UK financial firms given longer to respond to less serious customer complaints

The change should enable FCA-regulated firms to resolve more customer complaints more quickly, and is also expected to result in fewer consumers having to take their complaint further, the FCA said. However, firms will also be required to report all complaints made against them to the regulator, rather than just those that take longer to resolve, once the new rules come into force next year, it said.

FCA strategy and competition director Christopher Woolard said that the changes would “help deliver the quicker, easier and fairer resolution to complaints that consumers want”.

“Getting this right is also vital for firms,” he said. “A properly resolved complaint can keep a customer happy, and protect the firm’s reputation. But, more than that, effective complaints handling systems can act as an early warning system for firms.”

The changes follow a review of firms' complaints-handling procedures by the regulator, which concluded last year. The current rules allow firms to deal with less complex complaints without sending a formal letter by the end of the "next business day". However, they do not have to report those complaints to the regulator and customers may have to wait up until eight weeks before they are permitted to refer the complaint to the Financial Ombudsman Service (FOS) for final resolution if they are not satisfied with the firm's response.

Under the new rules, which will come into force on 30 June 2016, firms will be given three business days in which to respond to a complaint without the need for a final response letter. Once the complaint is resolved, the firm will be required to send a template 'summary resolution communication' to the customer, informing them of their right to take the complaint to the FOS if not satisfied. Firms will also have to report all complaints received to the FCA, even those that are resolved using the simpler procedure.

Consumers will also have access to more and better data on complaints made to financial services companies through the FCA's biannual complaint data release, which will contain details of all complaints received and provide additional context to allow consumers to better compare firms. The new, fuller data set will be published for the first time in September 2016 and will not be comparable to historic complaints data. However, the FCA said that the new release would be "more informative for consumers and the industry".

The FCA will continue to collect complaints data from firms twice a year once the new rules come into force, using a new 'complaints return' form. It has made some changes to the product categories included on the form to better reflect its regulatory priorities, most notably creating a distinction between "unsuitable advice" and "unclear guidance/arrangement" to reflect the introduction of guidance services following the pension reforms that came into force in April 2015.

Firms will also be prevented from charging consumers more than a maximum 'basic rate' for telephone calls, both in relation to complaints and in relation to post-contractual matters. This change will come into force on 26 October 2015.

Insurance regulation expert Colin Read of Pinsent Masons, the law firm behind Out-Law.com, said that although the changes would "inevitably" impact on some firms' business processes and add to their regulatory costs, the changes had been trailed by the FCA "for some time".

"The deadline for most of the changes is the end of June 2016, giving firms sufficient time to implement the new requirements," he said. "However, it is less clear whether the changes will drive the customer outcomes sought by the regulator."