With the football season upon us, I read with interest that the Football Association is introducing a retrospective ban for diving from next season and it couldn’t come a moment too soon.
Apparently, there will be two-match bans for players found guilty of diving or feigning injury and be known as “successful deception of a match official”.
Now it’s not often that the financial services industry can learn something from professional football but it did occur to me that this may be just one of those rare occasions where we could.
I was at a conference the other day, chatting to another self-invested personal pension (SIPP) provider about a client complaint case that he just concluded. It was an advised case and the adviser’s recommendation was to invest the bulk of his SIPP assets into a discretionary fund management portfolio (DFM) at an agreed level of risk.
A small element of the portfolio was exposed to commercial property and this element outperformed the other parts of the DFM. The client was very happy with this element of the portfolio and personally sought out and attended a presentation by the property fund manager, unbeknown to his adviser, he then asked that a supplementary investment be made into the property manager’s fund, using a cash pension contribution that he made for that express purpose.
The adviser counselled his client against this as it would distort the asset allocation model, reduce the diversification and increase his investment risk. His advice was ignored.
So, the investment proceeded as a ‘client choice’ and the adviser documented the advice process and recorded the client as ‘insistent’ and the transfer went ahead.
Three years on, the property fund went into administration, assets are (temporarily at least) locked down and under the control of the administrators. The value of the assets is yet to be determined but early indications are that these have been greatly diminished. The client was less happy than before.
At this point the client took a dive.
The client decided to officially complain to the adviser, citing that he was just a ‘poor old lay-person’ and should have been protected from the loss and that the adviser shouldn’t have allowed the investment.
The Ombudsman ruled in favour of the adviser, believing the appropriate risk warnings had been issued; the client was a sophisticated investor who understood that he was giving discretion to the DFM Manager and had unilaterally decided to add to the property investment despite clear advice to the contrary.
Red card
As this route was closed, the client decided to blame the SIPP provider as they were trustees to the SIPP.
So he dived again.
The SIPP provider received a complaint from the client that they rejected, and it was also rejected by the Ombudsman, not unsurprising as the client had signed a trustee’s minute, a further application form and a BACS authority.
Common sense prevailed but at a cost, the SIPP provider was embroiled in a 6-month defence of their peripheral position in the whole debacle and the adviser for over 12 months.
So what’s the solution? Well, how about the following?
- Clients should have the right to complain where there is a legitimate reason
- The client should decide who his complaint is against and not subsequently divert it
- The claim should be passed to an independent ‘Claims Panel’ for a preliminary decision as to whether indeed there is a case to answer
- The ‘Claims Panel’ would be industry funded, including an adviser, an Investment Manager (or other relevant expert) and a lawyer
- If the panel feels there is a case to be answered, the firm is then requested to provide its response
- If the complaint is rejected and the client remains unhappy, the case is referred back to the ‘Claims Panel’ for a final judgement
- Either side can refer up to the Ombudsman once the Claims Panel has issued its final judgement but at the clients expense which would not be recoverable
Genuine complaints should not be discouraged but we should root out vexatious complaints from those prepared to take a dive and waste everyone’s time. These proposals should greatly speed up the complaints process whilst simultaneously filtering out those seeking to blame anyone and everyone without good cause.
An expert panel will provide a high standard of scrutiny and will possess the experience to fully understand the issues at play.
I’m already looking forward to the new season!
Graham Muir is director at Talbot and Muir
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