Year after year I despair at the cost for advisers of the Financial Ombudsman Scheme and the Financial Services Compensation Scheme when I read their annual results.
More than half of the total number of complaints dealt with by the FOS last year involved four banking groups, while 4,076 financial businesses accounted for just three per cent. Close to one percent of FOS complaints are against IFAs. Complaints over unregulated collective schemes (understandably), annuity rates being low and inflexible, and an uneven playing field for commission paid on certain products are still widespread.
We have asked for a long stop on complaints to the FOS but the Treasury and the FCA have again ruled this out. This issue will roll on. After all, in 2014/2015 the FOS received about 750 complaints concerning financial advice more than 15 years after the incident was recorded.
Last year the number of complaints received against financial advisers concerning term assurance, the most basic of all financial products, were in double digits. “I didn’t claim as I’m still alive, so it was a waste of money” – please somebody apply sense to these old complaints pushed on by the claims chasers and put a long stop on certain term based products. A complaint received near the end of the term should be dismissed immediately.
I would struggle to recompile a file for a client given financial advice by myself over 20 years ago and my data storage up in the cloud uses the latest technology. Admittedly, advice provided on areas referred to as sensitive sales, such as pension transfers, will be need to be kept until the day I die. But, come on, term assurance files kept for eternity?
Meanwhile, I was pleased to see the FCA hold its first roundtable meeting about the FSCS funding model after the Financial Advice Market Review suggested a review was due. The review needs to consider the fairness of the current scheme funding, the scale of impact on firms and the impact on the scheme from sectors that do not currently contribute enough or at all.
Despite calls from Apfa and MPs for the FCA and the Government to reconsider a product levy as a way to bring down FSCS costs to advisers, it was deemed outside the scope of the review by the regulator, as it would require a change in legislation. Who else needs to demand a product levy be applied for the FSCS funding before it happens? Jose Mourinho? And when has a required change in legislation stopped the plethora of regulators say “no” to a good idea?
Advisers, particularly independent financial advisers, continue to represent the lowest risk of consumer detriment, yet still have to pay a disproportionately large share of the costs of regulation. This is not treating advisers fairly.
Kim North is managing director at Technology and Technical