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The Guidance Guarantee service due to be rolled out in April 2015 is to be provided by Pension Wise through the Pension Advisory Service and the Citizens Advice Bureau, as well as on line through www.gov.uk/pensionwise. However what avenue is there for complaint should the individual consider that the guidance is lacking or, indeed, plain wrong?
Unhelpfully, the Financial Ombudsman Service (FOS) will not oversee the service because the Guidance Guarantee is distinct from advice, and does not direct consumers to specific products. Similarly this is not currently a role for the Pensions Ombudsman. This is odd for the pensions industry as Pension Wise is providing financial pension information but is not being regulated in the usual ways.
Instead users of the government initiative Pension Wise will have recourse to an adjudicator should they have a complaint. If this cannot be resolved by the adjudicator then the Parliamentary and Health Services Ombudsman (PHSO) will take over the matter. The PHSO's role is to investigate complaints from people who allege they have received poor service from government departments, and the Pensions Schemes Bill (which has just undergone its third reading in the House of Lords) will place a statutory duty on the Treasury to provide Pension Wise.
Although the FCA currently states therefore it will have no enforcement powers in relation to the Guidance Guarantee providers, it will still be responsible for supervising the IFAs and the other providers and the potential difficulties arise, for example, where they give “guidance”, albeit not the Guidance Guarantee, during the course of their service to consumers. This leads to an artificial difference for the consumer about who to complain to about mistakes given in relation to their guidance. Some will be dealt with by the PHSO and some by the FOS and the difference between the two will be rather too subtle for most consumers, with potentially no neat cut off line in the consumer’s eyes as to how the error arose and who might have perpetuated it.
The FCA’s stance in relation to this type of complaint is currently far from clear, as its most recent guidance states:
We do not intend to be prescriptive about the complaints process in this standard. However, we want to ensure that consumers have access to a complaint management system that is fair, consistent and prompt and that at appropriate times, the availability of the complaints process must be communicated to the consumer.”
The FCA has stated its intention to make changes to ensure that an appropriate complaint management system is put in place. With major pension changes taking effect in less than 2 months’ time, however, the FCA is fast running out of time to implement such a complaint management system. Even when it has done so, it is unclear how such a system would interact with the PHSO. Having two complaint systems in place runs the risk of unnecessary complexity and inconsistent decisions being made in relation to complaints, and even different remedies and time limits applying – a situation which many would describe as unjust.
We await the promised new FCA guidance to see how this potential dichotomy will be resolved, and how fairness will be achieved for the consumer. Perhaps for political reasons, unlike the understanding reached between the Pensions Ombudsman and the FOS on personal pension complaints, it will be harder to achieve this for the PHSO and the FOS.
Among the remedies available under the PHSO, financial compensation is listed “for direct or indirect financial loss, loss of opportunity, inconvenience, distress, or any combination of these”. The Parliamentary Ombudsman ‘s Review of Government Complaint Handling suggests that only a small proportion of complaints tend to result in an award of financial compensation, however which further points to a potential “remedy gap” between the FCA and the PHSO.