Since 1 May, individual investors with a beef against any member of Imro, the regulatory body of investment management companies, have been able to take their grievances to the Investment Ombudsman rather than go through a tortuous vetting process first. Not only will he adjudicate on the financial aspect of the complaint (within a snappy 12 weeks) but also on whether you deserve up to pounds 750 for shot nerves, cold sweats and general distress.
"This is not an easy way to make a few quid," warns the Ombudsman, Richard Youard, citing the case of a man who unsuccessfully claimed pounds 25,000 for 25 hours spent sorting out a minor wrangle.
The emotional compensation will be made only in genuine cases - say, where a mistake over pensions or life savings has caused real distress - and will be capped at pounds 750.
Presenting his annual report this week, Mr Youard said that complaints about badly performing shares continued to be an important part of his work. But in these cases, he warned investors, "it is rare for me to find in favour of the complainant. In general the complaints reflect a lack of understanding of the operation of the stock market."
He said that it was up to investors to be conscientious when dealing with their investments. In one instance, a man had finalised details of an investment plan in a pub and then handed the documents to his wife for signature through the car window while she was waiting on a yellow line. This sort of approach could not succeed, he said.
The biggest area of misunderstanding remains the charges levied by investment companies. Mr Youard urged the companies to make it crystal clear how their charges will affect an investment, especially if they bite in the first year.
But he warned investors to beware of the gimmick where investment firms offer to cancel charges as a form of compensation. "This is a fob-off," Mr Youard said. "All it does is eliminate the profit the company would have earned. It has nothing to do with compensation."
The period of time within which a complaint can be brought before the Ombudsman - who deals with complaints of up to pounds 100,000 - has also been extended from 18 months to three years.
There is no time limit for pension transfer complaints. Until now only the most difficult cases were dealt with by the Ombudsman but the number of cases is expected to triple. The Ombudsman dealt with 91 complaints in the year to March.
Up to 30 per cent were related to the sale of investment plans, with personal equity plan sales and portfolio management the next greatest source of irritation.
The average claim works out at pounds 5,815 (pounds 6,127 last year).Reuse content