FOS is not up to the job of monitoring financial advisers
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Given all the problems consumers are having I question whether the Financial Ombudsman Service is up to the task.
In one case a consumer complained about a low-cost endowment that had a shortfall. The network connected with the sale refuted the claim, saying the customer had experience of maturing policies. It maintained this position so the case went to the FOS which took three years to consider it.
In the end, the FOS adjudicator stated he did not doubt the consumer was advised the product would clear the mortgage.
Phrases used by FOS staff were: “it would not be reasonable to assume that the adviser sold you this policy in the knowledge that it might not achieve this mortgage loan amount” and “the mortgage loan amount was at the maximum and so was unlikely to afford a full endowment”.
These gems were followed by statements such as “his salary of £20,000 was a good salary at that time and the loan was within normal criteria so he could afford to take some risk” and “there are 12 years left so he has ample time to make up any shortfall”.
Despite a forged signature on part of the application form, no illustration ever being issued and the fact-find being discarded by the insurer the FOS sided with the insurer and the network, giving IFAs a get-out - no need to advise that any investment may fall short.
MP Sir John Stanley raised this case with chief ombudsman Walter Merrick and City minister Lord Myners. Both replied with general statements to the effect that the FOS’ decision is final. So that’s that then. Prize may vary from picture
RAY FEATHERSTONE
SENIOR MORTGAGE CONSULTANT
EXPRESS FINANCE CORPORATION
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