Compliance Consultant Lee Werrell reports on a change to complaints handling procedures that will affect every IFA in the country

CP14/30: Complaints handling rules changes (

Forming and influencing the rules made by the regulators is the responsiMiFID IIbility of every authorised firm, feedback on proposals forms part of the responsibility of a mature industry. The FCA would like to know what you think of proposals to change the Complaints Handling Rules by sending your comments by 13 March 2015.


Across the period of 2013/14, fifteen major retail firms carried out self-assessments to help the FCA understand how complaints received from consumers are handled in practice, as well as providing evidence of policies, processes and management information (MI). The FCA also invited five trade bodies to take part in the Complaints Thematic Review.

The FCA established a working group of representatives from these participating firms and trade bodies to not only identify and discuss issues around regulated complaint handling, but also to discuss these issues with the Financial Ombudsman Service (FOS) and consumer groups. The working group made a number of recommendations to the FCA for further action and for possible changes to the rules. The Thematic Review concluded in June 2014.

Additional Drivers for the Thematic Review

The Parliamentary Commission on Banking Standards (PCBS) had also made several banking complaint handling recommendations that it wanted to see implemented within the regulatory framework and increasing transparency to empower consumers.


Extra pressure was building from the implementation of the EU Alternative Dispute Resolution (ADR) Directive which is designed and intended to provide European consumers and traders, access to out-of-court settlement schemes to assist in the contractual disputes that arise from the sale and supply of goods or services. The FOS falls within the scope of this directive which has a little under 6 months to go before implementation on 9th July 2015.

The Consultation Paper intends to address how all of these changes can be incorporated and achieved and the impacts they will have on ombudsman service procedures as well as overall complaints handling and reporting practices.



Overall Recommendations

Overall, three main recommendations emerged as policy proposals that were intended to improve the way complaints are identified, recorded and handled. Therefore the regulator has taken these on board and is proposing to:

  • Extend the informal complaint dealing time. This means that firms will have a longer period of up to 3 business days before escalating the complaint to a more formal process and not having to send a “final response” letter to those complainants following receipt. This will allow less formal complaints to be handled more quickly and efficiently without time pressure and in many cases may be easily resolved at a branch or first contact level without expanding into a full blown regulatory investigation.
  • Improve communication and FOS referral. When a complainant receives a response within or at the end of the three business day period, that if they are unsatisfied, they can refer the complaint to the FOS. This will cut down on the delay of having to wait for 8 weeks as well as serve to provide clarity and awareness of their rights of referral. The FCA will amend their rules accordingly if this is confirmed.
  • Achieve compliant recording on all complaints. With this additional freedom to respond in a reasonable time of three business days, to ensure increased transparency around complaints handling and, to reduce the temptation to manipulate data to any perceived advantage, the regulator will require all complaints to be reported. If a greater number of complaints are handled in this shorter proposed time then total transparency is needed to rebuild trust with consumers.

Supplementary Recommendations

There is an additional recommendation for all post-contractual telephone calls to financial firms to be charged to consumers at a maximum ‘basic rate’. This means that firms will not be permitted to provide ‘premium’ rate, which includes 0845 numbers – but they will be permitted to list mobile numbers.

There is also a proposed amendment for the Dispute Resolution: Complaints sourcebook (DISP) in the FCA’s Handbook to implement the Mortgage Credit Directive.


Advantages To The Change

The extension of the informal time allows less serious or less complex complaints to be dealt with relatively quickly and efficiently by the firm. In practice, this often means that the complaint can be handled at the first point of contact, by frontline staff in the relevant business unit, such as bank branch staff, without it being escalated to specialist complaints staff.

Staff members at this level may already have an established relationship with the consumer and they may know about a consumer’s particular circumstances and needs.

Where appropriate, consumers can find it easier to deal just with these staff, rather than specialist complaints teams who may be less familiar to them and to whom they may have to repeat their complaint. In many cases, consumers are not looking to have their complaint dealt with formally, including receiving a written response – they simply want an issue resolved quickly and effectively. The FCA discussed these preferences directly with consumers as part of its preparatory research.


There will be other advantages:

  • The complaints return will be revised with a new list of categories of complaint, set against product/service groupings
  • A simplified table for firms with fewer than 500 complaints will be available, and
  • The complaints publication will be revised to include more contextual information, helping consumers to more easily compare the services provided by competing firms


The regulator recognises that there are a number of risks of consumer detriment from extending the timeframe. There is a risk that some staff might take advantage of a longer timeframe without becoming more efficient and more minor complaints which may have been handled by the close of the next business day may now take longer to resolve. A related risk is that more complaints will end up being dealt with by front-line staff, when they may not have the appropriate skills or knowledge to deal with those complaints.

The Way Ahead

Put it all together, and you’ve got something that ought to give every adviser pause for thought as we go into the new year. Those who act pre-emptively will have less to worry about than those who don’t.


For details of how to manage your risks or any other regulatory issues, contact Compliance Consultant at or your qualified compliance professional.



ADR Changes

The Alternative Dispute Resolution Directive (the ADR Directive) applies more broadly than financial services, and it requires the UK government to ensure that dispute resolution, provided by a qualifying ADR body, is available for any dispute concerning contractual obligations between a consumer and a business, although the use of ADR is not mandatory for firms under the ADR Directive. Member States have until 9 July 2015 to implement the ADR Directive.

In Chapter 5 of the CP the FCA sets out its proposed approach to implementing the ADR Directive and provides an overview of the areas in which existing rules will change. This chapter covers:

Amendments to rules made by the FCA

  • Referring complaints to the ombudsman service.
  • Information requirements for firms.
  • Definition of consumer.
  • Ombudsman service annual reports.

Amendments to rules made by the ombudsman service

  • Definition of a chargeable case.
  • Definition of consumer.
  • Grounds for dismissal.
  • Test cases.
  • Resolution of cases by the ombudsman service.
  • Consumer redress schemes.
  • Voluntary jurisdiction.

Mortgage Credit Directive

  • Complaints procedure disclosure for intermediaries within the scope of the MCD.

Other rule changes

  • Successor firms.

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