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FOS chief urges advisers to tailor suitability reports to clients more

Caroline Wayman FOS

The Financial Ombudsman Service says advisers should take a more tailored approach to suitability reports as it sets out efforts to make the organisation less removed from the advice frontline.

Speaking to Money Marketing, FOS chief executive and chief ombudsman Caroline Wayman says advice complaints have largely related to annuities and unregulated collective investment schemes over recent years.

Wayman says investment complaints largely centre on the suitability of advice and the FOS is currently involved in work with Apfa about the format of suitability reports. She agrees with the trade body there should not be a rigid template for reports and says lengthy reports can be detrimental to the consumer.

She is aware of suitability reports that include information about products that are not relevant to the customer’s financial situation and says it is important for advisers to tailor the reports to the individual.

She says: “It creates a greater risk that people will not read them and not get the information they need. The first thing to think about is how to help the customer get the information they need. The chances of us getting involved are so much less if people know [what product] they have got.”

The FOS has restructured its teams so that complaints are dealt with earlier on.

Under the new system, ombudsmen work closely with groups of five investigators with the aim of bringing them closer to the frontline and, ultimately, reduce the cost of resolving complaints.

Wayman says: “Previously the ombudsman would only get involved when things get thorny. I want them to be in the heart of the organisation.

“Our experience is a lot of complaints can be more readily resolved if we can pick up the phone. We are trying to look at areas where process is not a barrier. It is about getting people answers as effectively and efficiently as we can.”

One initiative introduced to bring ombudsmen closer to consumers is having an ombudsman, including Wayman, do shifts on reception and handle walk-in consumer queries.

The FOS has also been getting closer to the adviser community through industry roundtables as recommended in the Financial Advice Market Review.

The first roundtable was held in September in Glasgow, with another planned in Stockport in November. As well as suitability, advisers have been airing concerns about staff qualifications and training, claims management companies, and pension complaints.

According to Financial Ombudsman Service data disclosed to Money Marketing, 630 complaints about pension freedoms have been submitted from April 2015 to August 2016  with “around double” the number of enquiries.

The FOS says the complaints concern delays, administration, advice and exit fees, with 26 per cent of complaints upheld.

But Wayman says the high volume of pension freedom-related complaints has not materialised.

She says: “A lot of people expected we would see a lot of cases after pension freedoms but we haven’t. It has been steady.”



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There are 11 comments at the moment, we would love to hear your opinion too.

  1. Yes and the FOS should have experienced and well trained staff too……………….pigs might fly!

  2. Thank god for that..the number of clients that tell me they give up the will to live after page 3 of the 27 page suitability letter for a monthly ISA contribution

    • On the other hand, a such a suitability letter for a term assurance policy would seem to be able to use the loss of the will to live before reaching the end of it as a valid justification for the sale!

  3. Neil Liversidge 6th October 2016 at 4:12 pm

    She “says it is important for advisers to tailor the reports to the individual.” In the immortal words of Basil Fawlty, we should get her on Mastermind, specialist subject the bleedin’ obvious.

  4. Stuart Rathbone 6th October 2016 at 4:28 pm

    More cost to pass on the unsuspecting punter in the name of their “protection”.

  5. This is what we asked for- more collaboration with FOS and better guidance on what is expected from advice processes. I think this is a bit like voting- if you don’t vote you can’t expect the government to do what you want- so think we should be throwing our lot into this scheme and see if we can improve things- last year with pension freedoms advice processes suffered delay and more delay- providers trying to be awkward, ceding scheme trustees doing the bare minimum, advisors procrastinating as they really didn’t know whether to accept pension freedoms or protect themselves and future liability and compliance teams running for cover to protect their businesses and their own personal liabilities- people retiring are sometimes without money for months as advisors fight to get through the advice process, suitability letters rewritten and rewritten adding more and more disclaimers (to protect the advisors not the customers) and don’t get me started on how long ‘insistent’ customers are taking when all they want to do is take some tax free cash to spend as they had always planned to do. The industry needs more confidence and taking to FOS regularly at these forums has got to help. We should all be on the same side- to give good advice to consumers and to feel confident in how to do it- is all I am asking for??

  6. Part of the advice process will presumably being explaining why products not being recommended are not suitable.

    Clearly the suitability report needs to be tailored, but a template is a good start.

  7. Richard Anderson 7th October 2016 at 8:50 am

    Hopefully the work with APFA will allow a consensus approach between advisers and FOS, to determine just what needs to go into a suitability report. We tailor all of our reports, which is why they take so long. There are still too many did-jointed parties in the financial advice world, with seemingly some of them not having much of a clue of the requirements of others. Time for a much more co-ordinated approach by all of the ‘stakeholders’ – FCA, Treasury, FOS, PFS, CISI etc. If you ask a client what they want to see in a suitability report most of them will say that they aren’t even bothered about getting one – they come for advice and to get everything taken care of for them. They don’t want to read a 10, 20 or 30 page report setting it all out, and it does dis-engage them, however, advisers are stuck in between a rock and a hard place, because they cant risk a complaint situation where FOS say ‘you didnt tell the client xyz’, hence we have to quote chapter, line and verse to avoid someone seizing on a loophole. There has to be a better way, but all parties need to be in agreement over requirements and expectations. The more straightforward the advice process the more people we can help – simples!

  8. why dont FOS produce an example of a suitability letter ?

    • For the same reason the FCA won’t regulate products….. It puts them on the spot to actually have to be responsible and accountable for what they do or say. We cannot have consumer champions coming down on the side of good common sense and taking the side of the adviser too often. The consumer witch hunters will start attacking the FOS disrupting the all important consumer confidence with the system that the F-Pack seem to put so much credence in. I mean come on can you actually imagine a system where we are all singing form the one sheet?????

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