The FCA clarifies its current position in relation to dealing with complaints in a statement on the 1st May 2020 which will be reviewed in 3 months time. The FCA is concerned that if firms do not deal with complaints in line with the regulation, then there will be an impact on vulnerable consumers, or cause consumers to become vulnerable. The FCA have extended the definition of vulnerable consumers to include small businesses and micro-enterprises.
The FCA discussed the following areas in the statement:
- Complaint handling capacity and priorities;
- Vulnerable consumers;
- Maintaining the quality of complaint handling;
- Firms experiencing difficulties;
- Claims management companies (CMCs) and referrals to the Financial Ombudsman Service;
- The Ombudsman Service’s general approach;
- Other considerations for CMCs; and
- PPI complaints
Below are the areas that we believe are relevant to our customers
Complaint handling capacity and priorities
In the current Covid-19 circumstances, handling complaints remains an important function which needs to continue in line with the regulations. Firms should take all reasonable steps to ensure as much complaint handling as possible continues through staff working from home, where it can be done fairly and effectively.
The FCA understand that firms’ capacity to handle complaints could be reduced as a result of the change in working practice and as such expects firms to prioritise:
- Promptly paying complainants who have been offered redress and who have accepted that offer;
- The prompt and fair resolution of complaints from:
- consumers who are likely to be vulnerable to harm if their complaint is not resolved promptly and fairly, and
- micro-enterprises and small businesses who are likely to face serious financial difficulties if their complaint is not resolved promptly and fairly; and
- Sending timely holding responses to those complainants in 2. where their complaints cannot be resolved promptly.
If a firm cannot deliver these 3 priorities adequately and effectively through home working, then firms should consider if it could be appropriate for the firm to maintain the minimal physical onsite presence. This is as long as the site is configured for social distancing in line with Government guidelines.
The FCA’s definition of a vulnerable consumer is in their Approach to Consumers document. This defines someone whose circumstances make them especially vulnerable to harm if a firm has not acted with appropriate levels of care, such as resolving their complaint promptly and fairly. Circumstances that can cause a consumer to become vulnerable include poor health, low financial or emotional resilience, life events such as bereavement or divorce, and low capability, including poor digital (e.g. ability to communicate and transact online), language and cognitive skills, as well as low financial capability. Covid-19 is likely to exacerbate personal circumstances that cause vulnerability. The FCA not only sees consumers but also micro-enterprises and small businesses at risk from harm if a complaint is not dealt with fairly and promptly.
Maintaining the quality of complaint handling
The FCA will expect firms to deal with complaints in the same way as they have always done. The FCA do not expect the current situation to materially affect a firm’s ability to:
- Enable clients to submit complaints through all available channels;
- Tell clients about their complaints procedure and those of the Financial Ombudsman Service (FOS). Details of FOS can be provided electronically; and
- Acknowledge receipt of complaints, particularly where the firm has the technology to send automated responses by email or online to complaints made electronically
Firms experiencing difficulties
If firms are experiencing operational challenges and find it more difficult to meet certain requirements in DISP 1.6 (Complaints time limit rules), for example, the requirement to provide a final response to complaints within 8 weeks of receipt (15 business days for payment services or e-money complaints), or a holding response explaining why they are unable to provide a final response within the timeframe, then they should inform their usual supervisory contact or contact email@example.com, and advise the FCA of the steps it is taking to manage and address its non-compliance.
The Ombudsman Service’s general approach
The Ombudsman Service determines complaints by reference to what is, in its opinion, fair and reasonable in all the circumstances of the case and so the challenges faced by firms during this period and what counts as good industry practice at the time, will form part of that assessment. Many of the FCA’s rules, such as those on promptly investigating complaints already give firms significant flexibility.
Where the FCA has issued guidance that gives firms additional flexibility to help deal with difficult operating conditions, such as the guidance published on unsecured credit, the Ombudsman Service will take this into account.
The FCA are in the process of discussing with the Ombudsman Service its approach to assessing complaints regarding specific issues that may arise as a result of the pandemic.
Considerations for Firms
Firms need to ensure that they have adequate staff to deal with complaints at home which remains a priority for senior managers. If firms are unable to deal effectively with complaints from home then staff will need to be employed on site.
Complaints should be dealt with fairly and promptly throughout the period.
Firms should ensure that even with reduced staff it is made clear to clients that even if phone lines are reduced and wait times longer, there are other channels to make complaints.
If there is still the possibility complaints are received by the firm by physical post, a member of staff will be required to go to the office to open mail in order that these can be dealt with within the required timeframes.
Senior Management need to review data in relation to complaints received by the firm to ensure that complaints are dealt with within the specified timeframes and that any redress is paid promptly.
The FCA have made it clear that there are no excuses for failing to deal with complaints promptly.
If firms are unable to adhere to the complaint handling requirement, they must contact the regulators.
Help and advice
If you require any assistance in understanding the implications of Covid-19 on your firm, please do not hesitate to contact us.