Pension freedom advice complaints: Delays and insistent clients cause of concern for the FOS

01 July 2016. Published by Matthew Watson, Partner

Following reassuring news about low pension-related complaint numbers, the Financial Ombudsman's latest newsletter has revealed further details of the types of complaints they have received since the sweeping changes to the pension freedom rules in April of last year.

In the year to March, FOS received around 1,000 enquiries specifically about pension freedoms and 440 complaints. Based on the government's figures that suggest around 250,000 people accessed their pensions in the first year of the new rules it seems that there has not been an immediate rush of complaints resulting from the changes. 


However, it is noteworthy that the highest number of complaints regarding pension freedoms related to delays in allowing individuals to access their pension funds. The FOS stated in the recent newsletter that "if we decide a pension provider caused unreasonable delays, we'll make sure their customer isn't worse off because of it". The newsletter provides no indication of what has been considered an "unreasonable" period of time. The FOS has also sought to put its own interpretation on the recent figures in seeking to identify that, as delays account for a smaller proportion of complaints than they do of enquiries, this suggests that the FOS has been proactively engaging with pension providers to help them understand the position. Readers may have their own views on this interpretation of the statistics. 


There are also passing comments on the difficulties advisors face when dealing with insistent clients in pension advice cases. The FOS notes "wanting to help a client who's set on using the new freedoms, while believing it isn't the best course of action in that client's individuals circumstances, is clearly a difficult position to be in". It will be of interest to see whether there is any tangible shift in the FOS' approach in dealing with insistent clients or whether such statements are merely token acknowledgments of the difficulties advisors face on this issue.


Perhaps the most telling figures from the FOS' newsletter are that the second highest number of complaints relate to individuals having to obtain financial advice before accessing their pension pots. The pension freedom rules require customers to obtain advice if they hold safeguarded benefits worth £30,000 or more. The much talked about "advice gap" has been one of the buzz words of the moment and it seems that the FOS has identified numerous complaints from customers in cases where they are either unprepared to pay for advice or are simply struggling to find an adviser who's willing to give them advice. 


We will have to wait and see whether the apparent deficit in advisors providing assistance to those customers with more limited means has the potential to create a risk for a minority of unscrupulous advisors targeting those customers who are unable (or unprepared) to seek advice.


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