FCA Supervision and Redress Flashcards
FCA Supervision Model (three pillars)
- Firm Systematic Framework (FSF) - preventative work through conduct assessments of firms. Assess whether interest of consumer and market integrity are central to how firm is run.
- Event Driven Work - dealing with emerging or recent problems.
- Issues and Products - intensive campaigns on market sectors or products putting consumers at risk
FCA allocated all authorised firms into one of 2 conduct categories: Fixed Portfolio and Flexibile Portfolio
FCA Conduct Categories
Fixed Portfolio firms:
- have a named supervisor and are proactively supervised using firm specific continuous assessment.
Flexible Portfolio firms:
- supervised by thematic and market based work and FCA support (communication and education) aligned to the key risks of the sector
FCA Power and Appeal
- gain access to premises
- cancel a firms Part 4A permission
- ban products after market consultation, or temporarily ban for 12 months without consultation
- ban misleading financial promotions
When appealing a decision made by the FCA, you may appeal to the Tax and Chancery Chamber of the Upper Tribunal
Firms Receiving complaints
First there is an ’initial consideration’ from the firm and if the customer is still not satisfied, is eligible to use the ’FOS’
All firms must have in place complaint handling procedures, ‘known to all staff and published’
Firms receiving a complaint must after ’8 weeks’ send:
- a Final response; or
- a Written response, indicating it could not make a final response and the complainant may refer to the FOS
All firms must retain records of complaints for 5 years involving MiFID business and 3 years for all other business
FOS Jurisdictions
- Compulsory - automatically covers firms regulated by FCA for certain complaints
- Voluntary - covers firms for certain complaints not covered by compulsory jurisdiction. Firms must sign up to join by contractual agreement with FOS
FOS Scheme (timeline and complaint dismiss scenarios)
FOS operates a scheme to settle disputes between customer and firm, where complaint has not been resolved to satisfaction
Scheme can be used by customer when a complaint has not been settled within 8 weeks, but only within 6 years of event or 3 years of customer knowing of problem
FOS can dismiss a complaint if it feels the complainant has not suffered financial loss, inconvenience or distress or firm has already made reasonable offer of compensation
FOS Scheme - mediation vs investigation, Direction and Award
If the parties cannot agree to a mediated settlement, the FOS will investigate the complaint
A provisional assessment and a determination will be made, if the complainant accepts the determination it is binding on the firm, but if complainant rejects, the firm is not bound
The determination can be a money award or a Direction
The maximum money awarded by the FOS is £150,000, for awards over this the firm is invited to pay, but not compelled to do so
A Direction where the FOS directs the firm to correct something
The Pension Ombudsman
Deals with complaints relating to personal and occupational pension schemes
An application must be made within 3 years of the event occurring, or 3 years of the complainant first knowing about it
Financial Services Compensation Scheme (FSCS)
Deals with claims against authorised firms that are insolvent.
When a firms still trading redress must be sought through FOS
Only certain claims are eligible, called ‘protected investment business’ and must be made within a set time (usually 6 years)
Maximum payout for a claim is £50,000
