Defined Benefit pension transfers and SIPP FOS complaints on the rise
Official FOS figures from the end of 2019 show Defined Benefit pension transfers and SIPP complaints are on the rise although the percentage of these complaints upheld has dropped. How will the FOS respond in an area where we have seen a heavy CMC presence?
The FOS has released its complaints data for the third quarter of 2019/2020, which makes for interesting reading for those in the pensions market.
Despite PPI complaints breaking the 2million mark, this last-ditch flash in the pan is expected to taper off over 2020 as the deadline for PPI complaints expired in August 2019.
While the FOS is busy working through this backlog, amid a number of other established FOS complaint streams, we anticipate the rise in complaints about DB pension transfers and SIPP schemes to continue.
FOS figures for complaints about DB pension transfers show that in quarter 2, (July to September 2019) the FOS received 157 complaints and had an uphold rate of 34%. In quarter 3 (October to December 2019) the number of complaints rose to 213 (a 35% increase) but with an uphold rate of only 29%.
Similarly, for SIPP schemes, in quarter 2 the FOS received 597 complaints and had an uphold rate of 56%. Quarter 3 saw an increase in complaints to 653 (a 10% increase) but a drop in the uphold rate to 49%.
What we have seen on the ground
Those with an ear to ground will be aware that pensions related complaints have been a thorn in the side for pension advisers and SIPP operators alike over the last few years as the FCA seeks to clarify what it says it always expected of the pensions industry from the outset.
It is interesting, nonetheless, that despite the very high profile of the FCA's concerns about pension transfers, the actual number of complaints in this area remains comparatively low. (Indeed, many of the complaints that have been made are not about the suitability of the advice provided but about delays in the transfer processing.)
What we are seeing, however, and what the figures don't show, is that there are strong indications that the driver for the rise in pensions complaints is the prevalence of claims management companies (CMCs) and the efforts they are going to in order to generate complaints in these areas, thus replacing the income lost due to the end of PPI complaints.
This certainly marries up with our experience as we have seen a sharp rise in pensions related complaints fronted by CMCs. At the same time, we are aware of a number of reported incidences where CMCs are flouting their obligations under the Claims Management Conduct of Business Rules with cold calling and promises of guaranteed cash to customers.
What we expect next and the battle grounds
We expect pensions related complaints, particularly about DB transfers and SIPP investments, to continue to rise as CMCs continue to permeate these markets.
While the drop in the percentage of upheld complaints suggests the FOS may be starting to get to grips with the issues, it is just as easily explained by the likely increase in complaints from the unmeritorious end of the complaint spectrum as CMCs blanket these markets for clients.
While the pensions market would be well served to get its house in order for the barrage of pensions related complaints to come, RPC has had some promising traction in not only responding to the complaints, but also by adopting strategies that undermine the CMCs credibility and competence with the FCA.