The number of pension complaints received by the Financial Ombudsman Service (Fos) is falling, but the complaints themselves are becoming more complicated with most relating to sales advice.
Tony King, lead ombudsman for pensions, says despite pension problems being headline news almost every day, the Fos is “not inundated at all” and the overall number of pension complaints is falling slightly.
But the complaints themselves are becoming more complicated and King says the Fos still gets a regular supply of complaints about pension fund withdrawal.
In most cases the consumer generally claims they were wrongly advised to enter this type of arrangement because they were not made aware of the risks involved.
When complaints are upheld, King says working out the redress for pension fund withdrawals is complicated because payments will have been made to the consumer which must be compared with the alternative annuity payments, as well as taking into account investment performance.
He believes the new arrangements after pension simplification are likely to have many of the same difficulties associated with them.
Some of the complaints the Fos is already dealing with will be affected by simplification – for example, where the complaint relates to what the consumer was told about the old tax regime or because redress is now possible in a different form because of the changes.
But, King adds: “Of course, in the run-up to simplification, advisers will have been working on the information available at the time. If the detail has changed, then just as with any other advice-related complaint we wouldn’t apply hindsight.”
The Fos is also continuing to see Pensions Review cases, but there are not many new ones coming in.
King says this can generally be put down to the time limits involved but, in applying time limits, the Fos does not assume the clock starts from the moment the consumer received an invitation to have the sale reviewed.
Instead, it looks at when the review would have been completed if the consumer had asked for a review when first invited to do so – it will usually ask the firm for their normal timescales for reviews of similar cases and it takes into account any specific features of the individual case.
Another area where it is difficult to calculate redress is pension mortgages, because it can be hard to work out which part of the premium is intended for the mortgage and which for the pension.
Although the Fos gets relatively few pension mortgage complaints and is not expecting huge numbers in the future, King says it is an area they will be looking at more closely.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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From 6 April 2019