Complaints Management Companies (CMCs), now regulated by the FCA, have spurred a big jump in SIPPs complaints with the number almost doubling to 3,811 in the last financial year, up from 2,000 in 2017-2018.
Around two thirds of all SIPP complaints are now brought to the Financial Ombudsman Service by a third party such as claims managers and law firms, up from a third in the previous financial year.
Overall the FOS received a total of 388,392 complaints in the last financial year with an uphold rate was 28%. It received 1,915 complaints about financial advisers, an increase of 14% on 2017-2018 with around a third of complaints upheld. Some 4,124 businesses had a complaint about them in 2018-2019, slightly up from 4,005 in the previous year.
The FOS says that third parties acting for consumers mainly submitted complaints in relation to perceived provider due diligence issues.
Data released by the Financial Ombudsman Service today showed that pension complaints were up by over 40% to 7,449 over the past year mainly due to the increase in complaints about SIPPs.
Around 60% of the SIPP complaints brought to the ombudsman service were about provider due diligence, while 15% were about the advice to transfer to a SIPP and invest in unregulated collective investment schemes (UCIS). The remainder were about general administration and advice issues.
The Financial Ombudsman Service also saw a 44% increase in occupational pension transfer complaints – from 553 in 2017-2018 to 798 in 2018-2019. The increase was largely due to people trying to take advantage of the Pension Freedoms and mainly about administrative delays rather than financial advice.
Caroline Wayman, chief ombudsman and chief executive of the Financial Ombudsman Service, said: “Investment and pension complaints are at their highest level in five years.
“While self-invested personal pensions can give consumers more control over how and where their pension funds are invested, consumers and advisers need to ensure this is the right vehicle for them.”
Greg Kingston, group communications director at Curtis Bank, said a continued increase in SIPP referrals to FOS was to be expected and was being “compounded” by Claims Management Companies who were charging fees up to 30% to make complaints. He added: “That cannot be a good outcome for the clients.”