Act now on mis-sold endowments: new article

mayb_2

dunstonh has never had a complaint upheld against him so I assume he was referring to the PI or the FSCS (which doesn't relate to the misselling claims at all). From what you are saying dreamy this is another reason why it is hard for some people to get redress, so the odds are more stacked against them if they bought from an IFA?

dunstonh

I've only got the posts on here to go by, but am I right in thinking that all FAs and IFAs have to pay into a central fund which pays out all compensation claims, and some of you feel that this is unfair as you have never had a complaint against you?

There is [subject to DLD's correction] but it is not a level playing field. For example, an IFA that is self employed or a partnership will carry the financial liability for advice to the grave. A limited company can cease trading, close down and pass its liabilities onto the FSCS. A number of companies have known they have some misselling payments to make and have closed down just in time to pass the liability on to others. Something that isnt possible with owner/partner firms.

Also, there is a pension review levy which pays towards the pension review of early 90s. Again, we all pay that whether we were involved or not.

Then there is the FOS levy which you have to pay regardless of whether you have any claims or not.

Then there is the FSA levy. In all the levies average around £3500 per adviser per year.

I think that is basically what is being said here Crazy Saver - it is akin to the public liability insurance that my husband had to pay as a self employed plumber. He never had to use it but he didn't mind paying it. It protected him too.

That isnt what is being said. That is a further payment on top of the levies. That is a further £2400 a year. No problems with that as its there to do a job.

The levy schemes are generally acknowledged as penalising the good companies to subsidise the bad ones. A common opinion within the industry at small business level is that the bad companies or those with the upheld complaints should be the ones paying the most for these things.

so the odds are more stacked against them if they bought from an IFA?

Yes. Mainly as IFAs generally dont have as many mis-sales and they are better at keeping documentation. A fact recognised by the FOS when they stated that IFAs in general have the lowest number of complaints upheld pro-rata. So, you are less likely to be mis-sold in the first place, so therefore you are less likely to get your complaint upheld.

However, I understand where DLD is coming from. In the case of the salesforces, the money isnt coming out of their own pocket. In the case of most IFAs, the money is coming out of their pocket so they are going to put a much stronger case forward.

mayb_2

Perhaps you would feel better about it if you saw it as an act of charity dunstonh for us poor lower net worth people? I think those who are really paying the price for all of this are the victims of the bad advice whoever gave it.

dreamylittledream

mayb wrote: »

dunstonh has never had a complaint upheld against him so I assume he was referring to the PI or the FSCS (which doesn't relate to the misselling claims at all). From what you are saying dreamy this is another reason why it is hard for some people to get redress, so the odds are more stacked against them if they bought from an IFA?

Actually the FSCS's single biggest claim type is endowment - if the IFA who sold you a policy is defunct and the policy was sold after August 1988 your complaint is handled by the FSCS.

Referring to the main point however dunstoh and I would no doubt partly disagree on the reasons for this but the uphold rate for complaints against IFA's both at the FOS and initial complaints to firms is much lower than those against banks, building societies and life companies.

Dunstoh would no doubt argue that this is because the sales were far more likely to be suitable and complaint if sold by an IFA. A cynic might suggest the IFA uphold rate is much lower as few IFA's will willingly payout compensation on a complaint as it comes either our of their own personal pocket or off their PI insurance which A) has a nasty excess and means the premiums go up).

I've dealt with thousands of complaints and I can tell you that very few IFA's will uphold a complaint of their own back. This is probably understandable when you consider where the redress needs to come from. Most complaints are ultimately about suitability of an investment - which is a subjective issue - so why pay out without a fight?

The answer is probably somewhere between the two. Small firms have no political axe to grind or have any benefit to maintaining a reasonable uphold rate to the FSA in the same way that the large players do. In short large firms will settle complaints for reasons other than the merits of a complaint. IFA's do not and as such fight every case usually as far as they can - indeed thisis a condition of some PI policies...

Most of the work done by the FOS is through mediation. The bigger firms are generally more willing to mediate than the smaller ones for a number of reasons. One is perhaps a principle issue, another could be a simple fact of human nature - a life companies complaints handler/complaiance officer is far more likely to form an objective view of a complaint if it is not him who is actually having to pay the compensation himself!

In my opinion the FOS take a more generous approach to IFA sales than large firms - this is purely based on my experience but taking two identical cases where no documentation exists and the sale is possible questionable but not conclusively so, I find adjudictors far more likely to side with the adviser than the consumer if the adviser was an IFA...

Of course I'm sure many advisers would say exactly the opposite - subjectivity is a wonderful thing isn't it?

However, one statement that is true is the best way to get compensation from a policy sold by an IFA is for the firm to have gone out of business. Providing you meet the requirements for qualifying for FSCS protection (ltd company) you are far more likely to have a complaint upheld by them than if the firm was still trading.

This more than anything else suggests to me that there is some bias in the FOS approach...

dunstonh

However, one statement that is true is the best way to get compensation from a policy sold by an IFA is for the firm to have gone out of business. Providing you meet the requirements for qualifying for FSCS protection (ltd company) you are far more likely to have a complaint upheld by them than if the firm was still trading.

This more than anything else suggests to me that there is some bias in the FOS approach...

Probably because the FSCS deal with cases where the company doesn't exist any more so there is likely to be no evidence to support the advice. With the FOS, there is a greater likelihood of the evidence supporting the advice to be present.

dreamylittledream

dunstonh wrote: »

Probably because the FSCS deal with cases where the company doesn't exist any more so there is likely to be no evidence to support the advice. With the FOS, there is a greater likelihood of the evidence supporting the advice to be present.

This is true to an extent, but if I had a pound for every with profits sale where no evidence exists but the FOS still find in favour of the firm I'd be a rich man.

The FSCS do not place as great a value on suitability on the balance of probability as the FOS do.

Whether this is the correct approach of course is open for debate...

mayb_2

Oh God and don't I know it - the debate will never cease on that one as each new claimant gets turned down on the balance of probablilty. I remember those exact words. In my mind the balance of probability is that the FOS was biased and minded to ignore anything that didn't agree with his predisposition.

I do have a feeling that the IFA's who went out of business were either pretty useless and so folded, or guilty of many missales and so chose to bow out before the proverbial hit the fan. Either way it wasn't them that paid the price but the consumer.

Before you jump in there dunstonh no I am not saying every sale was a missale and yes there are two sides. The winners and the losers.

dunstonh

This is true to an extent, but if I had a pound for every with profits sale where no evidence exists but the FOS still find in favour of the firm I'd be a rich man.

There does appear to be a view that the FOS do consider WP to be cautious (at least 90s cases they do). If the FOS used its 2008 risk profile (or any profile from around 95 onwards) then it would be medium risk and more complaints would no doubt get upheld.

I do have a feeling that the IFA's who went out of business were either pretty useless and so folded, or guilty of many missales and so chose to bow out before the proverbial hit the fan. Either way it wasn't them that paid the price but the consumer.

I couldn't disagree with you too much on the first points although, it was mainly failed business models rather than individual advisers. On those cases though it is not just the consumer that pays the price but also the advisers trading today. Pre 88 the consumer gets no protection. Post 88 and the current advisers pay the price.

Before you jump in there Dunstan no I am not saying every sale was a missale and yes there are two sides. The winners and the losers.

Thats all I have been asking you to acknowledge.

There are a lot of good firms out there today that are so fed up with paying the bills of those that have made the mistakes. The system is punishing the good and letting the bad get away with it. It is possible that will change to some degree now a court has ruled that the FOS shouldn't charge an adviser for a complaint that was not upheld. It has to go to appeal but assuming the FOS lose, it would be the perfect opportunity to make those that create the problems pay for it.

Also look at it from my point of view. I give advice and if I mis-sale, the redress comes out of my pocket and my family home is at risk. So, I make damned sure my advice is documented well, I don't transact in high risk areas and I don't do any transaction which is sailing close to the wind.

However, joe bloggs adviser working down the road for an employer or salesforce can sell what he likes with no financial comeback. The employer picks that up. joe bloggs adviser can then change companies every 5 years and go back to the same people and churn all the policies again and start the cycle over every 5 years. Never suffering any financial liability for the work he has done. If the complaints come in its usually long after he has left that company so they cannot take any disciplinary action against him.

The system is flawed as it allows the bad to get away with it but penalises the good.

I post my comments mayb not to be adversarial with you but just to give people here an insight from this side of the fence.

mayb_2

No problem with that dunstonh I am doing the same.

I think you are right that those really responsible should be made to pay - but isn't that what is happening if an IFA found to be responsible has to pay out of his own pocket? I would agree if the complaint is not upheld then the IFA shouldn't have to pay costs but then a proper insurance policy should take care of that surely?

The new system being talked about is not going to change anything happening here, except now nobody is going to be held responsible for poor advice. The person buying who wouldn't know poor advice from good advice is going to have to sign their rights away in order to be able to purchase anything from anyone. Very clever thinking here - finance companies totally protected from their actions again.

I couldn't disagree with you too much on the first points although, it was mainly failed business models rather than individual advisers. On those cases though it is not just the consumer that pays the price but also the advisers trading today. Pre 88 the consumer gets no protection. Post 88 and the current advisers pay the price.

How is that dunstonh? I thought advisors only paid if you were ruled against - if ruled against you should have to pay surely.

In the end if you find the system unfair you should protest against it - not blame the consumer for pursuing their claim because it is making life difficult for you. You have already said you are making good money from your business and have had no claims against you - those with failed mortgages aren't so lucky and can ill afford to pay the price of not claiming in order to protect someone else's income, you on the other hand can afford it even if you don't want to have to do so.

In the end a system should be in place that prevents anyone without a licence - only granted on satisfactorily obtaining such qualifications required to hold it and which can be withdrawn if necessary - cannot sell financial products of any kind. Finance companies wanting business should stop purveying their wares with a sales = bonuses mentality and put it all into a professional areana where it belongs.

dunstonh

How is that dunstonh? I thought advisors only paid if you were ruled against - if ruled against you should have to pay surely.

You were referring to failed/closed firms and with the FSCS, the current advisers pay the levy to cover the redress paid by the FSCS. So, in part I pay towards every claim that the FSCS uphold. The person that sold it doesnt pay a penny.

In the end if you find the system unfair you should protest against it - not blame the consumer for pursuing their claim because it is making life difficult for you.

The is beginning to happen. Recent court action is likely to force a rethink of funding.

In the end a system should be in place that prevents anyone without a licence - only granted on satisfactorily obtaining such qualifications required to hold it and which can be withdrawn if necessary - cannot sell financial products of any kind.

As it stands, if you see someone today who is not authorised by the FSA, you dont get a penny of redress regardless of what they do. It has to be an authorised individual doing wrong. An unauthorised person acting fraudulently gives no protection under the FOS/FSCS or FSA.