Sippdeal shocker (& link to template complaint letter)

koru

FOS decisions seem to be a real lottery. I wonder if this ridiculous position is something that R4 Moneybox would take up if you contact them?

Rollinghome

Clearly the right hand doesn't know what the left hand is doing. In the FCA video you linked to here they mournfully expressed their concern at increased "barriers to exit" and thus to competition while at the same time there appears to be encouragement for exactly that and more. Good luck with stage 2.

SnowMan

koru wrote: »

FOS decisions seem to be a real lottery. I wonder if this ridiculous position is something that R4 Moneybox would take up if you contact them?

Thanks. I will do that.

All my points have been completely ignored by the adjudicator. The response could not have been more superficial and contains factual errors. Here is the main bit.

......

The Financial Conduct Authority now requires businesses such as AJ Bell to make an explicit charge for offering its dealing platform charge to consumers this is a stipulation which AJ Bell has been requested to follow so therefore it has to increase the annual costs.

..........

The role of the Financial Ombudsman Service is to resolve individual complaints. We are not regulators, and we do not set or 'police' the rules for financial business must follow. This is the job of the Financial conduct authority (FCA). However, it is the case that generally speaking fianncial businesses havea variety of legal and regulatory obligations which they are obliged to comply with, such decisisons such as setting charges and conditions are considered a legitimate exercise of AJ Bell's commercial judgement.

.....

Because of this, I have to tell you I am unable to recommend that your complaint should be upheld. I appreciate this is likely to come as a disappintment to you. I know that this is not the outcome you were hoping for. But I hope this explanation has been helpful in setting out clearly why I have taken this view

1. My initial submission explained why AJ Bell were not forced by regulation to increase my charges, as they could have just switched everyone onto their existing charging structure.

2. Clearly setting the initial charge when I invested in April 2013 was the responsibility of the company for commercial judgement, and that isn't covered by the OFT guidance. But when they increase charges that is where it comes under the OFT guidance. The guidance and regulations are very clear on that.

When I rang the adjudicator up to make these points his response was in relation to

1. Effectively if AJ Bell say it was for a regulatory reason then it is not for him to decide if the regulatory reason actually meant charges had to increase. He would not comment on whether my assertion that his comment that the charge 'has to increase' is factually wrong.

2. He said it was not for the FOS but the FCA to consider the OFT guidance and so he ignored the OFT guidance in making his decision.

grey_gym_sock

a strange decision. hopefully the ombudsman will see it differently, and hopefully that will also clarify the general principles in this area.

SnowMan wrote: »

I am removing Youinvest from my platform comparison spreadsheet as their charges are completely meaningless as they could be quadrupled again with just 30 days notice with no waiving of exit charges.

strictly speaking, doesn't that apply to every provider who has exit charges in their terms? they might change the terms and refuse to waive the exit charges.

if it wasn't asking too much (which it is), i'd suggest instead adding a measure to the spreadsheet, showing how many years' charges it would cost to transfer out.

talexuser

SnowMan wrote: »

The FOS claim that Youinvest have negotiated an exemption from the Unfair Terms in Consumer Contract regulations with the FCA through a previous undertaking on their terms and conditions.

So what is the point of any consumer protection legislation or regulation if a company can just insert a clause into their contract which negates it?

SnowMan

Thanks for the support. I'm quite angry at the moment. I've sent this email back to the FOS adjudicator. He said he would look at my further points before it is referred on

Dear xxxxxxx


I am replying to your letter of 26th February which arrived today.

I do disagree with how you have reached your conclusions. Your response addresses none of my points, is superficial, and factually incorrect.

• My initial submission explained why AJ Bell were not forced by RDR regulation to increase my charges, as they could have just switched everyone onto their existing explicit charging structure to comply with the RDR. Bearing in mind the explicit charging structure was the basis on which I invested (as evidenced in my submission) that would have been the obvious thing for AJ Bell to do. So your statement ‘has to increase the annual costs’ is factually incorrect. Youinvest have as good as said in their final response that they made changes because of RDR (none of which applied to me) and then added in a general review of charges which did affect me.

• Clearly setting the initial platform charge at £50pa when I invested in April 2013 was the responsibility of the company for commercial judgment, and that isn't covered by the OFT guidance. But when they increase charges that is where it comes under the OFT guidance. The OFT guidance and regulations are very clear on that distinction. I had to take a similar case up with the Financial Ombudsman Service case against Hargreaves Lansdown in 2012. The adjudicator did consider the OFT guidance which was the correct thing to do. Adjudicators have taken the same approach in other cases. The OFT guidance is fundamental to this case. How can you assess if I am being treated fairly if you refuse to consider OFT guidance which gives clear indications on what or what isn’t fair.

• The FCA clearly are concerned about exit charges, watch this FCA video from yesterday which say that high exit charges are a concern for them http://www.fca.org.uk/news/review-of-implementation-of-platform-rules. Note that is about exit charges generally. So imagine their concern about companies quadrupling charges and then charging 3 years worth of charges to exit. Clearly the FCA can’t look at my individual case so please take responsibility and refer me to them, that is simply passing the buck for a decision you should be making

• What you are effectively saying is companies can set up based on a platform charge they don’t intend to maintain (albeit the customer doesn’t know that), quadruple it within 30 days and charge investors 3 years worth of charges to leave. As long as they give a vague reason why they are doing it that is stated in their terms and conditions (for example Youinvest might use to avoid a cross subsidy reason next time round) it is immediately valid. By this logic scams of this nature, set up in the same way, are just commercial decisions which the FOS would do nothing about. You have not considered how this is treating customers fairly.

• Youinvest also increased their exit charges as the result of the recent charges. Again that has nothing do with RDR but was another factor forcing me to leave.

• When I moved to Youinvest in early 2013 I compared the explicit platform charges for clean shares on different platforms. However if that charging structure can effectively be binned and quadrupled within a year, and I can be charged 3 years worth of charges to leave, how on earth could I have made an informed decision on which platform to use without the use of a crystal ball? When I asked you on the phone how I could make that informed decision you were unable to give any response. So I think you are saying that is fair for customers to have a system where it is not possible to make an informed choice. Effectively Youinvest’s explicit charging structure in 2013 on which basis I invested is completely meaningless.

• Youinvest are paying exit charges of up to £500 for customers moving to them, but won’t pay exit charges for those leaving them even on a quadrupling of charges. Please explain how this is treating customers fairly.

• Imagine my utility company were to increase my annual charges from £1,000pa to £4,000pa, 8 months into my switch, and then charged me £3,000 to leave them. Do you think that OFGEM would think that was treating customers fairly? Of course not. Do you think OFGEM would think that was a commercial decision for the company? You could change that example to mobile phones or any other customer product or service just about. So please can you explain why across all the consumer bodies in this country this sort of thing would be considered preposterous, and is precisely why the UTCCR regulations are there and yet the financial services industry claim exemptions from all that as they pleases.

• Please note I have also incurred a £9.95 selling cost in having to realise the £140 exit charge that should not have been charged. I have also been charged a platform fee of £12.50 in January. This is a result of Youinvest failing to re-register my investments to ATS in a timely manner (FCA rules cover this). This now also forms part of my claim. Had my re-registration been completed in a timely manner before the end of December then no £12.50 charge would have been payable.

• Please also address each of the points made in my additional submission in particular my references to the OFT guidance and 1j of the regulations.

I may submit further evidence but given the short time scale of 1 week to reply this is my immediate response

Yours sincerely

SnowMan

talexuser

Nice one, I particularly like the Utility simile, that brings it home forcefully.

SnowMan

grey_gym_sock wrote: »

a strange decision. hopefully the ombudsman will see it differently, and hopefully that will also clarify the general principles in this area.



strictly speaking, doesn't that apply to every provider who has exit charges in their terms? they might change the terms and refuse to waive the exit charges.

if it wasn't asking too much (which it is), i'd suggest instead adding a measure to the spreadsheet, showing how many years' charges it would cost to transfer out.

There is already a figure for exit charges in the spreadsheet. But without the crystal ball to know when the next increase will be, you can't make a sensible decision, as the predominent factor in the decision is the size and timing of this next increase.

Youinvest were the only ones this time round to force investors to the Ombudsman over exit fees (even HL backed down eventually). So I think I am justified in excluding them from the spreadsheet. Especially as there is a realsitic possibility investors will be let down by the Financial Ombudsman Service.

There are only very limited scenarios where Youinvest are cheapest on cost (some share and ETF only SIPPS). And these are the scenarios most vulnerable to Youinvest bringing in new charges, I would suggest. I wouldn't want people to get caught out by Youinvest's unfair treatment.

lejog2003

SnowMan wrote: »

The FOS claim that Youinvest have negotiated an exemption from the Unfair Terms in Consumer Contract regulations with the FCA through a previous undertaking on their terms and conditions.

Wouldn't the OFT be interested in hearing of this astonishing claim? How about writing to your MP complaining that the Will of Parliament seems to have been subverted?

SnowMan

lejog2003 wrote: »

Wouldn't the OFT be interested in hearing of this astonishing claim? How about writing to your MP complaining that the Will of Parliament seems to have been subverted?

I spoke to the FCA this afternoon and there is no exemption for Youinvest from UTCCR. The FCA were very helpful (in complete contrast to the FOS adjudicator).

The undertaking obtained in 2006 was in relation to Sippdeal's terms and conditions allowing unilateral changes to terms of conditions, so type 1 (j) terms. They were forced to change these to comply with 1 (j).

The FCA view is that it was not in the spirit of the changes that the FSA (as they were then) forced on Sippdeal to give them an exemption in relation to 1 (l) terms, only to make them compliant with 1 (j). Youinvest are trying to claim they do get exemption from 1 (l).

So Youinvest do need to comply with 1 (l) in particularly they can't increase prices even for a reason stated in their terms and conditions.

So the case is still watertight (barring any unexpected change of my mind from the FCA when they respond to me). I would like to think that the FCA will force Youinvest to make their conditions compliant with 1 (l).

It's just finding somone competent at the FOS to make a sensible decision based on the facts and legislation etc that concerns me.