Trawling through the latest decisions from the Financial Ombudsman Service (FOS) is always a fun few hours (for me anyway). 

    However, if you haven’t got around to it yet I have done it for you – and thought I might share my observations.  

    From the outset, I want to warn you there's no big surprises here, and the issues highlighted may well already feature on your list of things to improve.

    It boils down to processes, processes, processes... and maybe trying to find an extra hour or two in the day.

    I looked through over 300 decisions which fall under the heading 'investments and pensions' and roughly grouped them into the following categories:

    FOS complaints 0221

    As you would imagine, not all of these complaints were upheld.  

    In fact, only 32 per cent of them were upheld. Yet the time cost to the business and the human cost in terms of stress will have been present in every single one.

    So, what do these recent FOS decisions tell us?  

    While we clearly can't stop people making complaints, given that over half of the complaints fall under similar categories, it's worth considering what's driving these complaints in more detail.

    Service issues

    The complaints in this category related to fairly mundane matters, including failures to execute requests, wrong amounts being invested or transferred and performance complaints (which were not upheld).

    They also related to failure to provide a service such as an annual review, failure to update addresses or systems that were unnecessarily difficult to use.  

    None of these things ought to have happened, and could have been prevented by having robust processes in place.  

    Know your client processes and unsuitable advice

    Largely, these complaints boiled down to the client not understanding the product or investment properly and the risks associated with it.  

    Often the adviser will have recommended something altogether too complicated, or got distracted by the client’s objectives so that they discounted more simple investments in favour of more complex ones.

    Non DB pension transfers

    While defined benefit (DB) pension transfers are usually the ones in the spotlight, non-DB transfer cases were actually far higher up the list of recent FOS decisions.  

    A significant number of these were transfers to self-invested personal pensions (Sipps) which resulted in higher charges.

    What's more the additional benefits of transferring, such as flexibility and active management, were unnecessary for that client and did not outweigh the lower cost of the previous pension.

    For context, in 2009 the then FSA published a checklist for pension switching which the FOS still refers to in deciding whether pension switches are reasonable:

    • Charges - Has the consumer been switched to a pension that's more expensive than their existing one(s) or a stakeholder pension, without good reason?
    • Existing benefits - Has the consumer lost benefits in the switch without good reason? This could include the loss of ongoing employer contributions, a guaranteed annuity rate or the right to take benefits early.
    • Risk - Has the consumer switched into a pension that doesn’t match their recorded attitude to risk and personal circumstances?
    • Ongoing fund management - Has the consumer switched into a pension with a need for ongoing investment reviews but this was not explained, offered or put in place.

    The delay factor was surprisingly common. 

    Delay in investing, delay in responding, delays with providing information.  

    We’ve all been there – there'll be times when we know a case needs dealing with but we are 'too busy' or distracted by other things.  And we also know that the price of delay is usually higher than we want to admit.

    Lessons learned

    Receiving a complaint is always uncomfortable, not to mention time-consuming.

    It also often takes an emotional toll. This is true even where the complaint is unfounded – perhaps even more true. 

    No one can prevent all complaints.

    But many of the complaints related to matters which could have been reduced or avoided by robust processes, whether the complaint related to administration or advice.  

    Many more could have been resolved if the complaint had been dealt with more effectively from the start.

    (That said, there was a slightly odd complaint between an adviser and client where they were neighbours – the complaint looked more like a neighbourly dispute rather than a financial one).  

    In all cases the relationship between the adviser and the client had broken down.

    This brings me to my final point, where I'd like to draw on the wisdom of tour manager to the stars Jerry Weintraub, who managed tours for Elvis Presley, Frank Sinatra and Led Zeppelin and many more besides, and also produced major films including The Karate Kid.

    He said: “Relationships are the only thing that matters – in business and in life.”

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