In compliance with the EU Alternative Dispute Directive, the Financial Conduct Authority (FCA) have published new rules on complaints handling for financial services firms and limiting the cost of telephone calls which consumers make to firms for assistance or to complain.

  • In brief the new requirements are as follows:
    1. Extending the ‘next business day’ rule to three business days, to allow firms more time to resolve complaints less formally without the need to send a final response letter.
    2. Raising consumer awareness by informing consumers of their rights to complain to the Financial Ombudsman Service (FOS) by providing a ‘summary resolution communication’ once the complaint has been resolved.
    3. Obligation to report all complaints including those dealt with in the three business day rule.
    4. A new mandatory ‘complaints return’ reporting system, which requires firms to send the FCA data twice a year on a number of complaints they receive.
    5. Limiting the cost of calls that consumers make to firms.

The new rules affect all financial services firms. All FCA-regulated firms must have complaints-handling processes in place and comply with the FCA rules and guidance on how to respond with complaints promptly and fairly.

The objective of the new rules is to ultimately benefit the consumers who wish to complain to financial services firms by ensuring that complaints are handled more quickly, easily and transparently and it will also allow financial services firms more time to resolve complaints less formally.

The rules for complaints handling come into force on 30 June 2016. The rules on call charges come into force on 26 October 2016.

Complaints Handling

At present the ‘next business day’ rule permits financial services firms to handle complaints less formally without sending a final response letter or reporting the complaint to the FCA. The main reasons for the extension were to allow the firms more time to operate an effective system dealing with complaints, to enable specialist and third parties involvement (if required), to allow time to send the ‘summary resolution communication’ to consumers and to deal with the additional administration of reporting to the FCA. And in return, this will ensure fewer complaints will be referred to a formal investigation process and this will allow easier and speedier resolution for complaints.

If a complaint is resolved to the complainant’s satisfaction then a firm will not need to send a final response letter but a written ‘summary resolution communication’.

Raising Consumer Awareness

The ‘summary resolution communication’ is a written acknowledgment that firms must send to the complainants where their complaint has been resolved by the close of the third business day after receiving the complaint. The ‘summary resolution communication’ is a simple template message which acknowledges the fact the complainant has made a complaint and informed the complainant that the firm considers the complaint to be resolved and if the complainant decides that he is still dissatisfied he may refer the complaint to the FOS. The purpose of the ‘summary resolution communication’ is to be a template response not a final response letter.  The basic content of the ‘summary resolution communication’ is prescribed by FCA rules.

Complaints data reporting

Currently financial services firms do not need to report the number of complaints which they receive and resolve under the ‘next business day’ rule to the FCA. The new rules will require all financial services firms to send data on all complaints they handle and they will publish this information. Whilst the FCA appreciates there may be additional administrative practices (such as adjusting a firm’s IT and reporting systems, training staff etc.) and costs to comply with the new rules, the FCA believe that the majority of these costs should reflect changes which are necessary to meet the requirements of the existing rules. For those financial services firms that report complaints less than 500 complaints the FCA has introduced a shortened complaints form.

Call charges

From 26 October 2015 the FCA has stated that financial services firms must only provide telephone numbers which costs consumers no more than the ‘basic rate’ when calling about a contract that is already entered into and/or to complain. This will make it cheaper for consumers when they need to speak to a firm and prevent consumers from being discouraged to call due to the cost of the call.

Please note that the information in this article is not designed to provide legal or other advice or create a solicitor - client relationship. No liability is accepted for any loss caused in reliance upon its content and you should not take or refrain from taking action based upon the same.