FOS sees 24% increase in pension complaints

The Financial Ombudsman Service (FOS) saw a 24 per cent increase in pensions and investments complaints over 2018/19 as pension freedoms continue to have an effect, its annual review has revealed.

In its review published yesterday, 16 May, the FOS said it received 15,606 complaints regarding pensions and investments over 2018/19, compared to 12,632 the previous year, as pension transfers continue to be high on the regulator’s agenda.

The ombudsman said the complaints involve pension freedoms as more people transfer from a defined benefit to a defined contribution pension scheme, with three in 10 relating to the suitability of advice, with the rest focusing on administrative issues such as delays.

FOS said: “About three in 10 of these focus on the suitability of advice, and the rest relate to administrative issues, such as delays – where people believe they’ve missed out on a higher transfer value because a deadline expired.

“People have also complained about paying to be advised not to transfer – but often this is likely to have been good advice. The Financial Conduct Authority (FCA) starts from the assumption that most people with defined benefits will be better off staying put.”

Yesterday, the Work and Pensions Committee repeated its call for a ban on contingent charging, the fee an adviser takes if its customer decided to take a defined benefit transfer has been blamed for incentivising advisers to tell their clients to transfer, despite not always being in their best interest.

The FCA said it will investigate the matter further.

The ombudsman also said that it had received hundreds of complaints relating to technology issues, particularly around transfers, only exacerbated by poor customer service.

“When a large investment fund merged its platform with another last summer, not everyone’s investments successfully transferred across – with some lost, and others delayed,” it said.

“We heard from people who’d experienced delays ranging from weeks to months – or who’d seen parts of their investment portfolios lost altogether – and who were now very concerned that they’d lost money, or the chance to “wrap” their investments in a tax-efficient way.”

Self-invested personal pensions (SIPP) also saw an increase in complaints, roughly 40 new cases per week, regarding both the advice to get one initially and the SIPP operators themselves.

In April, the Financial Services Compensation Scheme said it was increasing its levy for the 2019/20 by £16m to £532m, after an uplift in SIPP operators.

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