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Ombudsman awards pounds 2.5m to investors

The Personal Investment Authority Ombudsman, the new independent watchdog for savers, awarded more than pounds 2.5m last year to investors who complained about the activities of life companies and financial advisers.

In more than half the cases considered, the Ombudsman, Stephen Edell, found fault in the activities of PIA member firms, at least in part. 47 per cent of cases led to orders of compensation against PIA members.

The scale of the awards, ranging between pounds 25 and pounds 90,000, followed more than 17,500 inquiries and complaints faced by the PIA Ombudsman's Bureau in 1995/96, the first full year it has been in operation.

Mr Edell is keen to double the amount that can be paid out to investors to pounds 100,000. He yesterday warned that that on present evidence the scale of complaints was likely to rise.

"The number of cases has increased significantly over the past year. I anticipate that this [upward] trend will continue and our aim over the next 12 months is to carry on providing a fair and efficient mechanism for the resolution of complaints."

Mr Edell said that of the awards made to complainants, six had involved sums above pounds 50,000.

Although there is no legal obligation on companies to honour awards above that amount, all six had done so.

Last year, the PIA Ombudsman played down suggestions that some firms might decide not to pay this amount. However, the Ombudsman's Council, the watchdog's ruling board, signalled an about-turn over whether the compensation ceiling which firms are required to pay should be doubled.