Annuity complaints fall to pre-pension freedom levels

Tom Ellis reports...

The number of annuity-related complaints handled by the Financial Ombudsman Service (FOS) between April and June has dropped to lower levels than before pension freedoms were introduced, while all other pension complaints were on the rise.

In the four quarters prior to the announcement of the pension reforms by then-Chancellor George Osborne in April 2014, the average number of new annuity cases was 150 per quarter. Between April and June this year the FOS received 128 new cases.

The number of new annuity complaints was still rising this time last year but, more than two years after Osborne’s reforms were announced, they have now fallen to pre-pension freedom levels.

A complaint is only handled by the FOS if it is unsettled at firm level.

The uhold rate of annuity complaints also dropped to 13%, down from a 20% average of cases upheld in the 2015/16 financial year.

Personal pension complaints were on the up though – 461 new complaints were received in the first quarter of this financial year, compared with 294 new complaints made in the corresponding period last year – an increase of 57%.

That said, the number of personal pensions complaints averaged 380 per quarter in the 2015/16 financial year.

The FOS also saw self-invested personal pension (SIPP) complaints rise from an average of 274 per quarter in the previous financial year to 328 in the first quarter this year. Last Q1 had seen a quarter fewer cases, at 261.

For its part, the Financial Services Compensation Scheme (FSCS) reported it saw an increase in claims values against life and pension advisers of 138% in 2015/16.

Income drawdown complaints were bouncing back too. The FOS said 47 new complaints were received last quarter whereas it received an average of 40 cases per quarter last year. In Q1 last year it had seen 42 new cases.

In contrast, investment ISA complaints were down 9% on the previous period, with 292 new cases received in the last quarter compared with an average of 321 over the last year. The success rate has remained much the same, however – at 36% compared with 37% on average in the preceeding quarters.

The FOS received a total of 81,709 complaints between April and June this year – 45% of which concerned payment protection insurance (PPI). That overall figure is down on the number for April to June 2015 (89,935) and also lower than the quarterly average for the last financial year (84,835).