In the newsletter it says: “Some IFAs argue that, because only 2% of complaints that go to the Financial Ombudsman Service (the ombudsman service) are levelled against IFAs, the independent sector provides a better service than the banks, and so the RDR should be focused solely on improving standards in banks; we do not accept this.
“The total figure for complaints referred to the ombudsman service includes complaints about services and products such as banking and credit, which are not provided by IFAs, so the comparison is not a fair one.
“The more relevant data to use relates to products and services provided by both IFAs and banks, such as investments and pensions. 14% of new cases referred to the ombudsman service in 2009/10 relate to this area - 22,278 cases out of a total of 163,012 of which 50% were upheld. Of these 22,278 cases, IFAs accounted for 12% of investment-related complaints, compared with 29% for the banks. On pensions, IFAs accounted for 28% of complaints and the banks 10%.
“… a complaint relies on the consumer becoming aware that there is a problem with the product or service and raising that with the firm. A consumer may never realise they have been advised to purchase an inappropriate product.
“The time lag between the advice being given and a problem developing, and often the firm no longer being in business when a problem is discovered, means that while complaints received can provide one indication of poor quality advice, an absence of complaints is not a reliable indicator of good quality advice.
“The evidence suggests that there are problems that need addressing, irrespective of the firm type (small or large) or advice service (independent or restricted).”
Commenting on this, Stephen Gay, director general at AIFA said: "However you look at the figures it is quite clear that IFAs have a commendable record on complaints relative to other channels, and the FSA knows this very well.
“When we consider the seriousness of the challenges facing the IFA community, not just in terms of market reform, but in the increasing costs of regulation, it would be more helpful for the FSA to direct its attention where the risk is greatest.
"IFAs enjoy high levels of customer trust and it is disappointing to see comments from the regulator which might undermine that well-deserved reputation. It is important that the FSA should offer analysis of relative risks but I would hope to see more constructive commentary in the future."
