As a survey on the Financial Ombudsman revealed almost three-quarters of advisers see themselves as the victim of false accusations for compensation, how far is the industry from restoring confidence in the ombudsman system?
Chris Hannant, general director at the Association of Professional Financial Advisers(APFA) agreed that APFA is "seeing complaints being brought to the Ombudsman prompted by third parties and rulings that are based on matters other than the original complaint, as a result of the FOS' inquisitorial approach.
"We are concerned about the discretion of the "fair and reasonable" approach to decisions, i.e. a compliant piece of advice could be deemed unfair; ensuring advisers have suitable access to adjudicators to explain their case, such as difficulty in getting a conversation on the phone; and whether the ombudsmen and adjudicators are sufficiently operationally independent - is an ombudsman appeal genuinely a fresh review?
"Industry concerns have a real impact: for example, it is why very few firms are interested in simplified or focussed advice. We have also seen some odd statements recently, such as seeking financial advice means you cannot be a sophisticated investor. I have had that confirmed to me that this is not FOS policy, but no explanation as to why it formed part of a ruling."
Fair and well equipped?
Among advisers surveyed 17% thought FOS adjudications were fair, while 7% thought FOS had a solid industry understanding of the issues they adjudicate on.
FOS responded to these concerns saying: "We provide extensive and on-going training to all staff to ensure that they have the relevant knowledge to investigate each particular case, whether these are investment, banking or PPI cases.
"Our adjudicators work very closely with our ombudsman at all stages of the complaints process, enabling them to share and benefit from the wealth of knowledge and expertise they possess. If either party is unhappy with the initial outcome of a complaint, they are entitled to request an ombudsman to review their case as the final stage of the complaints process."
FOS added: "Our training needs are tailored to the individual and all staff are hired because they have the skills necessary to carry out their roles. We also have a mentoring programme staff with on-going support given to all throughout their careers at the ombudsman."
FOS rules and processes were viewed as putting advisers in a disadvantaged position from the outset by 86% of advisers surveyed, 93% thought they should enjoy the same recourse to the courts as complainants.
FOS replied: "Ultimately, complaints about advisers continues to make up a very small percentage (less than 1%) of the total complaints we receive as an organisation. One in four (42%) of these cases were upheld in favour of the consumer, meaning 58% were found in favour of the adviser."
Not having a longstop was supported by 20% of advisers, FOS responded: "There are already complaint-handling rules which set out time limits for consumers to refer complaints to the ombudsman. After these time limits have expired, the business can choose to object to the ombudsman looking at the complaint on the grounds that it is "time-barred".
