25th April 2008
The FOS, the Hunt Review and the 'Misrememberers'
The FOS, the Hunt Review and the 'Misrememberers'
For those IFAs that have visited the 'dark side' and encountered the manner and methodology that is applied by those at the FOS in dealing with complaints against them, the Hunt Review will not have provided much comfort.
Unlike any other businesses where the time you have been trading can be seen as a measure of your success and professionalism, IFAs with “time served” are sitting ducks for being damaged by an unsavoury act of human nature - the “Misremembering” syndrome!
Lord Lipsey - a former PIA director - has stated that based upon his knowledge and experience, he believed that some policyholders who were compensated in the pension and endowment reviews should not have received a payout because they were not telling the truth. Lord Lipsey, who was leader of the pension review, said: “a lot of people had been sold pensions and endowment policies perfectly validly and they had either forgotten what had happened or they remembered but knew it was in their interests to forget what had happened to them.”
A recent poll of IFAs conducted by Money Marketing found that 95 per cent of 402 adviser respondents say they believe some people lied to get pension and mortgage endowment compensation.
The current FOS modus operandi seems to encourage Hillary Clinton-like “misremembering” and as a result creates an ombudsman system which has become a massive burden on the UK financial services industry as a whole and small IFA businesses in particular. There are very good reasons for there being an ombudsman service, but a major rethink regarding its own procedures and accountability is required.
There must be a way to ensure that the FOS behaves in a “fair and reasonable” way and that it does investigate cases based upon the core principles of the evidence available and balance of probability.
The FOS is a limited liability company, shrouded in secrecy, able by a quirk of statute to rewrite the law of the land, override parliament and be beyond affordable appeal processes.
Stick these ingredients in a mix with retrospective regulation, unscrupulous complainants or ambulance chasers who can cry “mis-sold” with no evidence for an event that took place over 15 years ago and you have quite a toxic meal to digest.
It is quite correct for a consumer to rely on the Ombudsman to resolve issues that have become deadlocked. But, there should be some parallels with the UK legal system applied to reach a “fair and reasonable” conclusion.
The starting point should be some evidence to back up the claim - no evidence provided by the complaining party should result in any complaint falling outside jurisdiction from the outset. If evidence is supplied that is clearly false or fabricated, this should, at the very least, result in the complainant picking up the tab.The current system allows, and actively encourages, consumers to misremember, even in some cases to enter fantasyland. This is costing the industry dear and putting many IFAs with years of unblemished records in financial and stressful danger.
In many ways the Hunt Review has failed the small IFA community and the public. As a result everyone is paying an uneconomic price - and that means consumers too, for the bad behaviour of many who falsely complain with a “nothing to lose, everything to gain” mindset.
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