Complaints Ombudsman Costs and Delays Rise

The Financial Ombudsman Service (FOS) has reported an increase in costs per complaint handled from £920 in 2019/20 to £1,040 in 2020/21.  The will be supplemented by an increase in the fee to regulated firms that are complained about from £500 to £750 per case in addition to an increased annual levy charged across the whole financial services industry.

The FOS also reported an increase in expected pensions and investment complaints to 20,854 from the estimated 12,500 expected complaints.  We put this down to covid-19 lockdown with people having more time on their hands as well as stock market falls and crashes at the start of covid-19 lockdown.

On a positive note, we believe both advisers and investors will now have a better understanding of risk and market volatility as well as its ability to recover.  Many of the increased complaint numbers were not upheld by the FOS as you cannot simply complain because the value of your fund has fallen.  Only 22% were upheld.

That said, complaints about SIPP administration were up and more upheld.

Finally, to add to costs, in 2019/20 90% of complaints were dealt with and agreed at Stage 1 Claim Handler and Adjudicator rather than 10% to Stage 2 being appealed against for a full Ombudsman decision. Whereas in 2020/21 an additional 3% of complaints i.e. 13% had to be referred for a full Ombudsman decision.

Comment

When comparing the above, 22% of complaints upheld for pensions and investments whereas 31% of complaints were upheld in other sectors such as mortgages and banking and if you exclude PPI complaints, 40% of non-pension and investment complaints were upheld.

That said, as advisers, we believe the consumer does get away with an element of all blame laid on the industry when consumers having some responsibility to as well as consumers not being charged when making fraudulent or over inflated complaints.