Following the well-publicised events besetting St. James’s Place and increased scrutiny over recurring fees and delivering an adequate ongoing service, this month’s case study shows how we helped an IFA firm successfully defend a service and fee complaint their PI insurance didn’t cover.
Failure to provide ongoing service and request for fees to be refunded
Mr B filed a complaint against his financial advice firm seeking substantial compensation of £45,000 for a failure to provide an ongoing service. He also requested a refund of the servicing fee and initial set-up fee.
Because the IFA’s PI insurance didn’t cover fee disputes, had the case been taken to the Financial Ombudsman Service (FOS) and lost, the firm would have been liable to pay the full amount of compensation, plus interest and an award for inconvenience.
With their insurance provider refusing to underwrite any losses resulting from the complaint, the IFA firm approached Jencap to help navigate the best course of action.
They wanted to do the right thing and asked for our help to work out a fair figure that would settle the matter quickly. With just two weeks left to respond before the eight-week window expired, we had to act fast.
Mr B claimed that the financial advice firm failed to provide an ongoing service between 2018 and 2023, saying he had “no meetings”. For good measure, Mr B also threw in an additional complaint which, while trivial, the IFA wanted to answer fairly.
He requested a refund for both the initial “set-up” fee and servicing fees plus compensation, which he said amounted to £45,000.
While the claim was exaggerated, the IFA firm took a pragmatic stance, admitting that they could have done better for the client but were entirely confident that they had delivered a service, although it may have fallen short of their usually high standard.
Our task was to investigate fairly, and work out an appropriate settlement in order to deliver the redress that would close the matter as soon as possible.
We reviewed the client file and servicing schedule. To ensure we had all the facts, we also interviewed Mr B’s relationship manager.
To reach a satisfactory conclusion for both parties, we addressed four key areas.
1. The service proposition
Mr B signed the client agreement twice – once at the initial meeting in October 2018 and again when presented with a copy of the document in June 2019. The agreement stated there would be annual reviews and further meetings at the client’s request.
We pointed out that between August 2018 and June 2019, Mr B had four meetings with his adviser and/or relationship manager. We also highlighted four further meetings that took place between November 2020 and February 2023, two of which were held on Zoom due to Covid-19 restrictions.
2. Documentation of costs
With the costs of the service clearly detailed in the client agreement and the suitability report (SR), which Mr B signed, we found nothing to suggest that the complainant was unaware of the costs involved.
The costs and charges were also included in the sales literature and itemised in later statements.
3. Ongoing servicing
Between August 2018 and February 2023, the client met with the relationship manager in six face-to-face meetings and two Zoom calls. To clarify the situation, we provided a summary of each meeting. They included an introduction and review of Mr B’s existing portfolio, fact-finding, presentations of the SR, and multiple portfolio reviews.
4. Non-routine visit
After being unable to contact Mr B, the relationship manager made an ad hoc visit to Mr B in May 2023. The impromptu meeting lasted approximately 45 minutes. At no point did Mr B express any dissatisfaction with the service he had received.
Our findings showed that the complaint lodged against the IFA firm had little substance, but there was a small divergence from the agreed servicing and portfolio review cycle.
The IFA firm wanted to wrap the matter up swiftly and avoid a lengthy and distracting investigation with the FOS. And we were tasked to advise on an appropriate refund.
The firm accepted our advice as a pragmatic and commercial resolution. We drafted the Final Response, which included the facts of the matter and a settlement on the condition that the complaint be withdrawn within 14 days.
Mr B immediately accepted the offer.
Despite being instructed very late in the process, with our help, the IFA firm paid out a fraction of what they had expected, and the complaint was resolved within two weeks.
Delivering value is crucial and costs complaints going forward are likely to increase.
IFA firms should review their terms and servicing proposition to ensure they are delivering what the clients have paid for and expect. It’s also wise to review your PI insurance policy with your broker to establish what exactly is covered in the event of a complaint.
Get in touch
Jencap Partners ensure a pragmatic approach to dispute resolution. From evaluation of the complaint to the “final response”, and beyond, we take care of every aspect of the process and, subject to your PI insurance policy, your legal defence costs may be covered.
Find out more about how we could help you resolve a complaint by talking with one of our experts.