Complaints are an issue that no intermediary wants to think about, but is a factor that cannot be ignored. According to the Financial Ombudsman Service, f
ollowing the advent of regulation, the number of complaints made against intermediaries has grown at a ‘steady but fairly moderate’ rate.
This can be put down to rising consumer knowledge of the financial market, while the increased diversification of brokers and their offerings should not go un-noticed. While brokers have been keen to explore other avenues of income, they need to be certain the correct procedures and guidelines are being followed.
Centring on advice
In a report discussing complaints against intermediaries, the FOS admitted most of the complaints centred on the areas of advice, charges and administrative failings, all areas that the Financial Services Authority (FSA) has commented on in the past.
Despite a rise in the number of complaints against intermediaries, the Ombudsman confirmed that most cases were dealt with at an early stage, a scenario repeated with complaints towards mortgage lenders.
Most brokers also welcomed the opportunity to discuss complaints that had been received and how to resolve them. Much of this work of discussing complaints was completed with case handling staff, and reported a positive response from all those involved.
However the Ombudsman confirmed that a number of smaller firms needed more information from the FOS than larger ones, particularly if they had no experience in dealing with the Ombudsman. It also stated its concerns that a number of intermediaries had difficulty in presenting their arguments ‘with the necessary degree of professional detachment,’ particularly in the instances in which the individual responding to the claim was also the subject of the complaint. The Ombudsman said this lack of objectivity had not affected the outcome of complaints but had ‘sometimes had an adverse effect on the length of time it had taken to achieve that outcome.’
The FOS also reported that a number of small firms were less understanding about the role of the FOS and suggested that a number of intermediaries were unsure of how to present their case. Some also missed the timeline of responding to the Ombudsman’s requests, while others focused their attention on the wrong things.
TSUB
To combat the perceived lack of knowledge among the small intermediary firms and one-man bands, the FOS issued regular updates on the progress of the complaint, much like the service the customer, or complainant received, allowing the broker to see any case developments as they took place.
Transitional complaints
While the FOS reported a steady stream of new complaints it confirmed it was still in the process of dealing with transitional complaints made after intermediaries came under the FOS’ compulsory jurisdiction, but relating to events that took place before jurisdiction occurred.
If the Mortgage Code Arbitration Scheme (MCAS) previously covered the firm, the Ombudsman could deal with a complaint by applying the standards upheld by the Code. However, the Ombudsman also said some consumers had failed to understand firms that had not been covered by the arbitration scheme could not be commented on, with the Ombudsman unable to consider the complaint. “Some consumers find it difficult to understand this and can be reluctant to accept that we cannot help in their particular case,” the Ombudsman reported.
In instances where the FOS dealt with transitional complaints, the Ombudsman revealed many firms neglected to hold or retain paper records about discussions with customers about what was agreed. The FOS stated that such records of conversations would prove ‘very persuasive evidence’ and urged firms to take more time in reporting any discussions with customers. However some firms found it difficult to understand why the Ombudsman asked for written records, as there was no regime requiring records to be kept at the time.
Whenever a transaction had originally taken place, however, the Ombudsman stated it would refer back to its usual approach of ‘decide what they think probably happened,’ taking into account information and evidence that the parties provide.
Robust record-keeping
It is evident that intermediaries need the correct procedures and operations in place to deal with the eventuality of a complaint. While most complaints are dealt with at the earliest opportunity, intermediary firms need to have robust record-keeping in place to collate any evidence if a complaint is made against the firm.
Small firms have to pay particular care in the collating, and filing of information. The regular updates by the Ombudsman should go some way to helping intermediaries understand the complaint handling process and ways to deal with the Ombudsman should a complaint have been made against the intermediary firm.
