FCA consults on complaints handling improvements

Financial services firms will no longer be able to use premium rate telephone numbers for customers as part of a series of proposals from the Financial Conduct Authority (FCA) on changes to the rules on complaint handling and post-sale telephone calls.

The proposals follow a FCA thematic review on complaint handing, and look to reform the way complaints will be dealt with and reported. The changes are now open to consultation.

Christopher Woolard, director of policy, risk and research, said:

'Consumers want a simple way to complain that does not leave them out of pocket. And they want to be assured that their concerns will be dealt with fairly and quickly.

'These proposed reforms will further improve the system, making it less bureaucratic for firms, easier for consumers and will provide us with improved intelligence on complaints.'

Under the current rules, complaints that are dealt with by the end of the next business day do not require a letter to be sent to the customer. For these quickly resolved complaints, if dissatisfied the customer could have to wait up to eight weeks before being able to go to the Financial Ombudsman Service (ombudsman service).

The recent thematic work showed the one day deadline could lead to some unintended consequences, with consumers often reasonably expecting a complaint to be dealt with quickly and, where appropriate, informally. The FCA is now proposing to extend the period during which complaints can be resolved without the need for a formal letter. Firms will be allowed up to three business days to deal with less complex complaints. This will help avoid unnecessary procedure and ensure that consumers have matters resolved faster.

In addition, complainants will be able to refer all cases to the ombudsman service immediately after receiving the firm’s response. Firms will also have to inform customers, in writing, that they are able to take their complaint to the ombudsman service if they are dissatisfied with the resolution. 

The FCA proposes to improve transparency by requiring firms to report all complaints to the FCA, not just those where final response letters are issued, as is the case at present. Firms will also have to analyse and report the causes and categories of complaints, which will be published alongside details about the size of firms, to provide greater context and allow for comparison of their performance.

The FCA is also consulting on amendments to the complaints handling rules to implement the Alternative Dispute Resolution Directive (ADRD).

The FCA is proposing to keep current time limits for referring complaints to the ombudsman service, as they comply with the Directive and provide a sufficient level of consumer protection. However, the rules will be amended so firms will be required to tell consumers when they respond to complaints if the firm will consent to the ombudsman service considering a complaint made to the ombudsman service outside the relevant time limits.

In addition, the FCA is continuing its work to consider the case for a 15 year ‘long stop’ on complaints to the ombudsman service. Implementing the ADRD in the way the FCA is consulting on would not preclude the introduction of a ‘long stop’ should it be decided it was appropriate to do so in the future.

In its recent review of how complaints are handled, the FCA found that while some improvements and innovations have already been made firms could and should be doing more. In particular, firms did not always consider the impact on consumers when designing and implementing processes and procedures. These proposals help address this concern. 

Notes to editors

  1. CP14/30 Improving complaint handling
  2. Thematic review: Complaints handling
  3. Alternative Dispute Resolution Directive
  4. The FCA’s dispute handling rules for regulated firms
  5. One minute guide – complaints handling
  6. Being regulated: dealing with complaints
  7. On 1 April 2014, the FCA took over responsibility for consumer credit and the regulation of 50,000 consumer credit firms, including logbook lenders, payday lenders and debt management firms.
  8. On 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA)
  9. Find out more information about the FCA



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