The number of consumer complaints over the misselling of the suitability of financial advice being upheld by the Financial Ombudsman Service have skyrocketed over recent years.
The number of complaints against financial advisers for misselling in the suitability of advice in the 2022/23 financial year reached 884, compared to just 570 in the previous year, analysis from Oxford Risk revealed.
To make matters worse, 62 per cent of complaints over the issue were upheld in 2022/23, a much higher proportion that previous years, which saw the number of complaints upheld hover below 50 per cent.
This is not the case for other types of complaints, such as administrative complaints, which actually saw a decrease from 687 to 503 last year, with a similar rate of complaints being upheld across both years.
On average when looking at all consumer complaints against financial advisers in 2022/23, just two-fifths (41 per cent) were upheld.
Issues over the misselling of financial advice over suitability issues have dominated headlines in recent months, after St James’s Place and other wealth managers have come under criticism for the issue.
It has been alleged that St James’s Place offered annual reviews of customer investments, despite the customers not necessarily needing it, and then did not provide the service.
Greg B Davies, head of behavioural finance at Oxford Risk said: “Based on the data from The Financial Ombudsman Service, we expect to see record numbers of mis-sale and suitability of advice complaints upheld in 2023/24.
“The regulatory trajectory and directives from The Financial Conduct Authority (FCA) such as the new Consumer Duty show a growing focus on client investment suitability.
“Firms that seek to address the regulation in the spirit in which it is meant by following this trajectory will be better positioned to avoid these complaints than those that treat it merely as a tick-box exercise.”