FSA announces new complaints handling rulesChanges to complaints handling are underway

27 May 2011

Changes to complaints rules

The FSA has announced changes to the way banks must handle complaints

New rules for consumer complaints handling have been announced by the Financial Services Authority. 

The Financial Services Authority (FSA) has confirmed that it will adopt new consumer complaint handling rules, and increase the Financial Ombudsman award limit to £150,000. 

The rules include an abolition of the 'two-stage' complaints handling rule, requiring firms to resolve complaints in one sitting, and a requirement for firms to identify a senior individual who is responsible for complaints handling. 

The FSA will also clarify existing rules so there can be no charge for submitting a complaint, and is consulting on ways to allow people wrongly pursued for debts to refer their complaints to the Financial Ombudsman Service

Progress on complaints handling 

The announcement comes hot on the heels of the recent FSA decision to fine the Bank of Scotland of £3.5 million for failures related to complaints handling following the sale of its retail investment products. It also comes after the £2.8 million fine imposed on Royal Bank of Scotland and Natwest for multiple failings in the way they handled customers’ complaints.

Which? chief executive Peter Vicary-Smith says: 'We’ve long argued that the two-stage complaints process was simply a way for firms to fob off legitimate complaints. This should put an end to consumers having to restate their complaints twice, something that stops many people taking their cases further.

'Ensuring that senior managers within financial companies have to take responsibility for complaints handing is a step in the right direction. We think that the FSA should take enforcement action against these individuals if too many people have their complaints unfairly rejected. 

'We now hope that the FSA brings in more new rules, so that people who are wrongly pursued for debts by companies they'd never had any dealings with can take their complaint to the Ombudsman.'

New complaints handling rules

The regulator has announced a raft of new rules alongside an increase to the limit on awards made by the Financial Ombudsman Service, from £100,000 to £150,000. The new rules include:

  • Abolition of the ‘two-stage’ complaints handling rule to make sure firms resolve complaints fairly and do not dismiss them the first time, requiring persistence from the customer to pursue the complaint;
  • A requirement for firms to identify a senior individual responsible for complaints handling;
  • Additional guidance to help firms understand the processes they might need to put in place to meet FSA requirements on root cause analysis; and
  • Further guidance requiring firms to take account of ombudsman decisions and previous customer complaints.

Further consultations 

The FSA will also clarify that information about complaints handling should be provided free, so that there can be no charge for submitting a complaint. It is also consulting on allowing people who are being wrongly pursued for debts to refer their complaints to the Ombudsman. Under the existing rules these people could not complain to the Ombudsman as they were not classified as a 'customer' of the firm.

The reforms are a continuation of the FSA’s approach to supervising how firms deal with their customers. The FSA also publishes complaints statistics, so that customers can see the volume of complaints being received by firms, as well as firm-specific complaints data. 

You can find a full guide on on the Which? website, including how to take a complaint further and who to complain to. 

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