SIFA 11
Complaints
SIFA 11.1
How to handle a complaint
- 01/12/2004
SIFA 11.1.1
See Notes
There are many
reasons why clients complain to firms. Typically, complaints arise where:
•a firm makes
unexpected or excessive charges; or•a firm does
not draw attention to a particularly strict condition in a contract; or•a firm does
not give a client adequate notice about changes to a contract; or•a client loses
money because of a firm's slow administration; or•a firm does
not warn a client adequately about the risks of a product.
- 09/09/2005
SIFA 11.1.2
See Notes
If you receive a complaint from or on behalf of an eligible complainant
(usually a private customer) about your firm's providing - or failing
to provide - a financial service, you will need to follow certain procedures.
- 09/09/2005
SIFA 11.1.3
See Notes
An
example of an eligible complainant is an individual who is classified as a
private customer. Individuals who are private customers can refer a complaint
to the Financial Ombudsman Service (FOS) if they are unhappy with a firm's
final response.
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SIFA 11.1.4
See Notes
Your internal
complaints-handling procedures must cover:
•receiving complaints;•responding to
complaints;•referring complaints
to other firms;•the appropriate
investigation of complaints; and•notifying complainants
of their right to go to the FOS, where relevant.
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SIFA 11.1.5
See Notes
A firm must have appropriate management controls to ensure that
its complaints handling is managed effectively. The oversight of a firm's
compliance must be allocated to a director or senior manager (SYSC 3.2.8 R). Your literature and correspondence relating to complaints should
be in clear and plain language (DISP
1.2.14 G).
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SIFA 11.1.6
See Notes
You must have
in place and operate appropriate and effective internal complaint-handling
procedures
•for handling
any expression of dissatisfaction, whether oral or written, justified or not;•for referring
to another firm, expressions of dissatisfaction about that firm's services
if you market (or have marketed) that firm's financial services or if your
financial services are marketed by the other firm (DISP
1.2.1 R); and•the procedures
must be written down.
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SIFA 11.1.7
See Notes
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SIFA 11.1.8
See Notes
If the internal handling of complaints
is inadequate, fewer complaints will be resolved at the earliest opportunity
and the number of unresolved complaints that are referred to the FOS will
increase. The FSA will act where it finds weaknesses in complaint handling
that put consumers' interests at risk.
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When and where should you publicise your procedures?
SIFA 11.1.9
See Notes
You should publicise your procedures
in the following ways:
•You must display
a notice stating that the FOS covers your firm. The notice should be displayed
in all of your branches or offices that your customers have access to.•Customers should
be informed in the firm's IDD what to do if they have a complaint (or in its
terms of business if that is provided on first contact with the customer).•At or immediately
after the point of sale, your firm must refer your clients in writing to the
availability of your internal complaint-handling procedures - for example,
in your terms of business.•If you receive
a complaint (unless it is resolved by close of business the next day) or receive
a request for a copy of the procedures, you must supply a copy of the complaint-handling
procedures to the complainant.•All of your
employees should be aware of the procedures.
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How quickly do you need to deal with a complaint?
SIFA 11.1.10
See Notes
You will want
to resolve complaints quickly and efficiently, although the length of time
that it will take you to investigate a complaint may vary. There are fixed
periods within which you have to inform your client of your progress:
- 09/09/2005
SIFA 11.1.11
See Notes
The steps are
explained in more detail below:
| Step 1 | Within five business days | |
|
-send a copy
of your internal complaints procedures; and-inform them
who will be handling the complaint; or-inform the complainant
of the referral by way of a final response and include the other firm's contact
details.
| ||
| Step 2 |
Within four weeks
Send a final response - including: | (It should be a separate document and written in plain English) |
|
-a summary of
the complaint;-details of any
offer made;-right your client
has to go to the FOS;-a copy of the
leaflet about the FOS - 'your complaint and the ombudsman';-a summary of
your investigation;-the time limit
on any offer made; and-the six-month
time limit for referrals to the FOS.
| ||
| Or send a holding response | ||
| Explaining why you are not yet in a position to resolve the complaint and indicating when you will make further contact with the client. | ||
| Step 3 |
Within eight weeks
Send a final response | |
| As per the details in step 2 above. | ||
| Or a response explaining: | ||
|
-why you are
not able to respond;-when you expect
to provide a final response;-explaining that
the client is entitled to refer the complaint to the FOS if unhappy with the
delay;-the reasons
for the delay;-giving a copy
of the leaflet about the FOS - 'your complaint and the ombudsman'; and-the six-month
time limit for referrals to the FOS.
| ||
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SIFA 11.1.12
See Notes
Where a firm has reasonable grounds to
be satisfied that another firm may be solely or jointly responsible for the
fault alleged in a complaint, it may refer the complaint to that other firm.
If it does so, it must refer the complaint promptly and - in any event - within
five business days of the date when it became satisfied that the other firm
may be responsible for the subject matter of the complaint (DISP
1.4.18 R).
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SIFA 11.1.13
See Notes
On receiving a complaint referred by
another firm, the standard time limits will apply from the date on which the
firm receives the referral. In particular, the firm must send a written acknowledgement
to the complainant within five working days. A firm should copy this acknowledgement
to the firm that made the referral.
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Exception to the rules: quick resolution of complaints
SIFA 11.1.14
See Notes
If you manage to deal with a complaint
by the end of the next business day after receiving it, there is no need to
supply your client with a copy of the complaints procedures.
- 09/09/2005
SIFA 11.1.15
See Notes
Complaints that are resolved by the next
business day do not fall under the requirements for:
•time limits;
or•record keeping;
or•reporting.
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Charging customers for handling their complaints
SIFA 11.1.16
See Notes
Any provision seeking to charge customers,
or to recover costs, for dealing with complaints before the FOS, is unjustifiable,
as this could deter customers from exercising their right to refer the dispute
to the FOS. In most circumstances we would consider such a clause in a firm's
terms of business to be unfair under the Unfair Terms in Consumer Contracts
Regulations. In addition, such a clause is, in our view, inconsistent with
Principle 6 of the FSA's Principles for Businesses, which requires that you
must pay due regard to the interests of its customers and treat them fairly.
- 09/09/2005
SIFA 11.1.17
See Notes
We recognise that frivolous or vexatious
complaints may raise unnecessary administrative burdens for both firms and
the FOS alike. In these circumstances, we think it would be legitimate for
firms, through their terms of business, to seek to reclaim costs and expenses
reasonably incurred by the firm as a result of defending these complaints
through the FOS.
- 09/09/2005
SIFA 11.1.18
See Notes
The question of what is frivolous or
vexatious would need to be determined on a case-by-case basis and is likely
to be a very small minority of cases. In our view, if the FOS did not dismiss
a case during its initial review on the grounds in DISP 3.3.1 R (2), the claim should not be regarded as frivolous or vexatious.
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Cooperation with the financial ombudsman service
SIFA 11.1.19
See Notes
A firm must cooperate fully with the
FOS in the handling of complaints against it (DISP
1.6.1 R).
- 09/09/2005
SIFA 11.1.20
See Notes
Cooperation with the FOS includes, but
is not limited to:
•producing requested
documents;•adhering to
any specified time limits;•attending hearings
when requested to do so; and•complying promptly
with any settlements or awards (DISP
1.6.2 R).
- 09/09/2005
Mortgage endowment complaints
SIFA 11.1.21
See Notes
We sent two Dear CEO letters to larger
firms in April 2002 and January 2004. These letters set out the kind of investigation
and standards that we expect in mortgage endowment complaint handling. You
can find these letters on our website under FSA Library and Communication
Documents:
www.fsa.gov.uk/pubs/ceo/ceo_letter_4apr02.pdf
www.fsa.gov.uk/pubs/ceo/ceo_letter_23jan04.pdf
www.fsa.gov.uk/pubs/ceo/ceo_letter_4apr02.pdf
www.fsa.gov.uk/pubs/ceo/ceo_letter_23jan04.pdf
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Where are the relevant Handbook sections?
SIFA 11.1.22
See Notes
Complaints-handling procedures are explained
fully in Chapter 1 of the Dispute Resolution: Complaints sourcebook (DISP).
The sections cover:
•the general
and additional requirements: DISP 1.2;•additional requirements
for internal complaint-handling procedures: DISP 1.3;•the time limits
for dealing with a complaint: DISP 1.4;
and•who should deal
with a complaint: DISP
1.2.16 R.
- 09/09/2005
Record keeping requirements
SIFA 11.1.23
See Notes
You must keep records for a minimum of
three years from when you receive a complaint (DISP
1.5.1 R). This is so that you meet our requirements and are able to co-operate
with the FOS if it asks for information about a complaint that is later referred
to it. These are minimum requirements and you may decide to keep material
for longer.
| Information about a complaint that you should keep: | |
| The name of the complainant. | The substance of the complaint. |
| Copies of correspondence between your firm and the complainant. | Details of any redress offered by your firm. |
| Documentation relating to the referral of a complaint | |
| The following section of the Guide is also relevant: | |
| • | 'Complaints reporting to the FSA' - Chapter 11.2 |
| If you do mortgage or general insurance business you should also refer to MIGI 14. | |
- 09/09/2005
SIFA 11.2
Complaints reporting to the FSA
- 01/12/2004
SIFA 11.2.1
See Notes
You
will need to send in a complaints return: unless your firm only conducts business
with clients that are not eligible complainants (which, as a small personal
investment firm, would be very unlikely).
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Why do you need to submit a complaints report?
SIFA 11.2.2
See Notes
We collect complaints data to assist
us in monitoring firms and their regulatory compliance.
- 09/09/2005
When are the reporting periods?
SIFA 11.2.3
See Notes
You must send
a return to us twice each year. The reporting periods are:
•the six months
immediately following a firm's accounting reference date; and•the six months
immediately preceding a firm's accounting reference date.
- 09/09/2005
SIFA 11.2.4
See Notes
Returns have
to be sent to us within 30 business days of the end of the relevant reporting
period.
- 09/09/2005
SIFA 11.2.5
See Notes
All firms will
have to collect complaint data in the new reporting format from 1 April 2005.
However, we only expect firms to submit complaints data to us electronically
from 1 July 2005. This means that data for the period 1 April 2005 to 30 June
2005 should be included in a firm's first return after 1 July 2005.
- 09/09/2005
How do you submit a report?
SIFA 11.2.6
See Notes
The returns
will be submitted via the Firms Online system within 30 business days of the
reporting period end date. Complaints returns are not part of the Retail Mediation
Activities Return (RMAR) but will be submitted in the same way. The format
of the return may be found at DISP
1 Annex 1 R.
•The returns
are in a grid format that allows analysis of complaints by product and complaint
type. There are separate returns for private individual complaints and small
business complaints.•The returns
also require information covering all customers of: the number of complaints
considered, complaints upheld, complaints referred to the FOS, complaints
resolved (and the time taken), outstanding complaints and the amount of redress
paid.
- 09/09/2005
Where are the relevant Handbook sections?
SIFA 11.2.7
See Notes
The following sections of the Dispute
Resolution: Complaints (DISP) sourcebook are relevant:
•an explanation
of what an eligible complainant is: DISP
2.4.3 R;•the reporting
periods: DISP
1.5.6 R;•the Financial
Ombudsman Service funding rules: DISP 5;
and•how to notify
the FSA if you do not conduct business with eligible complainants: DISP 1.1.7 R to DISP 1.1.8 R.
| The following sections of the Guide are also relevant: | |
| • | 'How to handle a complaint' - Chapter 11.1 |
| • | 'Reporting requirements' - Chapter 12.1 |
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