What's the point of a Complaints procedure if .......

KeithJohn

........the Financial Ombudsman says "Complaint handling is not a regulated activity and therefore not something we can consider."

Long story short - I've had the initial findings of a complaint I made to the Financial Ombudsman. They find in my favour, but the Financial Advisory Firm (mentioning no names) disagrees with the findings so it has to now be reviewed by an Ombudsman. This has taken so long because, in my opinion, the Financial Advisory Firm has been purposefully obstructive to me initially and then the Financial Ombudsman too in handling the complaint.  As an example I have given details of a taped call in which the employee of the Financial Advisory Firm who advised me admitted the Firm knew mistakes had been made on this particular issue both in my case and others too - but the Firm had not divulged that before I found out via the pension provider.  The Firm has not given this taped call to the Financial Ombudsman despite that being requested by me several times.  The Financial Ombudsman doesn't seem to want to push for this nor, more importantly, be able to take their obstructive behaviour re the complaint handling into account. This makes me think going to an FCA regulated firm because they have a complaints procedure and so are obliged to act when things go wrong is a fallacy.  Am I missing something - surely disregarding their commitment to complaint handling should be an issue in itself.

eskbanker

The FOS stance is effectively a technicality - https://www.financial-ombudsman.org.uk/decision/DRN1808361.pdf, for example, explains their rationale:

The handling of complaints is not itself a regulated activity. It’s something that the regulator – the Financial Conduct Authority (FCA) – requires financial businesses to do. But that isn’t enough to make it a “regulated activity” within the meaning of the rule – that is, one of the list of activities set out in the legislation from which we derive our powers. 

and that list of regulated activities is indeed prescribed at https://www.handbook.fca.org.uk/handbook/glossary/G974.html

So, even though complaint handling is an activity directed by the regulator, from a technicality point of view it's not a regulated activity as such!  Therefore the FOS assert that they don't need to consider complaints relating to complaint handling....

dunstonh

I've had the initial findings of a complaint I made to the Financial Ombudsman. They find in my favour, but the Financial Advisory Firm (mentioning no names) disagrees with the findings so it has to now be reviewed by an Ombudsman.

Both sides are allowed to refer the case to an ombudsman.  However, the ombudsman decision is binding on the advice firm.

The Financial Ombudsman doesn't seem to want to push for this nor, more importantly, be able to take their obstructive behaviour re the complaint handling into account. 

If the person on the phone call is an unregulated individual, then little or no weight will be put on what they say.  The FOS themselves are generally the same with their call centre staff.  They will be overly agreeable with the person calling and tell them its wrong and they will look at it even though they have none of the facts to actually say that.   

 This makes me think going to an FCA regulated firm because they have a complaints procedure and so are obliged to act when things go wrong is a fallacy. Am I missing something - surely disregarding their commitment to complaint handling should be an issue in itself.

It seems like the the complaints process is working in your case.  I assume the firm rejected your complaint, then you went to the FOS and the adjudicator upheld your complaint.   And the firm have decided to appeal.  All within the rules.

The FOS do report firms to the FCA if they feel they are not correctly behaving within the rules.

KeithJohn

Hi Dunstonh - :

If the person on the phone call is an unregulated individual, ....

The employee I spoke to was the regulated employee who deal with my pension transfer af ew years before - but who swiftly retired after our follow up conversation when the issue came to light.  It was because she was regulated in a regulated firm I felt I could hold her and her ffirm to account for what she said and advised - but the FOS don't seem to want to demand that taped call.  Should I take that to the FCA?

 I assume the firm rejected your complaint, then you went to the FOS and the adjudicator upheld your complaint.  

The Advisory firm basically blamed Standard Life as the pension provider and then ceased to comunicatewith me. However, I am inclined to accept Standard Life's position, which is that they didn't advise or decide anything The Advisor seems to have given ill-informed advice, which has lead to the loss of a tax-free protected lump sum.

As the FOS adjudicator (??) upheld my complaint do you think I have a high chance the actual Ombudsman will likely uphold too?  I understand the max they can instruct the Advisory firm to compensate is £5,000, is that right?  The FOS can't say how long it will take for an Ombudsman to decide. 

Thanks for your help and advice. Not surprisingly I am loathe to get another Financial Advisor involved.  At this stage it seems to me they aren't held accountable for what they advise.  

eskbanker

KeithJohn said:

I understand the max they can instruct the Advisory firm to compensate is £5,000, is that right?

That's not my understanding, where did you source that from?

The FOS approach to compensation is documented at:

https://www.financial-ombudsman.org.uk/consumers/expect/compensation

and if they agree that there's a clear correlation between demonstrably flawed advice and a tangible financial loss then I'd expect them to instruct the reimbursement of that loss, with some additional compensation on top if you've had to chase this around for years.

dunstonh

The employee I spoke to was the regulated employee who deal with my pension transfer af ew years before - but who swiftly retired after our follow up conversation when the issue came to light. 

So, the person you spoke to was not a regulated employee.  That is a black and white fact.    The problem with ex advisers is that their knowledge and information goes out of date very quickly.    Their role in the original transfer would be up for review in a complaint but a phone call or conversation whilst unregulated would not.

It was because she was regulated in a regulated firm I felt I could hold her and her ffirm to account for what she said and advised - but the FOS don't seem to want to demand that taped call.  Should I take that to the FCA?

From what you say, she was not regulated at the time the call was made. 

The Advisory firm basically blamed Standard Life as the pension provider and then ceased to comunicatewith me. However, I am inclined to accept Standard Life's position, which is that they didn't advise or decide anything The Advisor seems to have given ill-informed advice, which has lead to the loss of a tax-free protected lump sum.

The advice firm writes to the providers to ascertain any guarantees or safeguarded benefits etc.    Some providers are not very good at answering the questions, as asked.  Some of the providers list all potential issues in an automatic layout.   Some are very hard work to get the information out of.  In my experience, I have found Standard Life (the insurer side rather than the platform side) to be very weak at answering questions.  Often needing chasing and or only answering some of them.   However, , if the provider fails to supply information about transitional relief and its later found out that there was a transitional relief, then the adviser firm is at fault.    If the provider said there was no transitional relief and it was later found out there was, then the provider would be at fault.     

As this is an evidence based event.  i.e. does the pension file show that transitional relief was what was asked and answered on transitional relief.   Also, if there is transitional relief then the adviser would be expected to document its loss, on transfer, and why it was justified to still transfer it.

As it happens, many pensions with transitional relief are still worth transferring.    Whilst some very old hybrid plans have high tax free cash rates, the most common type is typically somewhere between 25% and 35%.   And usually, to get the higher amount of tax free cash, you have to buy an annuity as the provider will not transfer the value as flexible benefits.  So, you are left with the decision of higher tax free cash and annuity or lower tax free cash and flexible drawdown.

Whatever the scenario, the advice firm is required to document it. It is only if the provider said there was none that the provider can be blamed.   Yes, the adviser can be frustrated by providers but this is pretty black and white.

As the FOS adjudicator (??) upheld my complaint do you think I have a high chance the actual Ombudsman will likely uphold too?  

Statistically, only around 1 in 10 referrals to an ombudsman get changed. 

I understand the max they can instruct the Advisory firm to compensate is £5,000, is that right? 

No.  it is £375,000.

 The FOS can't say how long it will take for an Ombudsman to decide. 

a very long time.  Do not be surprised if it heads between 1-2 years.   Although, given the black and white nature of the facts (i.e. did the provider say there was no transitional relief/enhanced tax free cash or not and did the advice act on wrong information from the provider or act on no information from the provider and didnt check), it may be a bit quicker.

Thanks for your help and advice. Not surprisingly I am loathe to get another Financial Advisor involved.  At this stage it seems to me they aren't held accountable for what they advise.  

I don't understand why you feel that way as the process seems to be working.    

KeithJohn

Thanks to Dunstanh & Eskbanker for your help and detailed advice.

On compensation - great I was getting confused with having to take it up in a Small Claims Court if I don't get a satidsfactory resolution via OFS. 

I have just checked her email - says she was a "Consultant" followed by their footer saying they are a regulated firm.  I geuss it will be difficult to find out if she was herself regulated Financial Advisor now she is retired.

That is good to hear that the vast majority of cases found for by the Adjudicator are then upheld by the Ombudsman.  It's been 3 weeks since the Adjudication, about a year to get that point and several months of fruitless complaining to the Advisory firm before I gave up and went to the OFS.

The protected tax free cash lump sum (PTFC) was a big issue in our dealings at the time of transfer advice - because at first it was thought it couldn't be carried over but then a bulk transfer was agreed of all members of this fund that was closing and it was explcitly mentioned - twice in their report - as a benefit for me of this recommended course of action.  Standard Life (not the Advisory firm) have given over to the OFS correspondance between them and the Advisory firm - only some of which I am allowed to see as other bits pertain to other individuals' cases - and they say that clearly evidences that the Advisory asked lots of questions asked about the PTFC of those transferring but none related to my specific circumstances (whereby I had a long-standing existing membership of another scheme with Standard Life).

The fund is relatively small - about 55K at time of transfer, but now standing at about 66K in value.  I know the loss is hard to quantify as there are multiple variables - when will I retire, fund value at time of taking the PFTC, my tax rate at time, etc.  but I do have issues with the Adjudicator's low (IMO) value of the potential loss.  They took a fund value in the Liz Trust weeks, they have assumed I would be a basic rate tax payer - the fund was worth more at start of the investigation and is again now and I have been a tax payer at highest rate for many years and hope to be at the time I access the PTFC.  I have from the outset said I would be content with 'hold harmless' and wait to calculate my loss at time of taking PTFC in future.  But the Adjudicator says it has to be calculated now and a sum settled now.  I think the offer of about  £1200 is unfair to me as it totally ignores any growth potential or my likely tax situation.  It should be more than double that on the likely applicable tax rate if I tried to get a simiaalr size lump sum as I used to be entitled to consideration alone. They have also suggested "...£250 for the distress and inconvenience of losing his PTFC entitlement due to their poor advice."  I think a £1 a day or £20 per email taken to get this far would be fairer!

I will let you know how I get on.

Finally, yes the process is working - just. However, the complaint procedure effectiveness with the Advisory firm is non-exsitent. May as well not have one. So I must rely on the OFS, who are slow and ineffective in bringing the Advisory firm to the table and they seem to be suggesting (lets see if Ombudsman is more realistic) a settlement not fully recognising my potential loss or able to suggest a flexible solution that would more effectively right the damage done by providing poor advice. I feel better off on my own with the help of people like yourself.  Many thanks.