The number of cases rejected by the ombudsman soared in the past year, prompting questions about how advisers manage complaints in-house. Carmen Reichman finds out if the relationship between adviser and client crumbles when it comes to complaint handling.
The annual review published by the Financial Ombudsman Service (FOS) last week revealed that the number of cases rejected by the FOS had soared over the past year, raising the question why some of the cases were not resolved by advisers in-house prior to reaching the ombudsman stage.
Of the 4,139 complaints made against advisers last year, 42% were upheld, 12% fewer than in the year before. At the same time complaints against advisers rose by 45%.
The growing gap suggests that advisers found it difficult to arbitrate disputes resulting from an ever-growing consumer voice.
How to keep client complaints away from the ombudsman
The FOS suggested that as consumers were becoming more vocal about their rights, there is a need for advisers to adjust the way they handle complaints. A spokesperson said: “There has become a disconnect: as soon as somebody complains about a service they’ve received they are seen as a complainant and no longer as a customer.
“The future has to see a change in how financial services businesses deal with complaints. It has to no longer be a matter of dealing with complaints but a matter of customer service and the businesses will have to make sure they are acting with the customers in mind and in their best interests.”
Most advisers interviewed said in-house conciliation was the preferable way of handling complaints. But some argued that the regulatory system was detrimental to achieving positive outcomes smoothly.
Facts & Figures Financial Planners managing director Simon Webster said: “Very often clients comment on things that happen and under the rules the issue is a complaint. You have to tell the client that what they have said is deemed a complaint by the regulator and that we have to jump through certain hoops to satisfy the FCA.”
M Thurlow & Co senior partner Blair Cann suggested: “The difficulty in dealing with customer complaints is mainly personal. As a qualified professional it is perhaps natural to get defensive initially but if you follow the procedures and keep a decent file, resolving a complaint is not all that complex. “
APFA policy director Chris Hannant rejected the idea that advisers’ customer service efforts were to blame for the number of rejected cases and questioned the consistency of the ombudsman’s decision making.
“We can’t say from one year’s figures whether there is a systemic problem. There are always lessons to be learnt but in the context of the larger complaints picture I think it can be said that they’re doing a pretty good job.
“We hear members question the consistency of the ombudsman’s decisions. We will be discussing this with the ombudsman at the highest level to reassure ourselves that standards are re-applied,” he said.
More than 2,000 claims were rejected last year, a larger amount than in any of the past four years. Last year and in the year before only about 1,300 claims were not upheld by the ombudsman, however epidemic cases such as payment protection insurance (PPI), Arch Cru and Keydata played a big part in influencing those figures.
Church Hill Finance owner Anthony Badaloo said: “We are living in a complaints culture where we have £25bn paid out on PPI complaints alone. It is only natural that the number of complaints has increased.
“The bright spot for IFAs is that there have been fewer complaints upheld. It just means that the IFAs are the good guys in this landscape at the moment.”
>> Find out more
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation