Slowing investment markets have resulted in a spike in complaints against advisers to the Financial Ombudsman Service’s (FOS’s) investment, life insurance and super (ILIS) division this year.
The division, formerly the Financial Industry Complaints Service (FICS), has recorded a 43 per cent year on year increase in complaints from investors this calendar year to September 30.
Investors lodged 1,238 new complaints in the nine months to September 30, compared to 852 complaints in the nine months to September 30, 2007, and 1,127 complaints for the whole of calendar year 2007.
Alison Maynard, executive director of the new FOS division, now commonly known by its acronym ILIS, said the “greater numbers of complaints are to be expected because of what’s happening in the markets”.
Maynard is expecting complaints to “stay high during 2009 as well, because realistically, we have such a lag time between events happening and complaints”.
She is “not expecting the rate of complaints to grow beyond what we’ve been experiencing this year, despite the extreme volatility of the past few weeks”.
“I think our numbers are already high for July, August and September this year, and that’s because investors have received their end of financial year statements and updates.”
However, she acknowledged that the rate could be exacerbated by the imposition of new monetary limits, effective from July 1 this year, along with the incorporation of FICS into the FOS.
The limit on complaints related to life insurance has been increased from $250,000 to $280,000 and from $100,000 to $150,000 for complaints other than life insurance.
She said it “could happen that there would be some increase in new complaints as a result of the imposition of new monetary limits”.
“We know that much from the number of investors we have been turning away because their complaint was outside our (previous) monetary limit.
“We do know those people would have used us if we had a higher limit,” she said.
Maynard added that a comparable spike in complaints has been recorded this year to September 30 within ILIS’ two fellow divisions within FOS.
She said complaints to the banking division have “increased by about the same amount we have recorded while [the increase in complaints to the general insurance division has been] about 25 per cent”.
