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Complaints Handling Rules

Revisions to Complaints Handling - Final Rules Published

23 July 2015

Today, the FCA issued a Policy Statement revising their rules on Complaints Handling to ensure firms take complaints seriously and provide consumers with transparency.

These new rules will affect firms across all sectors of the financial services, as all FCA-regulated firms must have a complaints-handling process in place and adhere to the FCA’s rules and guidance on how to respond both promptly and fairly.

Brief Overview Complaint Handling Rules:

One Day Complaints Rule Extended to Three Days

The new rules will now mean that firms in the financial services sector will be able to resolve complaints less formally for a longer period, rather than try and meet the current one day target. As such, firms will now have up to three days to address a complaint to a customer’s satisfaction which will hopefully help more firms resolve complaints the first time round.

The longer time period will also enable easier and better resolutions for a bigger volume of complaints, thus benefiting both the consumer and the firms. As such the regulator expects this change to result in fewer consumers having to progress their complaints further.

If firms are able to resolve a customer complaint within the three day window, then they will then be required to send the customer a “summary resolution communication” - a simpler, template message invariably in writing. However, whilst the complaint will have already been resolved, the firm must still inform of the complainants right to take their complaint to the Financial Ombudsman Service.

Complaint Categorisation Altered: Advice or Guidance?

The regulator has also changed how complaints are categorised. Whilst 'misleading advice/guidance', 'arranging', or 'inappropriate sales technique' used to be the distinguishing complaints categories, the regulator now says complaints will be categorised as either 'unsuitable advice' or 'unclear guidance/ arrangement'.

This clear separation now between advice and guidance is set to provide the FCA with a clearer picture on how many complaints are made about regulated financial advice and how many relate to other guidance by firms.

Changes to Complaints Reporting Requirements

In addition, whilst firms weren’t previously required to report upon complaints handled informally under the one day rule, it will now be mandatory for all complaints to be reported to the regulator every six months.

The FCA’s Director of Strategy and Competition at the FCA, Christopher Woolard, said:

“Our rules will help deliver the quicker, easier and fairer resolution to complaints that consumers want. Getting this right is also vital for firms. A properly resolved complaint can keep a customer happy, and protect the firm’s reputation. But, more than that, effective complaints handling systems can act as an early warning system for firms.”

The data on complaints reported by firms to the FCA will then be made public by the regulator (every six months starting from September 2016) in order to allow better comparison of firms by consumers and will have additional context to make the data clearer and more informative.

What this will mean for reporting firms?

Every six months effective from 30th June 2016, firms will need to submit a complaints return to the FCA for their products and services across the revised list of complaint categories. (First submission is expected to be in early February 2017).

Firms will no doubt want to avoid inflating any complaint data that will be published against the firm’s name, therefore Staff will need to be well trained and reporting systems updated to ensure that the correct data is being captured as well as the correct category of complaint.

This will mean implementing changes to data being captured at present not only for the changes on the cause for complaint but also, for the majority of firms, the details on products and services will be much more granular.

Whilst the regulator appreciates that there may be additional administrative requirements and costs in order to comply with the new rules (as discussed above such as changing IT and reporting systems and training staff etc), the regulator believes that on the whole these costs should reflect changes which are necessary to meet the requirements of the existing rules.

Few or No Complaints to report:

For those firms that have less than 500 complaints to report then there will be a shortened complaints form that can be completed. In addition, should a firm have no complaints to report, as the FCA anticipates will be applicable to a significant number of smaller firms, then a Complaints Handling ‘Nil Return’ will be required to be submitted.

Call Charge Rates to Consumers

The new rules will also set to limit the cost of calls for consumers, thus banning the use of premium rate lines by firms for when customers call for assistance or to complain. Firms will be required to set a maximum ‘basic rate’ for call costs for all post-contractual calls including all complaints calls.

Capping the cost of calls is sure to be good news for consumers, and will mean than some firms will now have to make preparations to avoid certain prescribed numbers and rate structures that could be seen as excessive or unfair to customers before the rules take effect in October later this year.

Timeline to Complaint Handling Implementation:

Whilst some slight revisions to the Complaints Sourcebook (DISP) come into effect from the date of publish this month (23 July 2015) and additionally on 1st October 2015, the main changes that firms will need to prepare for will take effect on:


Update to Complaints Handling Rules

 “Consumers and firms should benefit from better complaint handling, as a result of new rules published today by the Financial Conduct Authority (FCA). In addition, financial services firms will be unable to charge their customers premium rates when they make telephone calls to ask for assistance or to complain.”

Financial Conduct Authority

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Complaints Handling

If you would like assistance in reviewing your complaints handling processes or would like additional support, please get in touch with us.

Further Reading:

Read the FCA’s full Policy Statement here PS15/19: Improving complaints handling, feedback on CP14/30 and final rules and take a look at the new Complaints Return Form - effective 30 June 2016.