Complaints Management Companies (CMCs), now regulated by the FCA, have spurred a big jump in SIPPs complaints with the number almost doubling to 3,811 in the last financial year, up from 2,000 in 2017-2018.

The Chartered Institute for Securities & Investment (CISI) has raised concerns with the FCA at the decision to increase the Financial Ombudsman Service’s (FOS) compensation limit from £150,000 to £350,000, as it may have “serious unintended consequences for its member SMEs”.

The Financial Ombudsman has reported a rise in the number of SIPP complaints it upheld in its third quarter to 59% in the period from Oct to December.

The current level of funding and the financial structure of FOS will have to change, FCA chairman Charles Randell told the Treasure Committee today.

The FCA has written to SIPP firms to reiterate regulatory commitments following the judgement in the Berkeley Burke case.

The percentage of complaints about SIPPs upheld by the Financial Ombudsman Scheme rose sharply in the spring as the number of new complaints about SIPPs also rose sharply. 

The FCA is set to take over regulation of claims management companies and estimated the cost to be in the region of £17m.

Complaints about SIPPs to the Financial Ombudsman rose by 37% over the past 12 months but complaints about IFAs fell steeply at the same time, according to FOS data released today.

The Financial Ombudsman Service has enlisted former Which? executive director Richard Lloyd to head a review into FOS’s complaints handling.

The review was launched after the FOS was heavily criticised following an undercover investigation by Channel 4’s Dispatches programme, in March, which appeared to show that complaints were being handled by insufficiently trained officials.

The documentary suggested that some officials had to use internet search engines to find out about the products they were considering.

Mr Lloyd, who is vice chair of Money and Mental Health Policy Institute and is UK chairman of complaints handler Resolver, will lead the independent probe and his remit has also been revealed.

He is to be granted “full access and the resources necessary” to carry out a review and can go where the investigation takes him, with unrestricted access to FOS staff and all documents.

The review will be completed by the end of June.

A document published by FOS, in relation to the review’s parameters, read: “The review will assess the evidence presented by Dispatches in respect of each of the issues raised in the programme, to consider whether there are any matters of substance which should be addressed, although it will not be restricted to the issues raised in the programme.

“If the review finds matters for concern, it will seek to identify possible root causes for them (such as management action or inaction, cultural factors, staff objectives and performance management, organisational structure or any other underlying factor) and how they might be addressed.

“The review will also consider staff morale and the factors which contribute to it.”

It was also revealed that the investigation will look into the extent to which the current governance and arrangements for providing assurance about the work of FOS to its board, including whistleblowing procedures, “are applied effectively and consistently.”

As head of the review, Mr Lloyd will be able to make recommendations for strengthening governance and assurance arrangements in his final report.

Two firms have been told they must pay compensation to clients after unsuitable advice relating to a SIPP.