Financial Ombudsman Service review fees would quadruple!
The recent comments made by Natalie Ceeney, Financial Ombudsman Service [FOS] chief executive, during a Money Marketing interview has certainly motivated many financial advisers to make critical comments on financial adviser forums.The thrust of Ms Ceeney’s comments suggested that if FOS was forced to employ qualified adjudicators or if current adjudicators were required to gain financial qualifications, review fees would quadruple. The comment which appears to have angered financial advisers most was “We are not giving financial advice, we are judging. Judges are lawyers and not financial experts because that is the skill set.” One financial adviser blogger summed up financial advisers feelings as “Not only do adjudicators at FOS have no financial qualifications, neither do they have any legal qualifications and are not lawyers or judges as Ms Ceeney seems to suggest.”
Why is there a mis-match between the views?
Modern financial advisers have grown up in an environment of increasing educational standards. At the time of the Financial Services Act 1986 the Financial Planning Certificate [FPC] was the generally accepted the minimum educational standard. The FPC is a level 3 qualification under the Office of Qualifications and Examinations Regulation [Ofqual]. The expected standard is now Chartered Financial Planner [CFP] status. To obtain a CFP status a financial adviser needs to study and pass approximately a dozen examinations in various aspects of financial services and related subjects at Ofqual Level 6, equivalent to a Bachelors (first) Degree. Mortgage advisers have also seen the requirement for mandatory qualifications and an increasing minimum acceptable level of qualifications.
Demands increase on advisers
At the same time, there have been increasing demands on financial and mortgage advisers to commit to annual, continuing professional development [CPD] programmes. Financial products are often complicated and financial advisers have two main concerns:
- Many financial products are complicated. Financial advisers argue that the adjudicators who judge whether financial products have been mis-sold or not should pass the same formal qualifications that those who arrange them have to take.
- Financial Advisers are concerned that decisions made by different adjudicators are at times inconsistent. The view of the financial advisers who receive the results of the adjudications is that a greater consistency would be achieved if adjudicators obtained formal qualifications in the products that they adjudicate on.
Financial advisers are not persuaded by the increasing costs argument that Ms Ceeney puts forward as a reason for adjudicators not taking formal product qualifications. Consumer lobby groups share the view of financial advisers arguing that although cost has to be a significant consideration the quality of consumer outcomes is of greater importance.
Claims Management Companies requirements
Professional CMCs are not being left behind. It is should be obvious that it is not in the financial interest of a CMC to waste resources on claims that are not genuine or cannot be substantiated. I know many staff in many CMCs are taking the same examinations that financial advisers or mortgage advisers have to take in an attempt to provide a better service to consumers by raising the quality of the claim. Regulation reinforces this position. The Claims Management Regulator [CMR] rules for approved persons (Principle 4) states, “A business shall ensure that any staff or other people working on its behalf have the necessary training and competence to perform their duties.”
The PFCA is committed to developing a recognised CMR qualification
In addition to product specific examinations, the PFCA is committed to developing an Ofqual level 3 qualification which will be available to all those who operate within the financail claims management sector