Complaints and Redress (3/80)

Question 1

What is the body for complaints and dispute resolution?

Answer 1

Financial Ombudsman Service (FOS)

Question 2

What does the Financial Ombudsman Service (FOS) cost?

Answer 2

It is free to complainants

Question 3

What is the maximum compensation the FOS can grant?

Answer 3

£350,000 (adjust for inflation in the future)

Question 4

What are the 2 jurisdictions under the FOS?

Answer 4

Compulsory Jurisdiction - complaints from eligible complainants against FCA authorised
firms in relation to their regulated activities
Voluntary Jurisdiction - Everything else

Question 5

What is a Super-Complaint?

Answer 5

A complaint raised by a Consumer Organisation. The FCA must responmd within 90 days.

Question 6

What is an “eligible” complainant for the FOS?

Answer 6

• a consumer (a retail and a professional client – any natural person acting for purposes outside of
  their trade, business or profession)
• an enterprise with fewer than ten employees and turnover or annual balance sheet not exceeding
  £2 million (a micro-enterprise) at the time the complaint is raised
  -charities with an annual income of less than £1 million at the time the complaint is raised, or
• a trustee of a trust with a net asset value of less than £1 million at the time the complaint is raised.

Question 7

Can an SME be an eligible complainant?

Answer 7

Yes - if they meet 2 of the following:

• Annual turnover of less than £6.5 million
• below the headcount threshold of 50 employees
• below balance sheet total threshold of than £5 million

Question 8

Can Charities and Trusts be eligible complainants?

Answer 8

Charities with income up to £6.5 million and trusts with net assets up to £5 million at the time they make the compliant would become eligible complainants.

Question 9

What should Complaints procedures cover?

Answer 9

• receiving complaints
• responding to complaints
• appropriately investigating complaints, and
• notifying complainants of their right to go to the FOS when relevant.

Question 10

What is the timefgrame for a final response to a formal complaint?

Answer 10

8 weeks

Question 11

How long does a complainant have to refer a complaint to the FOS?

Answer 11

6 months

Question 12

What must a firm do upon receipt of a complaint?

Answer 12

Firms must send the complainant a prompt, written acknowledgement providing early reassurance that they have received the complaint and are dealing with it. In addition, firms must keep the complainant informed thereafter of the progress of the measures being taken for the complaint’s resolution.

Question 13

What complaints records must be maintained?

Answer 13

• the name of the complainant
• the substance of the complaint, and
• details of any correspondence between the firm and the complainant, including details of any
redress offered by the firm.

Question 14

How often do firms report to the FCA on complaints?

Answer 14

Twice per year

Question 15

How long must complaints records be held?

Answer 15

1. for at least five years when the complaint relates to MiFID business or collective portfolio
   management services for a UCITS scheme
2. for three years for all other complaints
3. from the date that the compliant was received by the firm.

Question 16

What data on complaints must a firm make public (if they receive 500 or more)?

Answer 16

• how many complaints they have opened and closed
• the percentage closed within eight weeks, and
• the percentage of complaints upheld.

Question 17

What is the “next business day rule”?

Answer 17

Firms are permitted to handle complaints less formally,

without sending a final response letter, within 3 days of receipt of the complaint

Question 18

What is the The Financial Services Compensation Scheme (FSCS)?

Answer 18

The Financial Services Compensation Scheme
(FSCS) has been established to pay compensation to eligible claimants in the event of a default, or it
appears likely to cease trading and fall insolvent, by an authorised person.

Question 19

How much compensation can the FSCS pay out?

Answer 19

• For protected insurance (long-term insurance contract) – 100% of the claim (with no maximum
payment limit).
• For protected compulsory insurance (general insurance contract) – 100% of the claim (with no
maximum payment limit).
• For protected non-compulsory insurance (ie, other general insurance) – 90% of the claim (with no
maximum payment limit).
• For protected investment business and home finance advice – 100% up to £85,000.
• For protected deposits – 100% up to £85,000 per individual per financial institution.

Question 20

What is a Protected Claim?

Answer 20

A protected claim is a claim:
• for a protected deposit or a protected dormant account
• made under a protected contract of insurance
• made in connection with protected investment business
• made in connection with protected home finance mediation
• made in connection with protected non-investment insurance mediation.

Question 21

What are NOT considered as Eligible Claimants under the FSCS?

Answer 21

• other authorised firms (other than a sole trader, credit union, trustee of a stakeholder pension
scheme, small businesses where the claim arises out of a regulated activity for which they do not
have a permission)
• collective investment schemes, and firms who are acting as the operator or depository of a collective
investment scheme
• alternative investment funds, and anyone who is the AIFM of a depository of an alternative
investment fund
• pension and retirement funds, and anyone who is a trustee of such funds
• overseas financial institutions
• supranational institutions, governments and central administrative authorities
• provincial, regional, local and municipal authorities
• large companies
• large partnerships
• persons who claim arises from transactions in connection with which they have been convicted of
an offence of money laundering
• large mutual associations.