One of the issues that crops up most often in conversations with advisers is their fear about future claims. Adviser liability is also the factor we mention most frequently when asked by the likes of the FCA and the Treasury how to broaden access to advice or what steps can be taken to get advisers involved in relatively new markets such as secondary annuities.
No one disputes the need for consumer protection when it comes to financial advice. It is clear from just a cursory glance at the headlines that negligence exists. However, it is in both policymakers’ and advisers’ interests to reform the current situation.
One aspect of financial advice liability is the lack of a long stop on complaints. The other is the way in which liability in specific complaints is assigned in practice. Members have come to us with concerns about the decision-making of the Financial Ombudsman Service, where advisers were unable to gain access to the adjudicator in charge of their claim or where the scope of a complaint had been expanded for reasons that appeared unclear.
In response to these complaints, we began our project to improve confidence in the FOS’s processes. We asked members and other stakeholders for cases that illustrated issues with the FOS approach. These included concerns about the lack of an independent appeal, the training and qualifications of FOS staff in dealing with what are often complex issues and the feeling among advisers that greater emphasis was placed on consumer evidence than their own.
The discussions with the FOS are ongoing. However, what became clear from our conversations was in many areas the ombudsman’s stated policy was hard to fault. The problem was the reality of members’ experiences in certain cases appeared to be at odds with what the FOS said it would do.
Take the following example. While the FOS states consumers and advisers have equal access to adjudicators throughout the process of judging the claim, our members would tell us time and time again they would be unable to contact someone on the phone.
The FOS confirmed to us in meetings its policy was to ensure both advisers and consumers could readily contact the relevant official and we have been pleased to note chief ombudsman Caroline Wayman’s comments that it is working to improve the situation.
Similarly, the FOS states each official examines all the relevant facts and arguments, and listens to each side of the story. However, members relayed concerns that adjudicators failed to take into account certain key aspects of a case while appearing to automatically trust the consumer’s version of events without supporting documentary evidence.
We will shortly publish our own guidance for advisers on how to deal with the FOS and what to expect. Where there is a “gap” between policy and reality, we are happy to take this forward on members’ behalf.
There remains a great deal of work to be done with the FOS, including discussion of what we feel is the use of inappropriate indices in calculating compensation, as well as its approach to claims on Ucis. However, we hope our guidance and continuing conversations with the likes of the FOS and other regulators will be a useful part of a campaign to reform adviser liability.
Caroline Escott is senior policy adviser at Apfa