Compensation for opting out of SERPS

jamesd

defender of the weak, how do you usually win? Does lack of documentation or clearly documented inappropriate advice dominate? Any thoughts on how the statistics for your customer base may differ from those generated by cold calling like that here?

dunstonh

I am sure DOTW will respond but we have been told by our network that on average, out of 1000 complaints only 20-25 are genuine upheld complaints. However, a further 200-250 are classed as not proven but result in redress due to insufficient or missing documentation. There is no proof of mis-sale but no proof to say it wasnt. So, they have to pay up.

Most of those 200-250 would not be upheld if the documentation had been better. This is why they spend a lot of time with the IFA firm owners to get us to pass on where the failings have been so they dont occur again in future.

The network also says that one or two claims companies dominate the complaints each month where exactly the same template comes in for every single person with every conceivable reason listed whether applicable or not. In other words they are fishing on the hope that the 20-25% with poor documentation works in their favour.

defender_of_the_weak

I would expect the success rate for cold calling companies to be significantly below the 35-40% mark. They have no real interest in winning the case and if they even bother writing the complaint it will be a standard letter as described by dunston. It was reported that when Vickers Anderson went down they had taken on 3,500 cases and completed 23

The figures from dunstons network are more than a tad misleading and the idea that only 2% of endowment sales were genuine mis-selling is a total fantasy.

The term 'insufficient documentation' covers all of the cases where the adviser did not do his/her job properly and failed the requirement to document they knew their clients personal and financial circumstances and provide best advice.

We win our cases because we compare the advice with the overall financial planning and circumstances at the time, effectively re-doing the fact find. If the case fails to meet best or even vaguely appropriate advice (which should have been picked up by supervisory or compliance checks at the time of submission) then we will win the complaint

defender_of_the_weak

This was too good to miss

The Financial Services Authority (FSA) has fined Sesame Limited (Sesame) £330,000 for failing to treat its customers fairly by not handling complaints concerning Structured Capital At Risk Products (SCARPs) adequately.

The problems with Sesame's complaints handling were identified as part of the FSA's thematic review of SCARPs during March and August 2004. The FSA found that Sesame incorrectly rejected complaints from approximately 350 customers between March 2003 and October 2004. These customers had lost nearly £5.9 million. The complaints related to sales made by Sesame's legacy networks.

William Amos , Head of Retail Enforcement at the FSA, said:

"Sesame has no excuse for complaints handling failures of this kind, not least because the FSA had already issued a number of publications concerning both SCARPs and complaints handling. The failings we found highlight the need for firms to implement and maintain robust complaints handling procedures and to train staff adequately

This follows the fine of 290,000 in 2004 for pension transfer cases and a previous fine in 1998 for further transgressions of the regulators rulebook so the network opinion on what does or does not constitute a genuine complaint appear to have foundation firmly based on severely shifting sand

dunstonh

The figures from dunstons network are more than a tad misleading and the idea that only 2% of endowment sales were genuine mis-selling is a total fantasy.

No it doesnt. It highlights that far more are being paid out because they cannot be proven rather than being upheld. The end result to the consumer is the same as they get redress. However, there is a difference between upheld and unproven.

You know full well that more endowment complaints get paid out due to poor documentation than anything else. It is also fair to say that the way complaints are viewed today is very different to 3-4 years ago.

peterbaker

I had forgotten about how wobbly the pensions market had become on the question of contracting out. Thanks to dunstonh for detailing some of the angles.

I am (as usual) exasperated by such reminders.

Any young person reading this thread might be forgiven for thinking that contracting out was an option for those of us that did it during some of our employment past. It wasn't. It largely went with the territory of the particular employer's pensions offering.

It is perhaps no surprise to see a correlation between wound up final salary schemes that were associated with contracting out.

But worse than that, it isn't just the employers and trustees who have messed up pension promises and steered employees the wrong way with various options. By way of example, I was even been offered a bribe by AXA to change the basis of my SERPs policy. They wanted to take, and eventually went ahead and took, money from a "With Profits" SERPS arrangement - purely because it was a bag of money where they'd identified some "loose" change they wanted to snaffle for their shareholders. A bit like an amusement arcade owner who had noticed quite a bit of money had collected on the floor around his machines at the end of the working week and decided it was his despite the fact that his machines didn't leak and were already geared heavily in his favour. Worse still than that, said amusement arcade owner decided that he could take what was on the floor, AND actually redesign the floor with little and then larger trapdoors labelled Option 1 or 2 or 3 so that the money didn't lay around on the floor for customers to pick up, but actually dropped straight through to his counting house below. The trapdoors became so big that the customers themselves almost fell through but not quite, but a lot of the money that was still in their pockets fell out as they picked themselves up.

This is how I see the pensions market today. How very cynical of me!

Where oh where are the fund managers with a conscience of years ago?

It seems to me that the only fund manager you can trust is one who is afraid of you. And that only happens if you are very rich indeed.


Yet still we keep coming back ... is it because we just know that our money must be in their somewhere?

defender_of_the_weak

Er Dunston you are putting forward stats based on a company and compliance department that has failed to handle complaints time and again and has been found out and fined by the FSA.

The average uphold rate across the board is somewhere between 50-70% your network is 20-25%. Obviously everyone is out of step apart from Sesame

dunstonh

A company being fined for complaints is nothing new. Most have. Sesame's complaint responses are not out of alignment with others. The uphold rate on all complaints is not closer to 50-70%. The 20-25% is all complaints. Not product specific.

The people we get giving us the data at the meetings are not corporate level. They are the actual complaints handlers. They give us copies of the opportunistic ambulance chasers letters. They also show us the files. Their interest at the meetings is not looking backward but looking forward as prevention. So yes, I do put faith in what they are saying.

If complaints companies could be fined the same way, then there would be more of those dished out.

defender_of_the_weak

Bit of fudging going on here, what is the Sesame endowment uphold rate then. The latest fine involves the mis-handling of 350 cases involving 5.9 million and is the third fine for the same company.

dunstonh

Bit of fudging going on here, what is the Sesame endowment uphold rate then

We didnt ask it and they didnt supply it. Remember the context of what they were providing us was prevention in future. So there was no need to split it into product areas.

The latest fine involves the mis-handling of 350 cases involving 5.9 million and is the third fine for the same company.

For SCARPs and is it really a third fine? Remember Sesame is a merger of 5 networks over the years and the previous fines come from the legacy networks before Sesame ownership and this last one was just after misys starting merging them together but before the current advice process was put in place.

Most of the 5000 Sesame members would never have sold SCARPs. So, as per usual with these things, the majority get tainted withthe actions of the few. I dont know the breakdown but only 350 cases suggests that it is a very small number of members. Could be as low as 2 or 3 or even just one larger regional member. This is also reflected in our area meetings where the company owners get together and round the table there is only one firm that is suffering endowment complaints. The rest have none. Although there is one firm that never goes to these meetings and we know they are a heavy offender.