Complaints And The Financial Ombudsman Service

Question 1

What is a firm’s main responsibilities for handling complaints against a firm by customers?

Answer 1

1. The first step involves the firm considering the complaint itself and attempting to resolve it.
2. If the customer is not satisfied and is eligible, the complaint can be referred to the Financial Ombudsman Service (FOS) for independent investigation, which includes a mediation stage and potentially a determination stage (if mediation stage doesn’t resolve it)

Question 2

What must a firm do to comply with the complaint handling requirements?

Answer 2

1. A firm must have written procedures for handling complaints.
2. The firm should ensure all staff are aware of them, and publish these procedures for transparency.

Question 3

Once a firm receives a complaint from customers, what is the response timeframe of the firm?

Answer 3

1. A firm must respond within 8 weeks of receiving a complaint.

2 This response can either be:
A. A final response to the complaint.

B. A written response explaining:
I. why a final decision isn’t possible yet, with an estimated timeline for a final response.
II. The firm must also inform the customer that they can escalate the complaint to the Financial Ombudsman Service (FOS).
III. Enclose a copy of the standard explanatory leaflet.

Question 4

What are the record-keeping and retention guidelines for complaints?

Answer 4

1. Firms must retain records of complaints for:
   A. 5 years for MiFID-related business.
   B. 3 years for other types of business.
2. Firms must also provide the FCA with a biannual report detailing:
   A. The number of complaints.
   B. The time taken to resolve complaints (within 4 weeks, 8 weeks, and beyond).
   C. The number of complaints accepted as valid.

Question 5

What are the two types of jurisdiction for the Financial Ombudsman Service (FOS)?

Answer 5

1 Compulsory jurisdiction -
covers firms regulated by the FCA for certain complaints automatically.

2. Voluntary jurisdiction -
   covers firms that sign a contractual agreement with the FOS to cover certain complaints not covered by compulsory jurisdiction.

Question 6

What is the time limit for a customer to refer a complaint to the FOS?

Answer 6

1. DFOS operator scheme to settle dispute between a customer and firm where a complaint has not been resolved to the satisfaction of the complainant.
2. A complaint must be referred to the FOS:
   A. within six years of the event, or
   B. three years from when the customer knew of the problem, and
   C. within six months of the firm’s final response.

Question 7

What factors may lead the FOS to dismiss a complaint?

Answer 7

The FOS may dismiss a complaint if:

A. The complainant has not suffered financial loss, material inconvenience, or material distress.

B. The complaint is deemed frivolous or vexatious. (Silly or annoying)

C. The firm has already made a reasonable offer of compensation.

Question 8

What is the maximum monetary award the FOS can make?

Answer 8

1. The FOS can award up to £415,000 for complaints referred after 1 April 2023 about events from 1 April 2019 onwards.
2. For events before 1 April 2019, the maximum is £190,000.
3. For amounts exceeding these limits, the firm can choose to pay the excess but isn’t required to.

Question 9

What does it mean when we say that the “ FOS decision decisions are legally binding”?

Answer 9

1. Once the Financial Ombudsman Service (FOS) makes a final decision on a complaint (such as an award or corrective action), the firm must follow that decision if the complainant accepts it.
2. However, if the complainant rejects the decision, the firm is not bound by the ruling, meaning the firm does not have to follow it.

Question 10

The FOS has two steps - mediation and the determination steps

What is a FOS “determination,” and what happens if a complainant accepts or rejects it?

Answer 10

1. A determination is a final decision by the FOS, which can involve a money award or a direction for the firm to take corrective action.
2. If the complainant accepts the determination, it’s binding on the firm.
3. If the complainant rejects it, the firm is not bound by the determination.
4. A direction is where the FOS directs a firm to take particular steps to correct something but, this may not include a monetary award.

Question 11

Briefly explain what the FOS is

Answer 11

1. It’s the Financial Ombudsman Service (FOS) .
2. An independent body that helps resolve disputes between consumers and financial services firms.
3. If a customer’s complaint isn’t resolved by the firm, they can refer the issue to the FOS, which investigates the complaint and can make binding decisions, including financial compensation or corrective actions for the firm.

Question 12

The Pensions Ombudsman

What does the Pensions Ombudsman handle?

Answer 12

The Pensions Ombudsman deals with complaints related to personal or occupational pension schemes, particularly focusing on how pension schemes are run and addressing cases of maladministration.

Question 13

The Pensions Ombudsman

What is considered maladministration in pension schemes?

Answer 13

Maladministration includes:

1. Taking too long to act without good reason.
2. Failing to take necessary actions.

3 Not following rules or the law.

4. Breaking promises.
5. Providing incorrect or misleading information.
6. Making decisions inappropriately/ not giving a decision in the right way.

Question 14

What is the time limit to apply to the Pensions Ombudsman regarding a complaint?

Answer 14

Complaints must generally be made:

1. within three years of the event, or
2. three years from when the complainant first knew (or should have known) about the issue.

Question 15

Are the decisions of the Pensions Ombudsman binding?

Answer 15

Yes.

The Pensions Ombudsman has the legal authority to make final, binding decisions that are enforceable in court.