A report in industry newspaper Financial Adviser last week has raised the concerns of insurance companies that the public are increasingly becoming more aware of endowment problems and complaints are on the increase creating a "complaints culture".
A combined report by Norwich Union / Oxford Actuaries Consulting believed that complaints would rise with Norwich Union alone receiving 1,500 to 2,000 complaints a month. This level, which no doubt is reflected across the industry, is taking up massive resources at insurance companies.
The FSA are now starting to grant time extensions for insurance companies to deal with complaints within specific timescales.
Our view
There are two sides to complaints - those who have genuinely been mis-sold and those who are 'band wagon jumpring'. If you complain due to poor investment performance then your complaint should not be upheld. If you complain because the risks were never explained or you were not offered a repayment option then your complaint may be valid.
For too long the regulator and the Financial Ombudsmen have give the benefit of the doubt to the public when perhaps not all should have been considered. As a result, no doubt many have received compensation when they should not have.
Even if a complaint to the ombusdmen is declined and the adviser is proven to have dealt with things correctly they still have to pay the Ombudsman's fee, even if they were not at fault - this is plainly not equitable. An investor who did have the risks explained to them and still forces the complaint to the Ombudsman should be forced to carry the cost if it is proved that their complaint is unfounded.
We do not doubt that thousands of clients were mis-sold and they should be compensated by the industry. Many insurers, banks and building societies were guilty of massively pushing the virtues of endowments in the 80's and 90's. The 'sell sell sell' culture of many of these has now come home to roost.
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