On November 17, the UK Financial Conduct Authority (FCA) published a report setting out its findings pursuant to a review it carried out earlier in the year into FCA-regulated firms’ complaint handling arrangements. The FCA considers that “Complaints matter, and how they are dealt with can say much about a firm’s culture. Firms should deal with complaints fairly and promptly (using competent staff) and, where appropriate, redress should be provided. Dissatisfied consumers should not find it difficult to complain nor should the procedure be anything other than straightforward. 

While the FCA’s review focused on financial services firms operating in the retail sector, the implications of the FCA’s report could be far-reaching for all FCA-authorized firms as the report recommends that changes should be made to the FCA rules in this area, which will likely impact on investment firms in the wholesale sector as well as retail firms. 

The FCA recommended that all firms should make further improvements in the five stages of the complaint handling process: (1) the identification, (2) recording and (3) internal reporting of a complaint, followed by (4) the provision of redress and (5) carrying out of root cause analysis.   

The FCA report concluded that all firms should consider how the FCA’s findings relate to their own complaint-handling operating models, policies and practices, and the FCA urged firms to consider: 

  • whether their complaint-handling policies and processes fully consider whether their approaches to complaints have the interests of consumers at their heart, avoiding a tick-box approach to compliance; 
  • reviewing the definition of “complaint” and training their staff if the definition is not properly understood;  
  • whether their systems and processes could inhibit accurate recording of complaints; 
  • the observations made about consistency of redress and distress and inconvenience payments;  
  • their approach to root cause analysis; and 
  • whether they can make any improvements. 

The FCA will publish a consultation paper on changes to its complaints rules before the end of the year. 

The FCA’s report is available here.