The FOS has reported only a slight rise in complaints about investment-linked products in latest financial year, but said there had been a significant increase in problems reported by people who had taken out self-invested personal pensions (SIPPs).
The FOS said 75% of the complaints about SIPPS involved advice to invest in an “unregulated collective investment scheme” (UCIS) within a SIPP, which are now restricted to all but a very few types of investor.
“In some of these investment cases, we found that the business’s appointed representatives had acted outside their authority. As a result, investors were left unprotected – and in some cases, lost all their money,” the FOS said in its report for the year to 31 March 2015.
“Many people told us that they simply didn’t understand the risks involved with investing in UCIS. In some cases, we found that the financial adviser hadn’t highlighted the nature of the investments. In a few instances, the advisers didn’t seem to appreciate that while the investment itself wasn’t regulated, the advice they gave about it was. “
“Many people told us that they simply didn’t understand the risks involved with investing in UCIS."
The FOS said new complaints against IFAs remained low overall at 1%, although this rate has risen slightly from the 0.5% in the previous year. It said 42% of the complaints against IFA’s were upheld.
Guarantee bond complaints up
In terms of investment-linked products, overall complaints rose 1% in the last year though complaints about guaranteed income bonds, which promise to provide a fixed income over a fixed term, were up 32% while problems on “with profits” bonds fell 14%.
Structured products saw a 29% drop in complaints as did unit-linked bonds. Mortgage endowments, which have long been a source of large complaints, saw a 28% decline in new cases over the financial year.
