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CISI UK Financial Regulations > 5. Complaints and Redress > Flashcards

5. Complaints and Redress Flashcards

1
Q

IMPORTANT: What procedures should be included within a firm’s complaints-handling arrangements (what should they provide for)?

A
  • the receiving of complaints
  • acknowledging receipt of complaints
  • responding to complaints
  • appropriately investigating complaints, and
  • notifying eligible complainants of their right to go to the FOS where relevant.
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2
Q

MEM & Important: How long do we have to resolve a complaint before we have to send a copy of the complaints procedure?

A

3 business days

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3
Q

MEM & Important: When should the complaint procedures be given to an eligible complainant? What is the ‘unless’?

A

Either:
-At first point of contact or when docs is first provided/at point of sales or immediately after
-On request
-When a complaint is received
UNLESS:
-The complaint is resolved in 3 business days

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4
Q

IMPORTANT Q: Firms must have written procedures in place for complaints which are in line with which of the following criteria?
a) Justifiable comlaints which are in writing only
b) Justifiable complaints one which are in writing or oral
c) Only where complaints are in writing, whether they are justifiable or not
d) Where complaints are in writing or oral, whether they are justifiable or not

A

D

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5
Q

MEM & IMPORTANT Q: What does the firm do (and timings) when a complaint is received?

A
  • send the complainant a prompt written acknowledgement that the complaint is being dealt with
  • keep the complainant regularly informed of progress
  • within 8 WEEKS, send a written response to the complainant. This will either be a final response or a holding response.
    -If complaint is unresolved in that time:
    -Explain why and when it is likely to be
    -Inform them that they can approach the FOS (financial ombudsman Service) within 6 months
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6
Q

IMPORTANT: Firms receiving over 500 complaints in a given 6 month period is required to publish:

A

-Total complaints opened and closed
-Number of complaints closed within 8 weeks
-% of complaints still open

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7
Q

IMPORTANT: A firm is obliged to publish specified data about its complaints records if it receives 500 complaints within what number of months?
A) 2
B) 3
C) 6
D) 12

A

C

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8
Q

MEM & IMPORTANT: How long should complaints records be kept for MiFID and non-MiFID firms?

A

MiFID firms: Minimum of 5 years from when the complaint was received
non-MiFID firms: Min of 3 years

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9
Q

MEM & IMPORTANT: List the types of eligible complainant.

A

They are small retail clients, NEVER authorised firms
* consumers – any individual acting in a private capacity
* micro-enterprises – businesses employing fewer than 10 persons and having a turnover or balance sheet figure not exceeding €2 million at the time the complaint is raised
* charities with an annual income of less than £6.5 million at the time the complaint is raised
* a trustee of a trust with a net asset value of less than £5 million at the time the complaint is raised
* certain SMEs (small&medium enterprises) – with an annual turnover of less than £6.5 million and (a balance sheet threshold of £5 million or fewer than 50 employees.)

A further condition for eligibility is that the complaint must arise out of a business relationship with the firm.

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10
Q

Which of these is an eligible claimant under the FSCS?
A
Trustees of a CIS
B
Trustee of a pension fund
C
Overseas financial institution
D
A shareholder who owns < 5% of an organisation

A

D - private individual.

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11
Q

MEM & IMPORTANT: If an individual is awarded money in respect of restitution, who is paid 1st?

A

The FCA, who then passes to the individual

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12
Q

IMPORTANT Q: As part of the requirements for business partnerships employing fewer than 10 persons, to be classed as ‘eligable complainants’ for complaints handling purposes, their annual turnover must be below what threshold?
a) EUR 210,000
b) EUR 500,000
c) EUR 2 million
d) EUR 1 million

A

C

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13
Q

What is the dispute resolution scheme?

A

The Financial Ombudsman Service

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14
Q

IMPORTANT Q: The Financial Ombudsman Service is:
a) A department within the FCA
b) A part of the Office of Fair Trading
c) An independent body
d) A organisation formed by member firms

A

C

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15
Q

IMPORTANT: What is the role of the FOS?

A

Resolve complaints about financial services firms quickly and with minimum formality. It’s free and private. It does not replace the court system and any complainant is entitle to take civil action against the firm but can’t if they’ve accepted the Ombudsman’s final decision.

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16
Q

IMPORTANT: What is the role of the Financial Ombudsman Service?
A Administer and operate a dispute resolution service for clients of FCA-authorised firms
B Take civil action against FCA-authorised firms for valid customer service complaints
C Replace the role of the court system with a free dispute resolution service to eligible
clients
D Make rules and regulations related to the handling of complaints about financial services
firms

A

A. Not C as it doesnt replace a court system, as the complainant can do that if they reject

17
Q

IMPORTANT: What is the difference between compulsory jurisdiction and voluntary jurisdiction in relation to FOS?

A

CJ: extends to complaints from eligible complainants against FCA-authorised firms in relation to their regulated activities (and any ancillary activities) which the firm is unable to resolve to the satisfaction of the complainant within the timescales outlined above
VJ: covers complaints which are not within the CJ. Businesses can opt into the VJ by entering into a contractual arrangement with the FOS. Why would they do this? To give clients the fonidence that if things go wrong, they have the right to appeal.

18
Q

MEM & IMPORTANT: What’s the max award/compensation to complainants after going to the FOS. What happens when complaintent accepts or rejects the award?

A

£355,000 for complaints referred to the FOS on, or after, 1 April 2020 about firms’ acts or omissions on or after 1 April 2019.
* £350,000 for complaints about firms’ acts or omissions between 1 April 2019 and 31 March 2020, on or after 1 April 2019.
* £160,000 for complaints about firms’ acts or omissions prior to 1 April 2019, and which are referred to the service after that date.
For any loss (pain, suffering, financial loss, reputation damage, distress, inconvience)
Accepts: It’s binding on the firm & complainant
Rejects: can pursue matter through the courts, but it’s no longer free or private

19
Q

IMPORTANT: If a complainant accepts an adjudication decision made by the Financial Ombudsman Service (FOS), to what extent, if any, is it binding?
A It is binding on the complainant only
B It is binding on the firm only
C It is binding on both parties
D It is not binding on either party

A

C

20
Q

IMPORTANT: What is the role of the FSCS (Financial Services Compensation Scheme)?

A

To pay compensation to eligible claimants for losses if an authorised firm goes into liquidation.

21
Q

MEM & IMPORTANT: Who is the Financial Services Compensation Scheme funded by?

A

Authorised firms.

22
Q

Which of the following best describes the relationship between the FCA, the PRA and theboard of the Financial Services Compensation Scheme (FSCS)?
A The board of the FSCS is appointed by the Bank of England on behalf of the FCA and PRA
B The Chairman of the board of the FSCS is appointed by theFCA
C There is no relationship between the FCA, the PRA and theFSCS
D The directors of the FSCS are appointed by HM Treasury onbehalf of the FCA

A

B -The FSCS is operationally independent of the Regulator, although it must account directly to theRegulator for its actions.

23
Q

MEM & IMPORTANT: 3 claims under the FSCS that are eligible claimants only and 2 that are all clients. What’s the max claim for each?

A

Eligible claimants only, max claim £85,000:
-Deposits
-Investments
-Home finance

All clients (EXCLUDES MOST AUTHORISED FIRMS as FSCS is set up by auth firms for clients rather than themselves):
-Compulsory Insurance (long term) max claim: 100% of unused premium
-General Insurance (e.g. building insurance) max claim: 90% of unused premium

24
Q

IMPORTANT Q: What compensation is available under the FSCS for protected deposits AND FAILURE OF A CREDIT UNION?

A

£85,000

25
Q

IMPORTANT Q: What, if any, is the MAXIMUM amount of compensation payable under the Financial Services Compensation Scheme (FSCS) for compulsory third-party motor insurance claims?
a) 70% of the claim or £50,000, whichever is the lowest
b) 90% of the claim or £50,000, whichever is lowest
c) 90% of the claim with no maximum
d) There is no maximum

A

D.
Insurance protection provided by the FSCS is 90% of the claim with no upper limit (insurance business and general insurance advice and arranging)
Compulsory insurance of which 3rd party motor insurance is one type, is protected in full.

26
Q

IMPORTANT Q: What are super-complaints? Who may make a super-complaint?

A

Super-complaints: . A super-complaint allows the CERTAIN CONSUMER BODY (e.g. Citizens Advice Bureau or Which?) to raise competition and consumer issues with the FCA where a feature of the UK financial services market is, or appears to be, significantly damaging to the interests of consumers. They may discover a large amount of people coming to them complaining about a particular element of the inancial services/product/firm etc then the body can launch a supercomplaint to the regulator, grouping all complaints into 1.

27
Q

IMPORTANT: Under what legislative framework can certain consumer bodies alert the FCA to supercomplaints?
A Financial Services Act 2012
B Regulated Activities Order 2001
C Proceeds of Crime Act 2002
D Public Interest Disclosure Act 1998

A

A
B is specified investments in specified activities
C is ML
D is data protection etc

28
Q

IMPORTANT Q: What are mass-detriment references? Who may make a mass detriment reference?

A

Mass-detriment references:
Can be made by FOS or firms themselves if there’s been:
-Regular failures by a firm to comply with regulatory requirements resulting in loss or potential loss to consumers (e.g. impossible regulation to fulfil)
-firm acting in a way which is a complaint was to be made to FOS, the FOS i likely to find in favour of the complainant.

29
Q

MEM & IMPORTANT: How long does the FCA have to respond to super-complaints and mass-detriment references?

A

90 days CALENDAR days, explaining what the FCA intends to do

30
Q

IMPORTANT Q: As part of the requirements for business partnerships employing fewer than 10 persons, to be classed as ‘elibble complainants’ for complaints handling purposes, their annual turnover must be below what threshold?
a) EUR 210,000
b) EUR 500,000
c) EUR 2 million
d) EUR 1 million

A

C

31
Q

IMPORTANT: How, if at all, can the FOS introduce new rules?
A) It cannot introduce rules
b) Only with the consent of the FCA
c) Only with the consent of the PRA
d) To FOS can introduce new rules without reference to any other organisation

A

B

32
Q

IMPORTANT: As part of its complaints procedures, a firm must have in place a mechanism to measure how many complaints are handled within what MAX number of business days?
a) 1
b) 5
c) 14
d) 28

A

A) firms must establish formal processes of analysing how many complaints are resolved within 1 business day of receipt (I think this is that they have to tell the FRA quickly)

33
Q

Can a third party appeal to the Tribunal on behalf of an authorised firm against a decision notice?
AYes, if the appeal is made within 28 days of the notice being issued
BNo, unless the time limits for the disciplinary procedures are extended
CYes, if all other parties agree to this appeal being made
DNo, only the firm to whom the notice was issued can appeal

A

A

34
Q

Which of the following does not have any rights under the Financial Services Compensation Scheme?
AA retail client with an ISA
BTrustee of a scheme with assets of less than £1 million
CA small business with regard to a general insurance contract
DAn authorised firm with respect to general insurance

A

D) excludes most authorised firms

35
Q

All of the following must always be complied with in relation to customer complaints,except:
A The presence of written procedures in relation to investigatingcomplaints
B Always paying compensation
C The creation of written procedures in relation to responding tocomplaints
D Disclosure of the right to refer the complaint to the FinancialOmbudsman Scheme

A

B - Options A, C and D are compulsory in order to fulfil the FCA’s requirements regarding customercomplaints.

36
Q

Which of these is an eligible claimant under the FSCS?
A
Trustees of a CIS
B
Trustee of a pension fund
C
Overseas financial institution
D
A shareholder who owns < 5% of an organisation

A

D - private individual.

37
Q

In relation to the FCA’s complaints handling requirements, which of the following is TRUE?
A. The complaint must be dealt with at the firm by an individual involved in the original matter
B. The firms is not obliged to advise the complainant of their rights to take the complaint to the
FOS
C. The firm’s procedures for the receiving of eligible complaints apply to complaints received by
both oral and written notification
D. The firm must maintain a document on its internal procedures for dealing with complaints.
However, it is only required to provide this to clients/complainants when requested to do so

A

C, not D because Either:
-At first point of contact or when docs is first provided/at point of sales or immediately after
-On request
-When a complaint is received

CISI UK Financial Regulations (6 decks)

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