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Now watchdog warns on A-Day

FOS retreats on Sipp alert but says pension changes will bring complaints

The Financial Ombudsman Service says the Chancellor’s U-turn on residential prop- erty in Sipps will not lead to a flood of claims against advisers but warns that A-Day will spark misselling complaints in the longer term.

Lead pensions ombudsman Tony King has moved to calm fears stemming from the FOS’s previous warning that it would investigate complaints from people who have been advised to set up Sipps for residential prop- erty investment.

He also plays down warnings which were made by the FOS before Christmas that advisers should have made it clear to customers that placing residential property in Sipps was only a possibility.

King says advisers will only be expected to have provided advice based on information available at the time and the FOS will not use hindsight.

He says: “We spend very little of our time thinking about hypothetical outcomes of complaints we have not received. We do not expect a deluge of Sipp complaints.”

But despite the FOS annual budget predicting a 20 per cent drop in pension complaints in 2006/07, King believes A-Day will give rise to complaints against advisers in the longer term.

Financial Services Legal partner Gareth Fatchett says: “The complaint culture means there will inevitably be complaints to do with residential property in Sipps.”

There could be relief for IFAs on endowments. The ombudsman says it is expec- ting complaints to rise by 10,000 to 125,000 in the next financial year, with two-thirds stemming from endowment policies as customers lodge complaints before the three-year time bar imposed by some life offices but the number of complaints will greatly reduce after that.

FOS spokeswoman Emma Parker says: “There is def- initely light at the end of the tunnel.”


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