22 Aug 2018
FOS complaints about SIPP’s have almost doubled in numbers over the past 12 months.
FOS numbers released this week showed SIPP claims were the twelfth most complained-about product with 922 complaints, equivalent to 45 per cent of the 2,051 complaints received within the entirety of 2017/18, in just the first three months of this year (April to June).
SIPP complaints also had one of the highest uphold-rates, with 59 per cent of complaints being upheld.
I would suggest that it should not have escaped the FOS’s attention that with PPI claims now in their death throws, claims management companies (CMC’s) are at it again, never ones to miss new business opportunities within the financial services sector.
For example we read that a law firm “has submitted 500 claims to the Financial Ombudsman Service over an embattled Sipp provider”.
Based on the latest FOS numbers, this one CMC is responsible for over half of the SIPP complaints and against just one SIPP provider.
The law firm in question, Anthony Philip James & Co, claim that a SIPP provider “failed to treat customers fairly by accepting a high volume of clients who were unsuitable for Sipp investments from an unregulated introducer”.
Notwithstanding the rights and wrongs of the situation, there are some big questions to ask around:
We assume that the CMC’s in question operate on a no win no fee basis, taking a split of any pay-outs that may arise from a FOS decision. When the dust settles perhaps the FOS could confirm how many came through these CMC's?
Is it time to look at how CMC’s interactions with potential ‘business opportunities’ and the FOS should be controlled?
The current regulation allows for CMC firms to ‘go fishing’ within the complaint process rules. If the catch is successful, they are passing the filleting work on to the FOS.
That must stop.
The time has come to create a different track for CMC’s when complaints get caught in their trawl net.
There is a perfectly good system in place to look at ‘miss-selling, miss-advising and miss-buying. Despite all its faults, the FOS is set up to deal with these situations. It is free to use and as a result any redress goes to the complainant.
If a consumer insists on using a CMC to take the spadework out of submitting a claim against a regulated firm, or even have them manipulate the situation then the FOS should view this in the same way it should when an individual has embarked upon a legal process before the FOS is involved..
The FOS cannot investigate a complaint if a legal case has been initiated against the firm being complained against.
The current position, if the CMC initiated FOS claims are successful and the firm cannot pay, is that the CMC’s fees are, in effect, paid by the FSCS and that seems immoral?
As a footnote, surely the time has come to remove unregulated investments, firms and instruments from the FSCS payout pool, FCA regulation and FOS control and, stop advisory firms dealing, advising or arranging unregulated products.
I do understand that some advisers see that unregulated products can form an important part of financial planning. But the fallout from these products far outweighs the benefits. Failures can be catastrophic for the consumer, the adviser and their peers, who eventually pick up the tab.