Watchdog braced for wave of complaints

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The Independent Online

The Financial Ombudsman Service says it is preparing itself for a new wave of complaints from clients who believe that their financial advisers or portfolio managers did not get them back into equities quickly enough after the end of the bear market.

The Financial Ombudsman Service says it is preparing itself for a new wave of complaints from clients who believe that their financial advisers or portfolio managers did not get them back into equities quickly enough after the end of the bear market.

The FOS says that after spending much of the past few years dealing with complainants who felt their advisers took too many high risk bets during the technology bubble - losing them more money than was necessary - it now fully expects to hear from those who believe their managers were too cautious coming out of the bear market.

The UK's personal finance complaints culture has continued to develop at an exponential pace over the past year, with the FOS caseload rising to almost 100,000 in the 12 months to 31 March, an increase of more than 57 per cent on the previous year.

While the majority of these have been in relation to accusations of endowment mortgage mis-selling, split-capital investment trusts and precipice bonds, there appears to be a growing number of people complaining for more trivial matters, and in relation to increasingly small amounts of money.

Last year, the FOS published details of one man's complaint against a pension company's policy of rounding-up balances to three decimal points. He said the move had cost him one-third of a penny, as well as any growth which he may have received on the amount over time. Other bizarre recent cases include a complaint against an insurance company which refused to pay out £12,000 in damages after a prize-winning parrot died by flying into the side of its cage.

David Cresswell, a spokesman for the FOS, said: "Over the last three years, the complaints were that managers were holding technology stocks for too long. But we're now expecting complaints over their managers not moving swiftly enough to get their clients back into equities.

"Clearly people would have a right to complain if they felt their portfolio manager hadn't acted sufficiently quickly.

"I'm not saying we would uphold [these complaints], but we'd have to look at it carefully. It would depend on what your contract said."

Mr Cresswell added that, similarly to its handling of complaints over managers taking too much risk in the bull market, it would have to consider any new cases in the context of how other managers acted at the end of the bear market.

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