“Based on the data from The Financial Ombudsman Service, we expect to see record numbers of mis-sale and suitability of advice complaints upheld in 2023/24.”
– Dr Greg B Davies, head of behavioural finance at Oxford Risk
Consumer complaints about mis-selling and suitability of advice are continuing to rise and are increasingly being upheld by the Financial Ombudsman Service (FOS), according to new research from behavioural finance analyst, Oxford Risk.
Suitability and mis-selling remain the most complained about issues for financial advisers and failure to address the growing regulatory focus will mean the industry heading for a new record high, Oxford Risk warns.
Most recent FOS data for 2022/23 shows 884 resolved complaints against financial advisers for mis-selling and or the suitability of advice, and almost two-thirds (62%) of all complaints were upheld.
That compares with 570 resolved complaints in the previous year when almost half (49%) of all complaints were upheld while the previous year saw 573 resolved complaints and 47% upheld.
Complaints about mis-selling and suitability are significantly higher than any other reported issue and are growing year-on-year. The second highest issue was consumer complaints around administration and customer service, with 503 resolved complaints and only 30% upheld in 2022/23 and the numbers are barely changed compared with the last three years at 29% or 30%.
On average, when looking at all consumer complaints against financial advisers in 2022/23, just two-fifths (41%) were upheld.
Dr Greg B Davies, head of behavioural finance at Oxford Risk, said: “Based on the data from The Financial Ombudsman Service, we expect to see record numbers of mis-sale and suitability of advice complaints upheld in 2023/24. The regulatory trajectory and directives from The Financial Conduct Authority (FCA) such as the new Consumer Duty show a growing focus on client investment suitability. Firms that seek to address the regulation in the spirit in which it is meant by following this trajectory will be better positioned to avoid these complaints than those that treat it merely as a tick-box exercise.”