The mis-selling and suitability of advice made up 61 per cent of all new complaints about financial advisers to the Financial Ombudsman Service (FOS) in 2023/24, analysis from Oxford Risk has revealed.

The most recent FOS data showed that 1,459 new complaints were made about financial advisers in 2023/24, including 892 relating to the issue of mis-selling and suitability of advice (61 per cent).

This represents a 13 percentage point increase compared to the previous year, when there were 884 complaints relating to mis-selling and suitability of advice from 1,823 new complaints about financial advisers.

Oxford Risk urged advisers to make greater use of technology to deliver more personalised advice and to increase client engagement, with the aim of providing good outcomes and minimising the risk of FOS complaints.

The firm argued that the current market volatility further increased the importance of advice suitability.

The percentage of suitability of advice complaints upheld was 57 per cent in 2023/24, down slightly compared to the 62 per cent upheld in 2022/23 but up from the 49 per cent upheld in 2021/22.

Complaints relating to administration and customer services were the second most common in 2023/24 at 418, but previously made up more complaints than mis-selling and suitability in 2021/22.

Defined benefit pension transfers not into SIPPs were the most complained about product in the 2023/24 figures, accounting for 368 complaints, ahead of 241 relating to UCIS and non-standard investments.

Other product areas in the top five included standard investments (169), personal pensions (155), and stocks and shares ISAs (123).

“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,” Oxford Risk chief client officer, James Pereira-Stubb.

“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.

“It is possible that the ongoing reliance on Attitude to Risk Questionnaires is contributing adversely to investor risk suitability and overall dissatisfaction.

“This approach has never been fit for purpose, and financial advisers deserve a better, more holistic solution.

“Establishing a suitable risk level requires combining an investor’s financial circumstances and financial knowledge and experience of investing with their financial personality.”

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