In 2024, financial advisers continued to face a challenging landscape with respect to claims and complaints, particularly in the areas of pensions and mortgages. As the financial services industry grapples with evolving regulatory expectations, increased consumer awareness, and rising interest rates, financial advisers are encountering new sources of liability that are reshaping the professional indemnity (PI) insurance market. These developments underscore the importance of proactive risk management and the need for advisers to stay informed about emerging claims trends.

1. Pensions: A Persistent Source of Complaints

Pensions have remained one of the highest-ranking products for complaints, and 2024 was no exception. Several issues have contributed to the increasing number of claims related to pensions, which include:

• Disappointing Investment Outcomes: Consumers have voiced dissatisfaction when their pension funds have not performed as expected. Financial advisers have been criticized for recommending investment strategies that did not meet clients’ financial goals or risk tolerance when compared to benefits given up
• Delays and Mismanagement of Funds: Another surprising cause of pension-related complaints is delays in processing pension funds or instances where funds were misallocated or incorrectly invested. Clients may have reported frustration when their pensions are not managed in a timely manner, or when investment decisions have resulted in losses.
• Tax Liability: The changes in LTA caused a number of issues and we have also seen the way pensions and investments have been set up, done so in such a way as to create inheritance tax issues which could have been avoided/minimised.

2. Mortgages: Interest Rate Impact and Consumer Expectations

Mortgage-related complaints saw a notable rise in 2024, largely due to the 2023 interest rate hikes. As interest rates continued to climb, many consumers found themselves facing increased mortgage payments. Issues arose as they reached the end of their existing fixed rate term. Any delay or error in the application process often left the consumer paying a higher rate than anticipated, resulting in a complaint being made against the advising firm. 

3. Service and Annual Reviews: A Focus of Claims Management Companies

While pensions have long been at the forefront of financial adviser claims, the level of service provided and alleged lack of annual reviews has been a significant cause of complaints over recent months, particularly by claims management companies as they home in on FCA’s emphasis on value for money and Consumer Duty obligations.Whilst they may not necessarily involve considerable financial losses they require a firm to handle them under their complaints procedure, incurring time and cost.

Looking Ahead: What to Expect for the rest of 2025

As we move closer to the second half of 2025, these trends are expected to continue, and financial advisers will need to be vigilant in mitigating risks associated with these common causes of claims. While service-related complaints may not necessarily result in large financial penalties, they can lead to reputational damage and disproportionate operational costs due to the time involved in resolving disputes.

DSAR’s frequently accompany vague complaints which creates an additional administrative burden for the firms concerned.

Conclusion

The trends in complaints and claims for financial advisers in the PI market continue to evolve. Pensions and mortgages remain prominent sources of complaints, but service-related issues and annual reviews are becoming increasingly significant. In order to mitigate these risks, financial advisers must be proactive in their approach, ensuring they deliver clear, transparent advice, maintain robust communication with clients, and stay on top of regulatory changes. By doing so, they can better manage the risks associated with these complaints and maintain a strong and trusted relationship with their clients.

Amy Griffiths

Senior Claims Executive

[email protected]

+44 7821 658857