Just. Walk. Away. 

This post is prompted by the combination of a case I am currently working on, and the recollection of a historic case which involved a dispute with the FOS about a spurious customer complaint (against an ex-Member Firm).  In that latter example, the contentions were so pronounced, that we had retained the services of arguably the leading UK law firm, specialisting in such matters.  It was, in the end, a relatively small comfort to discover that our concerns about the lack of intellectual rigour and veracity were shared by the experts:  they confirmed that, on almost every point of (factual and regulatory) detail, the FOS were profoundly in error, but they also confirmed that proving that this was the case would change very little.  And so it turned out.  In our experience, there is little sign of any improvement in that respect, judging by the files we have recently reviewed.  Readers may care to review an article we published in 2013 on this very topic, based upon our disquieting experience at a FOS 'Outreach Event'.  I remain convinced that, if regulation is to have any kind of intellectual rigour, it needs to be based on something more substantive than habit, whim and ideology.

Fast forward to the present day.  In the latest case, our Member Firm provided investment advice in 2013 - the kind of advice which is so pedestrian and well-validated, that no sane person would question it, the kind of advice which undoubtedly would never have given rise to a complaint.  The client, being possessed of a wilful mentality rejected that advice, and used an external firm which recommended a series of speculative investments, all of which failed to varying degrees, the last succumbing to its own toxicity in 2016.  Our Member was never privy to that advice, having been 'warned off' by the client and the third-party DFM.  The DFM filed for voluntary liquidation at the end of 2016, the process completing earlier in 2017 after which, the client complained to the FOS about our Member Firm's advice in relation to these investments.  In the process of our investigation, it turns out that the client is a chum of one of the principals within the failed DFM firm.  After reviewing the file, the FOS is minded to support the complaint against our Member.

The whole thing, quite clearly, stinks.  The clear-thinking reader will no doubt be perplexed at the outcome, and will quite rightly ask if there is any other factor which might lead to this decision.  And, I am afraid, there is.  The Member Firm did advise on the transfer of two rather mediocre PPPs into a SIPP, hoping that he would be allowed to handle the investment element, and then reluctantly acceded to the demands of client and DFM.  What happened thereafter had nothing do with him, but this subtlety in the advice process seems not to matter to the FOS.

There is more to this case, and the more deeply one looks at the history, the clearer it becomes that in its eagerness to arrive at a redress outcome, the FOS is choosing to avert its gaze from the complexities that undermine the easiest and simplest potential conclusion.  One might expostulate and fulminate against the resulting injustice, but our experience is that this kind of culture rarely supports argument based upon a nuanced reading of the data - so what to conclude?

  • The 'standalone SIPP', without the attaching investment advice and implementation, is a dangerous thing for an Adviser to get involved in;
  • Advisers want clients who will listen to, and follow, their advice - rather than those which will resolutely pursue some other approach;
  • The FCA's guidance on 'insistent clients' is one of those grey areas where you can expect little sympathy from the FOS;
  • The FOS is not really interested in the facts, or in proportionality, or in apportioning responsibility where it is due - it simply wants to close the file.  This means that Advisers ought not to expect a reasoned or reasonable consideration of cases which are perhaps less than entirely straightforward;
  • If you encounter client behaviours redolent of what I have described above, take my advice:  just walk away.
Related reading
On consolidating legacy pension arrangements
On managing SIPP advice safely
On working with other advisers
Kevin Moss, 11/08/2017