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Merricks cautious over RDR effect on complaints

Outgoing Financial Ombudsman Service chief ombudsman Walter Merricks has warned his successor not to assume that complaint numbers will fall as a result of the retail distribution review.

In an interview with Money Marketing, Merricks says the RDR has the potential to reduce complaints by making advice propositions clearer to the consumer but there is also room for confusion.

He says: “I think it would be unwise of my successor to count on the assumption that complaints from the retail investment world are suddenly going to go down as a result of that.

“If people understand more clearly the basis of the advice that they are getting, then there is potential for our complaint numbers to go down. But I tend to be a bit cautious about assuming that changes of that kind are going to necessarily result in fewer complaints.

“Every time you make a change in the system there is always a possibility there will be misunderstandings, so I am cautious.”

Merricks, who is due to leave the FOS later this year after 10 years at its helm, says the relationship between the FOS, the Office of Fair Trading and the FSA needs to be reviewed.

He says mortgage endowments, Equitable Life, precipice bonds, bank charges and PPI have all challenged the handling of widespread complaints.

He says: “I think the interaction between ourselves and the regulators, whether that’s the OFT or the FSA, on the bigger-ticket issues is something that is right to look at. If you look back at the history of the ombudsman service over the last 10 years, it is marked by these big surges of complaints and I do not think anybody can say there has been an ideal solution.”

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