Actionable Insights for IFAs & Compliance Officers
Over 2,000 FOS adjudications on pensions and investment advice show exactly where complaints get upheld, and what separates firms that can defend their advice from those that cannot.
A Summary of FOS Pensions & Investments Adjudications (Jan 2024 - May 2025)
Executive Summary: The Three Critical Takeaways
For busy IFAs and compliance officers, the data and trends distil into three critical points.
The Big Picture: Complaint Volumes and Outcomes
The overall trend is one of consistent pressure. Much of the H2 2024 rise was in banking, but DC pensions and investment complaints rose too, even as DB pensions cases tailed off.
| Metric | Figure | Note |
|---|---|---|
| Uphold rate, pensions and investment cases | ~46% | Significantly higher than the FOS average |
| DB transfer uphold rate | 60-70% | The most heavily scrutinised category |
| CMC-brought complaints upheld | ~25% | Lower success rate, suggesting many are speculative |
| Consumer-brought complaints upheld | ~37% | Higher success rate than CMC-driven complaints |
Why complaints are upheld: the most common failings
The data gives a clear picture of what the FOS considers poor practice. Firms must focus compliance effort on these areas.
Unsuitable advice
By a wide margin the most frequent reason for an upheld complaint, with over 600 cases in the analysis falling into this category. It is the root cause of most high-value redress awards.
A recurring scenario involves BSPS members advised to transfer out. One FOS decision cited a 41-year-old client who was "worried and unsettled." The adviser facilitated the transfer, but FOS found the advice unsuitable, breaching rules on treating customers fairly (Principle 6) and clear communication (Principle 7). The firm's defence that the client was insistent was dismissed.
Actionable insight: the suitability of advice must be demonstrably in the client's best interests. This requires a deep understanding of their circumstances and objectives, and a thorough analysis of alternatives.
The 'insistent client' trap
A common but often unsuccessful defence is that "the client wanted to do it." The FOS and FCA take a dim view of this argument, especially for high-stakes decisions like DB transfers.
Unless the formal insistent client process is followed perfectly, the defence is unlikely to succeed. Even then, FOS can still uphold a complaint if the outcome was foreseeably harmful. An adviser's professional duty may require them to refuse to transact, rather than facilitate a poor decision.
Actionable insight: using the insistent client process to abdicate responsibility has a low likelihood of success. For high-risk transactions, the safest course of action is often to decline the business, and to document any insistent client interaction meticulously, including a clear written recommendation against the course of action.
Inadequate risk profiling and due diligence
Many complaints centre on a mismatch between the client's risk profile and the recommended investment, particularly where non-standard or unregulated assets are involved.
Cases are frequently upheld where cautious clients are placed in high-risk portfolios. Complaints involving unregulated assets held within a SIPP for cautious clients are almost always upheld: SIPP operators and advisers are expected to conduct thorough due diligence on the investment and on any unregulated introducers.
Options UK Personal Pensions (formerly Carey Pensions) frequently accepted business from third-party unregulated introducers who advised clients to move into unregulated investments facilitated by Options UK. Complainants had a 100% uphold rate in the 167 cases adjudicated in the period. Options UK also lost a Court of Appeal judicial review against the FOS in May 2024, with the court finding they had breached their duty to act honestly, fairly and professionally regarding due diligence on introductions to unregulated firms and investments. By contrast, Hargreaves Lansdown, whose platform business rarely involves these factors, saw the vast majority of its execution-only complaints rejected. The FOS looks at the substance, not the label.
Actionable insight: risk profiling is more than a questionnaire, it requires a documented conversation. Firms must have a robust due diligence process for all products, and an explicit policy to avoid unregulated investments and introducers unless a compelling, documented case can be made.
Poor communication and disclosure
Failures to adequately disclose fees, charges or risks are a common thread in upheld complaints. The Consumer Duty raises this bar even higher, requiring communications that consumers can genuinely understand.
In pension switching cases, the FOS will uphold a complaint if an adviser failed to justify why moving to a more expensive pension was beneficial, or downplayed exit penalties. With DB transfers, if a critical yield analysis showed an unrealistic required growth rate (for example 8%+), the adviser must prove they made clear how unlikely this was.
Actionable insight: all client communications, especially suitability reports, must be clear, fair and not misleading. Document that you have explicitly discussed downsides, risks and costs.
Defined benefit pensions advice carries financial risk
The median redress award across all categories is low (around £400-£500), but the potential losses from unsuitable DB transfer advice are enormous, as the mean (average) redress amounts show.
| Category | Mean redress |
|---|---|
| Defined benefit pension | £28,457 |
| Investment advice | £4,165 |
| Other pension | £4,298 |
| Maximum DB redress in sample | £415,000 |
This demonstrates the long tail of risk. A single upheld DB transfer complaint can represent a significant risk to a small firm.
The danger of latent complaints
The negative consequences of poor advice are not always immediately obvious, especially with pensions.
| Time since advice | DB pension uphold rate | Investment advice uphold rate | Other pension uphold rate |
|---|---|---|---|
| 0-2 years | 44.1% | 61.2% | 56.5% |
| 2-5 years | 71.0% | 54.5% | 47.4% |
| 5-10 years | 85.6% | 66.9% | 44.3% |
| 10-15 years | 89.5% | 47.8% | 45.7% |
| 15+ years | 61.8% | 21.6% | 39.6% |
Actionable insight: this is a critical risk management point. Complaints can surface over a decade later and are still very likely to be upheld for DB pensions, where the uphold rate for complaints made 10-15 years after the advice is nearly 90%. Investment advice complaints behave differently: the uphold rate is highest in the first two years and then declines. Understanding this tail risk is challenging, and a careful understanding of PII run-off cover may be valuable.
Complaint volumes over time
DB pension transfer cases are tailing off and are now a lower-volume issue. Investment advice cases are broadly stable, while other pension complaints show a broad upward trend.
There is a notable spike in decisions for both these latter categories in March 2025, with a similar spike in March 2024, which could suggest some seasonality. This is partly the result of the conclusion of a set of cases featuring Zurich and Options clients: their upheld cases relate to putting clients into the wrong pension structure or high-risk investments, usually citing execution-only type defences.
Firm features associated with upheld complaints
Further analysis of firm characteristics and marketing approaches offers insight into which types of advice businesses are statistically more likely to attract, and lose, FOS complaints. Three notable features emerged from the data, each with practical implications for compliance and operational risk management.
In summary, operational permissions, marketing focus and complaint composition all provide meaningful, early-warning indicators of where upheld FOS claims are most likely to arise. Compliance leaders should weigh these when prioritising internal reviews and resource allocation. Firm size and firm age are not predictive of claims per adviser: compliance risk comes in all shapes and sizes.
Best Practice Checklist for IFAs and Compliance
By focusing on these core areas, firms can build more resilient processes, deliver better outcomes for clients, and be in a much stronger position to defend their advice when it comes under scrutiny.
- Create in-house data-warehouse functionality to understand concentrations and surface risk. Consumer Duty, PROD and the DB Transfer Finalised Guidance (FG21/3) all expect firms to understand concentrations of risk across products, business types and advisers.
- Always document a thorough analysis of alternatives, especially for pension transfers (mandatory under COBS 19.1B, pension transfer suitability).
- Where possible, articulate the counterfactual: without implementing Recommendation X, the client will not achieve Objective Y, due to the explained risk, shortfall or limitation of alternatives.
- Separate 'risk appetite' from 'capacity for loss' and document both, per the FCA's Finalised Guidance (FG21/1, FG21/3).
- Maintain an approved product list, and scrutinise any non-standard investment with a formal, documented due diligence process.
- Have a default policy to reject business involving unregulated introducers unless rigorous due diligence and positive vetting is in place. FCA Dear CEO letters and SIPP reviews have explicitly criticised firms who do not do this.
- Establish a clear, firm-wide policy on high-risk insistent client transactions, and consider refusing them.
- Ensure staff are trained to maintain a clear boundary between advised and non-advised services.
- Meticulously document any insistent client case with written warnings and client acknowledgements.
- Retain advice files indefinitely: digital storage is cheap, redress is not.
- Implement a system of peer review or second-pair-of-eyes checks for all high-risk advice before it is finalised.
- When a complaint is received, prepare a comprehensive file with a clear narrative and all supporting evidence.
- Use data-warehouse concentration and complaint data as a key input for Consumer Duty board reports and reviews. Evidence of management engagement is key to defending Consumer Duty claims, so good organisation and analysis of your data is essential. AI tools can make this a lot easier.
- Proactively review client outcomes through statistical and case-based analysis, and benchmark against peers where possible. Do not wait for complaints to identify potential areas of harm.
- Ensure all communications are designed to be understood by the target audience, sample test to prove this is the case, and empower clients to make good decisions.
Turn your complaint and compliance data into an early-warning system.
If you want to understand where your firm's risk concentrations actually sit, book a 30-minute discovery call and we will map the right first step.