Handling Complaints as a Financial Services Firm
Each financial services firm must have and publish a written complaints procedure to deal with complaints from eligible complainants. In this article, which is relevant to the CII’s R01, CF1, CF8, ER1, and J07 exams, we take a look at how complaints should be made, the process to be followed by the firm being complained about, and what happens if the firm cannot resolve the complaint to the complainant’s satisfaction.
This article is correct as at 24 April 2023
Eligible Complainants
The list of eligible complainants includes:
- consumers;
- micro-enterprises with fewer than ten employees and a turnover or balance sheet total of no more than €2m;
- charities with an annual income of less than £6.5m;
- trustees of trusts with a net asset value of less than £5m;
- consumer buy-to-let (CBTL) consumers;
- small businesses with an annual turnover of less than £6.5m and fewer than 50 employees or a balance sheet total of less than £5m; and
- guarantors.
Making a Complaint
A complaint should be made in the first instance to the firm that provided the service. If they consider that another firm is responsible, they must refer the complaint to them within 5 working days.
This article takes a look at how complaints should be made, the process to be followed, and what happens if the firm cannot resolve the complaint. Share on X
Complaint Procedure
There is a strict procedure that must be followed when handling a complaint, and the client needs to be kept informed at all times:
- They should firstly receive a prompt acknowledgement of the complaint.
- Within four weeks, they should be sent a summary of the complaint, investigation summary, details of any offer and its time limit, or they should be sent a holding response.
- After eight weeks, there should be a final response and at that point, the client should be told that they can refer the matter to the Financial Ombudsman Service (FOS).
The exception to this procedure is for rapid resolution complaints, which must be dealt with within three business days.
The Financial Ombudsman Service
As mentioned above, part of the process for dealing with complaints is letting the client know they can refer the matter to the FOS. The FOS’s objective is to resolve complaints and disputes as quickly as possible, and any complaint must be referred to them within six months after the final response has been received, six years after the event, or three years after the complainant knew or should have known they had cause for a complaint, whichever of these is the earliest date.
In exceptional circumstances, the FOS can take on complaints after these time periods, and for complaint cases that involve pension transfers, pension opt-outs, and FSAVC reviews.
Once the FOS has considered the complaint and has decided on what is fair and reasonable, the decision is sent in writing to both parties. The individual must then accept or reject the outcome within the time limit specified in the correspondence. If the decision is rejected, they can pursue the complaint in court.
The maximum the FOS can award is £415,000 for complaints about actions and omissions by firms that are referred on or after 1 April 2023 and that occurred on or after 1 April 2019. They can recommend a higher figure, but this would not be binding on the respondent. Lower figures apply for complaints relating to business conducted before this date. They can also make a directions award, telling the firm what action it needs to take to put things right, awards for costs and/or interest, and awards for distress or inconvenience.
Pensions
Finally, you should note that the Pensions Ombudsman deals with any management or administration complaints surrounding personal pensions and small occupational schemes, whereas the Financial Ombudsman Service deals with the sale of these products.
Grab the resources you need!
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Alternatively, you can download one of the tasters for CF1, CF8, or ER1 if you’re studying for one of those exams.
