FCA complaint handling, rules, timescales and procedures

The FCA complaint handling rules, requirements and the Financial Ombudsman Service (FOS)

What is a complaint?

The FCA complaint handling rules defines a complaint as an expression of dissatisfaction (oral or written) about the provision of, or failure to provide, a financial service. It alleges how you have suffered (or may suffer):

financial loss;

material distress; or

material inconvenience

The FCA complaint handling rules operate a five key stage approach to complaint handling as follows:

Identifying a complaint.

Recording a complaint.

Internal reporting of a complaint.

Provision of redress.

Carrying out root cause analysis.

The FCA Handbook “DISP” deals with FCA complaints handling rules and is divided into three main chapters:

Treating Complainants Fairly

Jurisdiction of the Financial Ombudsman Service

Complaint handling procedures of the Financial Ombudsman Service

There are also further sections on FCA complaints handling rules that are only applicable to some firms: the Standard Terms – which sets out how complaints against VJ participants are dealt with under the Voluntary Jurisdiction – an appendix on handling mortgage endowment complaints, an appendix on handling payment protection insurance complaints, and transitional provisions and schedules.

Which sections apply to which firms and how of t he FCA complaint handling rules , depends on the type of firm and the type of business the firm conducts and this requires a decent in-depth knowledge of DISP. For example, UCITS management companies should be aware that just because they may not have any complainants that fit the definition of ‘eligible’ complainants doesn’t mean they don’t still need to handle complaints in line with FCA complaints procedure in DISP 1.

Any weakness or breakdown at any stage could result in a poor consumer experience and prevent the firm from resolving complaints effectively.

The FOS is an independent adjudicator of consumer complaints linked to the supply of finance.

Firms must have their own internal complaints handling procedures and comply with rules (set out in the DISP chapter of the FCA Handbook) which set out timescales within which responses to complaints must be given to customers. The firm must have an adequate regulatory complaints policy and procedures as well as effective means of recording their categories and responses in a compliant way.

If, at the end of a firms internal complaints-handling process (generally eight weeks), the customer remains dissatisfied, they have the right to refer the complaint to the FOS for adjudication and resolution. FOS’s decision is not binding on customers, who remain free to pursue their complaint in the courts if they wish: The Decisions Are However Binding On Firms And FOS Can Order Firms To Take Corrective Action And Where Appropriate Pay Redress Up To £415,000.

This Was Increased From £375,000 On 1st April 2022. The Increase Only Applies To Complaints Referred On Or After 1st April 2019. For Complaints Referred After 1st April 2019 About Earlier Complaints, The Limit Increased From £170,000 To £190,000.

A further limit was introduced for £430,000 for complaints referred to FOS on or after 1 April 2024 about acts or omissions by firms on or after 1 April 2019. For the latest limits and a full explanation – please go HERE.

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This guide is only an aide memoire and intended for information only for anyone appraising the documentation needed in an audit/compliance check. It is not to be considered as direct advice or intended to replace specific 1 to 1 engagement with your compliance and risk professional.

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