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IMC IE Chapter 4 > IMC Chapter 4 - Complaints and Redress > Flashcards

IMC Chapter 4 - Complaints and Redress Flashcards

1
Q

Define ‘financial loss’

A
  • Consequential loss
  • Prospective loss
  • Actual loss
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2
Q

Define a complaint

A

Any expression of dissatisfaction, oral or written, about financial services activities.

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3
Q

What is a breach?

A

A firm’s non-compliance with rules. The rules could be FCA rules, the firm’s own rules or any other rules from other organisations, such as HMRC.

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4
Q

Do firms need to record all breaches?

A

Yes!

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5
Q

What must FCA-regulated firms ensure they have when it comes to complaints?

A

Complaints handling procedures.

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6
Q

List the 5 things an internal complaints procedure must cover.

A

1) Receiving complaints
2) Responding to complaints
3) Referring complaints to other firms
4) The appropriate investigation of complaints
5) Notifying complainants of their right to go to the Financial Ombudsman Service (FOS) where relevant

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7
Q

What is the firm’s managements responsibility when it comes to complaints?

A

The management of the firm has a responsibility to ensure appropriate controls are in place to ensure
that the rules in relation to complaints are complied with and it is possible to identify recurring and systemic problems.

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8
Q

List the 2 procedures around the publication of a firm’s complaints procedure.

A

1) Drawn to the attention of customers (together with the clients’ rights of access to the FOS) at the first point of contact or when documentation is first provided
2) Sent to customers on request and to complainants automatically when a complaint is received (unless the complaint is resolved in one day). The procedures given to customers must contain the specific name of the person dealing with the complaints

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9
Q

Which staff in a firm should be aware of the complaints procedure?

A

All employees (and appointed representatives) that deal with clients should be made aware of the complaints procedures.

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10
Q

What 3 things must the complaints procedure make provision for?

A

1) Complaints to be investigated promptly and fully by an employee of sufficient competence who was not involved in the matter which is the subject of the complaint
2) The person charged with responding to complaints to have the authority to settle complaints, or to have access to someone who has the necessary authority
3) Responses to complaints to address the subject matter of the complaint and, where appropriate, offer appropriate redress

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11
Q

What must a firm send to the complainant when it receives a complaint and when must it send this?

A

A firm must send a written acknowledgement and a copy of the complaints procedure promptly from receipt of the complaint, providing the name or job title of the individual handling the complaint for the firm.

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12
Q

How long does a firm have receipt of a complaint to try to resolve the issue?

A

8 weeks

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13
Q

List the 2 possible things a firm must do at the end of 8 weeks of receiving a complaint.

A
  1. Send a final response
  2. Explains that the firm is not in a position to make a final response, give a reason for the further delay and indicate when it expects to be able to provide a final response. Informs the complainant that he or she may refer the complaint to the FOS if dissatisfied with the delay, and encloses a copy of the Financial Ombudsman Service’s explanatory leaflet.
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14
Q

What are the 2 things a firm must do when it sends a complainant its final response?

A
  1. Inform the complainant that he or she may refer the complaint to the FOS if dissatisfied with the final response, and that he or she must do so within six months
  2. Enclose a copy of the Financial Ombudsman Service’s explanatory leaflet
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15
Q

How long must a firm retain a record of a complaint?

A

At least three years from the date of receipt of the complaint, unless it is a MiFID business, where records must be kept for five years.

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16
Q

List the 4 things a record of a complaint should include.

A
  1. The name of the complainant
  2. The substance of the complaint
  3. Any correspondence between the firm and the complainant
  4. Detail of any redress offered
     
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17
Q

How many times a year must a firm provide a complaints report to the FCA?

A

Twice a year.

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18
Q

List 5 things which must be included in the twice yearly reports a firm must provide to the FCA.

A
  1. The total number of complaints
  2. Complaints closed within four weeks of receipt
  3. Complaints closed within eight weeks of receipt
  4. Complaints closed more than eight weeks after receipt
  5. Complaints outstanding at the end of the reporting period
19
Q

Does a firm need to send a report to the FCA if no complaints have been received during the time of the last report and the expected report?

A

Yes! Reports must be sent even if no complaints were received (i.e. a nil return).

20
Q

List the 3 instances where a complaint is ‘closed’

A
  1. The firm has sent a final response
  2. The complainant has accepted in writing the firm’s earlier response
  3. The complainant has not responded to the firm within eight weeks of the firm’s written final response
21
Q

What are some of the reasons the FOS can make awards to a firm due to a client’s complaint?

A
  1. Financial loss
  2. Pain and suffering
  3. Damage to reputation
  4. Distress
  5. Inconvenience.
22
Q

What do complaints against authorised firms relating to regulated activities fall under?

A

The ‘Compulsory Jurisdiction’ of the FOS.

23
Q

Does the ‘Compulsory Jurisdiction’ of the FOS only cover activities inside the definition of designated investment business?

A

No! This might cover activities outside the definition of designated investment business, such as general insurance, deposit taking and credit/debit card transactions.

24
Q

What option does the FOS offer to unauthorised firms?

A

Unauthorised firms can also submit to the ‘Voluntary Jurisdiction’ of the FOS by entering into a contract with the FOS as a voluntary participant.

25
Q

What must be done if a complaint has not been settled to the satisfaction of the customer within eight weeks of receipt by the firm?

A

The complainant must be informed that he or she has the right to complain to the FOS.

26
Q

List the time frames in relation to the following factors of which the complaint must be referred to the FOS.

  • Of the event
  • Of the customer knowing the problem
  • Of the firms final response
A

The complaint must be referred to the FOS within six years of the event, or within three years of the customer knowing of the problem, and currently within six months of the firm’s final response.

27
Q

List the 3 instances where a complaint can be dismissed by the FOS.

A

1) The complainant has not suffered financial loss, material inconvenience or material distress
2) The complaint is frivolous or vexatious
3) The firm has already offered reasonable compensation

28
Q

Will the FOS always investigate a complaint?

A

NO! When there is a reasonable possibility of resolution by mediation, the FOS will endeavour to achieve settlement by this route. If mediation is not an option, the FOS will investigate the complaint.

29
Q

Is the FOS determination immediately binding on the firm?

A

No! Only if the complainant accepts the determination is it binding on the firm.

30
Q

What happens if the complainant rejects the FOS’s decision?

A

They can pursue the matter further through the courts.

31
Q

List the 6 situations in which a customer may complain to The Pension Ombudsman.

A

1) Taking too long to do something without good reason
2) Failing to do something they should have
3) Not following their own rules or the law
4) Breaking a promise
5) Giving incorrect or misleading information
6) Not making a decision in the right way

32
Q

When does a complaint to The Pension Ombudsman need to be made?

A

A complaint to the Ombudsman needs to be made within three years of when an event occurred or, if later, within three years of when the complainant first knew about it.

33
Q

What powers does the Ombudsman have?

A

The Ombudsman has the legal power to make decisions that are final binding and enforceable in court.

34
Q

Why was the FSCS established?

A

The Financial Services Compensation Scheme (FSCS) was established to provide compensation where authorised persons and appointed representatives are unable to satisfy claims against them.

35
Q

What are the key elements of a claim?

A

To succeed, a claimant must have a protected claim against a relevant person, and make that claim within the relevant time limits, usually six years of the date of the event. Note that a claim can only be made once a firm is in liquidation. If the firm still exists, the customer must explore all other avenues of redress.

36
Q

Can authorised firms be eligible claimants?

A

Authorised firms can never be eligible claimants unless they are a small business (e.g. sole trader) and the claim arises out of regulated activity that they do not have experience of.

37
Q

List the 3 items classified as a protected claim.

A

1) Designated investment business
2) Deposits
3) Insurance

38
Q

List the geographical rules surrounding the FSCS.

A

The activity subject to a claim must be carried out in the UK or in an EEA state by a firm passporting its services there.

39
Q

Which individuals count as relevant persons?

A

1) An authorised firm
2) An appointed representative of the above

40
Q

Which firms would NOT count as relevant persons?

A

An EEA firm passported into the UK is not a relevant person. Customers losing money from the activities of such a firm would have to seek compensation through the firm’s home state regulator.

41
Q

What is the FSCS limit for designated investments?

A

£85,000 per individual

42
Q

How is the FSCS funded?

A

Authorised firms.

43
Q

What is the total payout for compensation for the scheme as a whole?

A

For the scheme as a whole, the total payout for compensation is unlimited.

IMC IE Chapter 4 (1 decks)

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