Mis-selling and suitability of advice made up nearly two thirds (61%) of all new complaints about financial advisers to the Financial Ombudsman Service.
Analysis of FOS data by behavioural finance experts Oxford Risk shows that in 2023/24, a total of 1,459 new complaints about advisers were made, with 892 relating to mis-selling and suitability of advice.
It marks an increase from 48% in the previous year, which saw 1,823 new complaints, with 884 concerning mis-selling and suitability of advice.
However, Oxford Risk said the percentage of suitability of advice complaints upheld in 2023/24 fell to 57% from 62% the previous year, but ahead of the 49% of complaints upheld in 2021/22.
Other major issues behind FOS complaints include administration and customer services and charges, fees and commission.
Meanwhile, defined benefit pension transfers not into SIPPs were the most complained about product in 2023/24, accounting for 368 complaints, ahead of UCIS and non-standard investments (241 complaints). Other product areas in the top five included standard investments, personal pensions and stocks and shares ISAs.
Oxford Risk said the data also showed that in 2023/24, 205 resolved complaints to FOS related to advice and events from more than 15 years ago, with nearly half (45%) upheld.
James Pereira-Stubbs, chief client officer at Oxford Risk, said: “Suitability of advice is clearly a major issue in the FOS figures and one that the financial adviser industry needs to address particularly given current volatility.
“It is important to bear in mind that complaints to the FOS about financial advisers make up a very small proportion of total complaints, and advisers deserve tools that make good practice and regulatory compliance easier with a tighter focus on client investment suitability.”
Oxford Risk said it is possible that the ongoing reliance on Attitude to Risk questionnaire could be adversely contributing to investor risk suitability and overall dissatisfaction. The firm said the questionnaire has “never been fit for purpose” and advisers require a more holistic approach.
It is urging advisers to make greater use of technology to deliver more personalised advice and to increase client engagement with the aim of delivering good outcomes and ultimately avoiding the risk of FOS complaints.
According to Oxford Risk’s recent white paper, using AI and machine learning to engage investors can improve financial outcomes and grow assets under management for advisers by 10% or more.
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