In its 2024/25 Plans and Budget Consultation paper out this week the complaints body said it received fewer complaints about BSPS than it expected this year and expects to see “very few” in 2024.

The forecast suggests that BSPS cases, related to bad advice to transfer pension pots out of the BSPS scheme, may have peaked.

The FOS Consultation Paper says: “Complaints about investments and pensions (are expected) to remain relatively stable with fewer complaints than expected about the British Steel Pensions Scheme (BSPS) consumer redress scheme this year, and we expect to see very few next year.”

BSPS pension transfer cases have dominated the financial trade headlines this year with a flood of cases involving failed advice firms, who gave bad advice to BSPS members, being considered by the FOS sister body the Financial Services Compensation Scheme.

The FSCS is currently dealing with more than 40 failed advice firms which gave bad advice to BSPS members. This week the latest BSPS adviser firm to be declared in default by the FSCS was Huddersfield-based Inspirational Financial Management Ltd (FRN223511) which recently went into administration. 

The FSCS told Financial Planning Today it has so far paid out £72m in compensation on all BSPS cases based on total loses of £105m, with £33m of losses uncompensated due to caps on claims.

In its Annual Report, also out this week, the FOS confirms the scale of BSPS cases.

It said the British Steel Pension Scheme (BSPS) redress scheme A saw a total of 538 people contacting the FOS about defined benefit transfers from the British Steel Pension Scheme (BSPS).

With the number of BSPS cases now apparently past the peak, the number of complaints about investments and pensions, which have soared in recent years, looks to be on downward trend, according to the FOS.

In its Annual Report, the FOS said it dealt with 14,098 cases during the past 12 months involving investments and pensions, nearly 2,000 fewer than the 15,900 it expected. It also expects the number of investment and pensions cases it deals with to drop slightly to 13,900 in the coming year.

On average the FOS upheld 35% of the 209,471 cases it resolved in 2022/23 but this masks a huge variety in uphold rates across different types of cases. In the ‘mini-bond’ sector, recently the source for a large number of complaints, it upheld 86% of cases, one of the highest levels of any sector.

On mini-bonds the FOS said the complaint upheld percentage was very high and it found: “..problems with the way issuers have promoted the product – misleading consumers about the risks, and failing to follow the FCA Handbook."

The FOS also found that in many cases the mini-bonds provided to consumers were inappropriate due to lack of investor experience to assess risk and the businesses "should have rejected the application."

In insurance it upheld 31% of complaints; in mortgages, pensions and investments it upheld 28% of cases. In investments alone it upheld 30% of cases.

FOS Year at a Glance Infochart

Source: Financial Ombudsman Service

The FOS unveiled plans this week to reduce its case fee from £750 to £650 but to consider begin charging Claims Management Companies fees for the first time. Seven in ten businesses, whose customers referred complaints to the FOS, did not pay any case fees at all in 2022/23 due to the annual free case allowance of three cases per firm, the FOS said.

The FOS said it also expects to cut its budget by about £60m in the coming year by using reserves from higher than expected income.

The FOS predicts its total projected income will be £191m for 2024/25, based on its proposed level of resolved cases. It said this was a £51m reduction against the 2023/24 latest forecast income of £242m and an effective £60m reduction when inflation and resolution volume increases are taken into consideration.