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Merricks admits IFAs may not value scheme benefits

The chief financial ombudsman has conceded that it may be difficult for

small IFAs to see the benefit of belonging to the Financial Ombudsman

Scheme because of the limited number of cases they are involved in.

Writing in the scheme&#39s annual report, chief ombudsman Walter Merricks

says the service will rarely seem good value for money to small firms while

membership for bigger companies is quite cost-efficient.

His comments echo many in the industry who say small IFAs pay a

disproportionate amount for their mandatory membership to the ombudsman.

IFAs were involved in only 15 per cent or 2,795 of the 18,633 investment

cases dealt with by the ombudsman last year.

In the proposals for funding of the scheme, IFAs will be ringfenced so

their costs do not mix with other parts of the industry. Half the cost will

be divided between all firms, depending on their number of RIs, and the

other half will be covered with a per case levy.

Merricks says: “For a small firm of financial advisers, a small building

society, friendly society or small insurance business, the value of a free

dispute resolution service for its consumers is more difficult to

appreciate.”

Riach Independent Finan-cial Advisers proprietor Bob Riach says: “For a

small IFA, I do not think it adds good value. A £500 charge for a

complaint that may be unf-ounded is extreme.”

DOCE:

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