The UK’s Financial Ombudsman Service (FOS) created 922 new Sipp complaint cases between April and June 2018, an increase of 77% from 521 during the same period last year.
Of the Sipp complaints received during the first quarter of the financial year, 137 were passed to an ombudsman.
The cases can go through a two-stage process, with an adjudicator initially reviewing the complaint.
If the parties disagree with the adjudicator’s findings, it is then passed to an ombudsman for a final decision.
The remaining 785 cases were either settled at adjudication or were not resolved as of 30 June.
The upheld rate was 59%, up from 50% a year ago.
Key areas of complaint
Personal pension complaints remained relatively static, with the number of new cases dropping to 436 in Q1 2018/19 from 438 during the same period a year ago.
The decreasing popularity of annuities can be seen in the recent ombudsman figures, which reported a 34% drop in the number of new cases.
The upheld rate, however, increased to 19% from 14% in Q1 2017/18.
There were 55 new income drawdown cases, up from 45 a year ago. The upheld rate rose to 47% from 35%.
Beware scammers and fraudsters
The latest quarterly publication from the FOS focused on fraud and scams and comes shortly after the Financial Conduct Authority launched its Scamsmart campaign.
It also coincides with figures released by UK Finance that show banks and card companies prevented nearly £1.5bn ($1.9bn, €1.67bn) from being lost to fraud is 2017.
Pat Hurley, lead ombudsman and director of casework at FOS, said: “The rapid evolution of technology means people are able to engage with financial services in ways they couldn’t have imagined just a few years ago.”
He said the speed at which technology is emerging and changing consumer behaviour and expectations “can provide a fertile ground for scammers who are always moving with the times too”.
What constitutes gross negligence?
“It’s understandable that, in many cases, neither a bank nor their customer feel they’ve done anything wrong. People who’ve fallen victim to scams will often tell us they felt they had no option but to do what they were told by the scammers,” Hurley said.
“At the same time, banks often tell us they believe their customers have been ‘grossly negligent’ in handing over personal details to scammers – enabling the scam to occur.
“But gross negligence isn’t a term to be used lightly. When someone contacts us after losing money to a scam, we’ll look to see if they actually authorised the transaction. In assessing this, we’ll be trying to ‘recreate the scene’,” he explained.
“If we think it’s more likely than not they didn’t authorise the transaction, that’s when we need to consider whether they were grossly negligent – as part of deciding what’s fair and reasonable. And one of the key things we’ll think about will be the environment that was created by the fraudster for the consumer – essentially the ‘spell that was cast’.
“As financial services change, and scams evolve with it, what’s considered grossly negligent behaviour will inevitably change too.”
*The original version of this story stated that Sipp complaints had risen 43% – this was incorrect
