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;
- Requiring firms to identify a senior individual responsible for complaints handling;
- Additional guidance to help firms understand the processes they might need 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.
The consultation paper also confirms an increase to the limit on awards made by the Financial Ombudsman Service from £100,000 to £150,000.
Sheila Nicoll, the FSA's director of conduct policy, said:
"We would rather customers were not put in a position where they had to complain, but when they do we want them to be treated fairly by their firm, with their complaint resolved promptly and being provided with redress when needed.
"Good complaints handling contributes to customer loyalty and should provide the opportunity for firms to put right problems in product design or sales before issues become widespread. But we have found major failures with the way firms handle customer complaints and have since taken enforcement action against two firms as a result of poor complaints practices."
Complaints handling forms a key part of the FSA's intensive and intrusive approach to supervising how firms deal with their customers. Since 2009 the FSA has published aggregate complaints statistics so that customers can see the volume of complaints being received by firms.
In September 2010 the FSA also started to publish firm-specific complaints data, enabling customers to compare and contrast the way different firms deal with their complaints.
On 25 May 2011, the FSA announced a fine for Bank of Scotland of £3.5 million for failures related to complaints handling of its retail investment products.
This is the second firm fined following the FSA's review of complaint handling practises by five major banking groups. Royal Bank of Scotland and Natwest were fined £2.8 million in April 2010 for multiple failings in the way they handled customers' complaints.
Andrew Strange, Director of Policy, AIFA, said:
"The FSA's Annual Funding Requirement has now passed half a billion pounds for the first time. The impact of this on firms - and on the clients they serve - is clear to see.
"Whilst IFAs not holding client money will see a welcome reduction, the wider context of a regulator requiring greater accountability is only further underlined by the overall escalating budget.
"The proportion of costs allocated to the intermediary sector remains out of line with the threat posed to the regulatory system. We will continue to push the regulator to better apportion its costs to the industry and to make better use of risk indicators."
