FOS treating IFAs as ‘guilty until proven innocent’

Did you believe the FOS help complainants create a complaint where none existed?

This was just one of 15 questions answered in the FOS survey we ran during June & July which received 212 responses. Many thanks to all of you who completed the survey and for the hundreds of really inciteful comments that really put some flesh on the answer bones. As with all our surveys, it is the comments that make for such interesting reading.

The final ‘score on the door’ for that question? 66% believe that the FOS help complainants create a compliant where none existed!

Very worrying indeed, but it is some comments added, beyond a simple yes or no that should really start ringing bells with the FOS. For this question some comments were:

  • Where they feel inclined they will stray from the complaint in order to favour the customer with a positive outcome even if it has not been the subject of a complaint.
  • There was a case where a client was making a complaint against a DB scheme, but when FOS realised the company concerned wasn’t on its register, the FOS employee suggested the client complain against us!! 
  • I believe that complainants are apt to add to their initial complaint when in conversation with the Ombudsman and I know that FOS will look at the wider picture if they feel it is reasonable to do so 
  • Yes, there is no doubt that the process is not to seek a resolution of the complaint made, but to ensure that there can be no suggestion that the FOS have not investigated any opportunity for a clients’ complaint to succeed. 
  • The FOS demonstrate the view that all complainants are innocent and honest and that the Industry is corrupt and incompetent. So, if they can dig into a complaint and find an alternative angle they will do it

Another question asked was: “Do you think FOS rules and process place an adviser or firm in a ‘guilty until you prove your innocence’ position from outset or have you generally found them to be fair?”

83% agreed, some comments are:

  • I have yet to see an initial complaint letter which does not make the adviser look guilty, otherwise there would be no complaint. It has to be, therefore, that the adjudicator is biased towards the complainant until the defence is provided. 
  • Absolutely. To the point that I have decided to stop investment advising in the next 12 months. I now consider the risks too high. All of the cases I have read, or been involved in, seem to work on that basis – “prove that you didn’t do it”
  • Our Judgement was based on the argument that the complainants view had to be more likely and not just as likely as our own. 
  • It is difficult to answer this however the rules mitigate against a ‘fair trial’ and in that respect there is an imbalance. As Walter Merricks famously stated to a Cardiff Conference in 2003, it is like a game of football where one side is playing uphill.

Worryingly, we also observed the following:

—  55% of respondents had no idea as to who the FOS is accountable to.

—  72% had experienced false or manufactured claims with a view to obtaining compensation

—  95% felt that the adviser should have the same rights as the complainant to appeal to the courts when unhappy with a decision rather than an than expensive judicial review

Full results will be shared with you soon, but in the meantime, a copy of the results has been sent to the Treasury Select Committee, the FOS and the FCA.

As yet we have had no responses apart than from the FCA thanking us for “sharing the findings of your latest FOS survey. It makes for interesting and occasionally provocative reading”.

The survey results have also been picked up by FT Adviser who were interested to know if the report findings were perceptional or based on actual experiences?

Our view is that although we cannot be 100% sure, either flags an issue. If perceptional then the FOS has work to do the change those perceptions. If they are actual, then work is required there too.

We hope, in regulatory speak, that ‘learnings’ will be taken from this to ensure that the original intent for any Ombudsman is to resolve complaints based upon the balance of probability and/ or any evidence that may be available.

We do not look to favour one side over the other, but looking at all of our FOS surveys from 2011 to 2018 there does appear to be a consistent  and ongoing view in the world of financial advisers that simply cannot be ignored.

To view full results click here

Read the article in FT Adviser