In May this year, Money Marketing published a story about the number of complaints made against financial advisers in respect of advice given more than 15 years ago.
Figures from the Financial Ombudsman Service showed that in 2017/18 there were 235 complaints, of which just 68, or 28 per cent, were upheld. In 2014/15, it was 171, almost three times more.
The FOS figures prove something I have long argued: that the number of upheld complaints outside the so-called 15-year longstop liability period demanded by some advisers is both miniscule and falling sharply.
We should not be too surprised. As advisers have become more professional, it is inevitable that the number of complaints dating back to the Wild West misselling era of the 1990s will gradually tail off.
In more than 25 years writing about the industry, I have come across just three complaints outside the 15-year limitation period demanded by some advisers. In each case, the advice was scandalously bad. It is right that people whose finances have been destroyed should be compensated for this, no matter when the advice was given, or what the scale of any award is likely to be.
The FCA’s recent proposal to raise the FOS compensation limit to £350,000 has no bearing on the issue. If that’s what you lost because of bad advice, you should get that back.
Let’s be honest, most advisers faced with a £150,000 ruling against them will go into default anyway. They’ll do the same at £350,000. The issue then is about reforming FSCS funding rules, not imposing a longstop or, as some want, to oppose the compensation limit increase.
The right to complain about bad advice more than 15 years down the line is a crucial backstop for consumers, ensuring they are protected against the worst cases of misselling.
Calling for a longstop on complaints is an empty emotional spasm – with negative reputational consequences for advisers. Is that what they really want?
Nic Cicutti is managing director at Inspired Money