Unit 1 - 5. Complaints and Redress

Question 1

Complaint Procedures (DISP, record keeping and response time)

Unit 1 - 5. Complaints and Redress

Answer 1

DISP 1.2 Consumer awareness rules
DISP 1.3 Complaint handling rules
DISP 1.4 Complaints resolution rules

Stages and timings
Record-keeping and reporting (kept for 5 years if for MifID business, 3 if not) (firms must twice yearly report to FCA on complaints)
Final response to complainants (within 8 weeks, gives person 6months from final response to go to FOS)

Question 2

Eligible Complainants

Unit 1 - 5. Complaints and Redress

Answer 2

Can only take grievance to the FOS if eligible complainant.

1. Consumers
2. Micro-enterprises (less than 10 people, smaller than 2mil euro turnover/balance sheet)
3. Charities (income less than £6.5m)
4. A trustee of a trust (net asset value less than £5m)
5. Certain SMEs (turnover less than £6.5m, balance sheet threshold of £5m or fewer than 50 employees)

Question 3

PO and PPF

Unit 1 - 5. Complaints and Redress

Answer 3

PO = The Pension Ombudsman
PPF = Pension Protection Fund

PO is independent organization to help people resolve their pension disputes and complaints.

PPF is accountable to parliament and seeks to protect those who have defined benefit pension scheme in event employer becomes insolvent.

Question 4

Firms subject to PSD or EMD (complaints)

Unit 1 - 5. Complaints and Redress

Answer 4

PSD (Payments services regulations)
EMD (Electronic money directive)

EMD or PSD complaints have different timescales for complaints. Must send final response to the complainant by the end of 15 business days.

Complaint can be any oral or written expression of dissatisfaction

Question 5

FOS (jurisdiction, awards)

Unit 1 - 5. Complaints and Redress

Answer 5

The Financial Ombudsman Service

Independent body established to administer and operate a dispute resolution scheme. It is free to complainants, which removes fear of legal costs.

Compulsory jurisdiction (CJ) for complaints from eligible complainants against FCA auth firms which can't be resolved auto go to FOS.
Voluntary jurisdiction (VJ) covers complaints not in CJ. Businesses can opt into VJ via contractual agreement.

FOS award limits (future awards changed with inflation)
£355k after 4/2020
£350k (4/2019 to 4/2020)
£160k (prior to 4/2019)

Question 6

FSCS

Unit 1 - 5. Complaints and Redress

Answer 6

Financial Services Compensation Scheme. Pays compensation to eligible claimants in the event of a default/insolvency by an authorised firm.

Compensation is only paid to cover financial loss. Claims usually per eligible person, per firm.

From banks, up to £85k per person (170k joint)
Insurance firms/brokers and financial advisors (100% protected for compulsory insurance, 90% for non-compulsory)
Investments (85k)
Pensions (if pension provider fails, 100% of claim, no upper limit. If SIPP operator fails, 85k max. Bad pension advice, 85k max).

Question 7

Super-complaints and Mass-detriment references

Unit 1 - 5. Complaints and Redress

Answer 7

Under FSA2012, certain consumer bodies can make ‘super-complaints’ which raise competition and consumer issues with the FCA where a UK market appears to be damaging to the interests of consumers.

FOS or regulated firm can make mass-detriment reference if it appears there have been regular failures by firms to comply with regulations and consumers have suffered. Or firm regularly acted in way which if complaint were to be made, FOS would make award.