Prudential Regulation Authority Rulebook

Access for retail consumers to mechanisms for dealing with complaints about financial services firms is a key part of the regulatory regime. The Act gives the FSA the power to make rules relating to the handling of complaints by firms and provides for the establishment of an independent dispute resolution scheme (the Financial Ombudsman Service) to resolve complaints about financial services firms quickly and with minimum formality. The body established to administer and operate this scheme (the "scheme operator") is the Financial Ombudsman Service Limited ("FOS Ltd").
In addition, the Consumer Credit Act 2006 has amended the Act giving the Financial Ombudsman Service power to make rules for the resolution of certain disputes against holders of standard licences (licensees) issued by the Office of Fair Trading under the Consumer Credit Act 1974.
This module of the FSA Handbook contains the rules and guidance relating to the handling of complaints by firms and licensees and to the operation of the Financial Ombudsman Service. Responsibility for the rules relating to the Financial Ombudsman Service is shared under the Act between the FSA and the FOS Ltd, with those rules and other requirements written by the FOS Ltd being subject to approval by, or the consent of, the FSA.
Under the Act, the Financial Ombudsman Service comprises three jurisdictions: (a) The Compulsory Jurisdiction covers firms which are required to participate in the Financial Ombudsman Service in respect of complaints about activities specified by the FSA [and unauthorised persons subject to the Compulsory Jurisdiction in relation to relevant complaints]; (b) The Consumer Credit Jurisdiction covers licensees which are required to participate in the Financial Ombudsman Service in respect of complaints specified by the Financial Ombudsman Service and arising in the course of consumer credit activities;(c) The Voluntary Jurisdiction can cover financial services activities not included in the Compulsory Jurisdiction or the Consumer Credit Jurisdiction. Both firms and unauthorised firms can participate in the Voluntary Jurisdiction by contractual agreement with the FOS Ltd (in accordance with the Standard Terms - see below) and are known as VJ participants.

Although the authority to make the rules relating to the Compulsory Jurisdiction, the Consumer Credit Jurisdiction and the Voluntary Jurisdiction derives from different sections of the Act, the provisions have been co-ordinated to ensure that, wherever possible, they are identical.

Chapter 1: Complaint handling procedures for firms and licensees
These rules set out the complaint handling procedures which firms and licensees capable of giving rise to an eligible complaint under the Compulsory Jurisdiction or the Consumer Credit Jurisdiction (see Chapter 2) must establish. In relation to the Compulsory Jurisdiction, they are made by the FSA under section 138 of the Act and paragraph 13 of Schedule 17 to the Act. In relation to the Consumer Credit Jurisdiction, they are made by the Financial Ombudsman Service under Paragraph 16B of Schedule 17 to the Act subject to approval by the FSA. These rules, with some exceptions, are applied to VJ participants by contract via the Standard Terms set by the FOS Ltd (Chapter 4).

Chapter 2: Jurisdiction Rules
These rules set out the scope of the Compulsory Jurisdiction, the Consumer Credit Jurisdiction and the Voluntary Jurisdiction of the Financial Ombudsman Service. They specify who can refer a complaint to the Financial Ombudsman Service and the time limits for doing so, as well as which activities are covered by the Compulsory Jurisdiction, the Consumer Credit Jurisdiction and the Voluntary Jurisdiction. The rules also set out the territorial scope of the Financial Ombudsman Service. They are relevant to consumers who may wish to refer complaints to the Financial Ombudsman Service; to firms which are subject to the Compulsory Jurisdiction; to unauthorised persons who are subject to the Compulsory Jurisdiction in relation to relevant complaints; to licensees which are subject to the Consumer Credit Jurisdiction; to VJ participants and to the Ombudsman himself. The rules relating to the scope of the Compulsory Jurisdiction are made by the FSA (under section 226 of the Act); the rules relating to the scope of the Consumer Credit Jurisdiction are made by FOS Ltd under section 226A of the Act, with FSA approval; the rules relating to the scope of the Voluntary Jurisdiction are made by the FOS Ltd, with FSA approval (under section 227). The rules relating to the time limits for referring a complaint to the Financial Ombudsman Service are made by the FSA under paragraph 13 of Schedule 17 to the Act and are applied to VJ participants by contract via the Standard Terms set by the FOS Ltd.

Chapter 3: Complaint handling procedures of the Financial Ombudsman Service
These rules apply to the Ombudsman, to firms, and to unauthorised persons who are subject to the Compulsory Jurisdiction in relation to relevant complaints and to licensees who are subject to the Consumer Credit Jurisdiction. They are also relevant to complainants. They set out how the FOS Ltd and, in particular, the Ombudsman will handle complaints under the Financial Ombudsman Service. For the purposes of the Compulsory Jurisdiction, they comprise the scheme rules and the costs rules (made by the FOS Ltd, with FSA consent or approval, under paragraph 14 of Schedule 17 and section 230 respectively) and rules made by the FSA on the kinds of loss or damage that can be compensated, including the maximum amount which can be awarded (s229). For the purposes of the Consumer Credit Jurisdiction, they comprise rules made by the Financial Ombudsman Service with FSA approval under paragraph 16B (1) of Schedule 17 to the Act. These procedural rules are applied to VJ participants via the Standard Terms.

Chapter 4: The Standard Terms
The Standard Terms are made, with FSA approval, by the FOS Ltd under paragraph 18 of Schedule 17 to the Act and are the contractual terms by which VJ participants participate in the Voluntary Jurisdiction.

Appendix 1: Relevant Existing Complaints
The Ombudsman Transitional Order, made by HM Treasury under sections 426-428 of the Act, extends the scope of the Financial Ombudsman Service to enable it to deal with complaints about pre-commencement business where these could have been handled by a former scheme ("relevant complaints") and makes special provision for the handling of these complaints.
It distinguishes between:
(a) relevant existing complaints (ie complaints referred to, but not determined by, a former scheme (other than the Personal Insurance Arbitration Service) before commencement (see article 2 of the Ombudsman Transitional Order); and
(b) relevant new complaints (ie complaints referred to the Financial Ombudsman Service after commencement which relate to a pre-commencement act or omission, in respect of which the firm was, immediately before commencement, subject to a former scheme) (see article 3 of the Ombudsman Transitional Order).
The Order enables the FOS Ltd, with only a few exceptions, to handle relevant new complaints in accordance with its new procedures, as set out in DISP 1 to 5 and these are covered in the main body of the DISP rules. Except as otherwise indicated, the term "complaint" in DISP 1 to 5 therefore includes a relevant new complaint.
However, the Ombudsman Transitional Order makes different provision for the handling of relevant existing complaints (ie complaints which the former schemes have partly completed at commencement). These complaints will be passed over to the Financial Ombudsman Service by the former schemes (except the Personal Insurance Arbitration Service) at commencement and the Ombudsman Transitional Order requires the FOS Ltd to complete the handling of these cases. However, it provides that the Financial Ombudsman Service must do this, in a significant number of respects, in accordance with the procedures of the relevant former scheme. The arrangements for dealing with these complaints are set out in DISP App 1. This describes the ways in which relevant existing complaints must be treated differently from other complaints dealt with under the Financial Ombudsman Service, but cross refers to the provisions in DISP 1 to 5, where appropriate. (DISP 1 explains how complaints which are partly completed by firms (as distinct from former schemes) at commencement are to be handled.)

Appendix 2: FSA's guidance on handling mortgage endowment complaints
DISP App 2 contains FSA's guidance to firms on handling mortgage endowment complaints.