The FCA finalises rules on complaints handling

Posted by Felicity Rowan on
On 29 July 2015, the Financial Conduct Authority (FCA) released its Policy Statement (PS15/19) detailing final rules to improve the complaints handling landscape for consumers and FCA authorised firms. PS15/19 follows the FCA's  consultation paper published on 14 January (CP14/30) on the same point.

Background

At the back end of last year the FCA published its findings following a thematic review of complaints handling processes of 15 retail firms and 5 trade bodies.

The firms carried out self-assessments to understand how complaints received from consumers are handled in practice, as well as providing FCA with evidence of their policies, processes and management information (MI).

The FCA found that there were various areas of improvement that could be made. Broadly, these were in respect of:

  1. Customer "unfriendly" complaints processes.
  2. Consistency with redressal offered to customers.
  3. Considering wider issues that may have caused a complaint.
  4. Firms’ MI – communication with the FCA.
  5. Training and awareness of what constitutes a "complaint"

CP14/30 consolidated the FCA's findings out of its thematic review, putting forward proposed policy/rule changes to be made to improve the complaints handling processes of relevant firms/customers. CP14/30 addressed how the changes would affect firms in the compulsory jurisdiction of the Financial Ombudsman Service (FOS) and those in the voluntary jurisdiction (firms who contract into identifying FOS as its competent dispute resolution authority). Many of the FCA's proposals have been adopted and finalised in PS15/19, see below.

Rule changes

In summary, changes to be effected are as follows:

  1. Extension of the "next business day rule" to three days. Allowing firms more time to resolve complaints less formally. This is intended to allow firms to resolve more complaints first time rather than try to meet the current one day target.
  2. If a complaint is resolved during this three day period, firms will be required to send their customers a simpler, template message. This will inform the complainant of their right to take their complaint to the Financial Ombudsman Service.
  3. Consumers will now have access to more data on complaints made to financial services companies. Firms will be required to report reporting all complaints (including those handled by the close of three business days after the firm receives them) to the FCA, which will publish the data and provide additional context to allow consumers to “better” compare firms. Currently, firms are only required to report complaints to the FCA that take longer than a day to resolve.
  4. Limiting the cost of calls consumers make to firms to a maximum ‘basic rate’, including all post-contractual calls and all complaints calls
  5. From September 2016 an updated ‘complaints return’ which requires firms to send FCA data twice a year on the number of complaints they receive

Who does this affect?

These new rules affect firms across all financial services sectors.

All of the above will apply to firms in the compulsory jurisdiction, which means all FCA authorised firms.

The FCA has indicated that it will release further guidance on the applicability of the changes to firms under the voluntary jurisdiction in due course.

Key dates

Key dates of note are:

  • The rules on extending the ‘next business day rule’, complaints reporting and requiring firms to send a summary resolution communication, come into force on 30 June 2016.
  • The rules on call charges come into force on 26 October 2015.
  • Parts 4 and 7 of Annex C (DISP) of the instrument come into force on 23 July 2015. The amendment in Part 4 is guidance on the effect of section 234B of the Financial Services and Markets Act 2000 which concerns situations where liabilities have been transferred from one respondent to another. 

For further information on PS15/19 please click here. 

About the Authors

Specialising in financial services regulation, Felicity advises regulated firms and Approved Persons, private individuals and businesses on financial services issues.

Felicity Rowan
Email Felicity
020 7814 6877

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Specialising in CCA compliance and FCA regulatory advice, Richard is a partner in Blake Morgan's Financial Services group.

Richard Humphreys
Email Richard
01865 254243

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