The latest complaints data from the Financial Conduct Authority (FCA) makes sober reading for investment platforms.
The watchdog recently reported that complaints in the first half of this year were double that in the pre-pandemic second half of 2019, rising from 8,431 to 17,090.
The increase perhaps isn’t surprising given the huge number of customers platforms have welcomed this year, particularly at the beginning of the year as the combination of wild market swings, excess savings and lockdown boredom drew people to the markets.
But it does show that platforms, in aggregate, didn’t have a sufficiently robust infrastructure to welcome so many new customers without affecting their service levels. While it was fair to accept disrupted service as firms pivoted to remote working in spring 2020, the surge this year suggests the rise in complaints cannot just be put down to lockdown teething issues.
Interestingly, the rise in platform complaints comes as total complaints across financial services have been falling. Across the whole industry complaints were 7 per cent lower in the first half of this year than in the second half of last year, and the lowest level recorded since 2016.
At a firm level, AJ Bell appears to have had a notable rise in complaints. The number of complaints per 1,000 customers rose from 2.07 to 4.23 for investment products and from 1.01 to 4.56 for pension products between the second half of last year and the first half of this year. This is partly down to the fact its financial year begins in October, so the effects of 'Pfizer Monday' (9 November 2020), when all major platforms had disruptions, are recorded as complaints in the first half of this year.
AJ Bell’s number of complaints in proportion to customer numbers is still lower than a number of its peers. Interactive investor, Fidelity Personal Investing and Halifax Share Dealing received complaints of 6.23, 8.17 and 8.35 per 1,000 customers for pension products in the first half of this year. This compares with 0.03 for Hargreaves Lansdown.
Digging further into the data, complaints which specifically relate to 'delays/timescales' for investment products have seen a notable jump. While the regulator doesn’t provide any more data on the specifics of the complaints, I would love to know how many of these relate to transfer issues – my guess would be a lot.
The chart below shows a 70 per cent jump between the second half of last year and the first half of this year.
On the transfer issue, I’m pleased to report that STAR (Speedy Transfers and Re-registration) – the industry body set up to improve transfers (which I wrote about in May) – recently confirmed it is on track to start accrediting firms in the first quarter of next year, which should give us a clearer picture of how bad the problem is and put more pressure on the weak links to sort things out.
Many industry participants are sceptical that the industry will be able to fix the problem without regulatory intervention – but at least things are moving in the right direction.