New financial services regulators to "adopt FSA model" for complaints

A new consultation paper (34-page / 508KB PDF) sets out the proposed scheme that will be followed by the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and the Bank of England when they take over the regulatory responsibilities of the FSA from next year. The proposals have been prepared by the FSA in consultation with the Bank.

The regulators intend to operate a single complaints scheme "broadly in line" with the FSA's current procedures in order to save costs, although the consultation sets out additional processes to be used where complaints have been raised against more than one regulator. Transitional arrangements will apply to complaints already under investigation at the legal cutover between FSA and new regulator responsibility, as well as complaints about the FSA received after the Financial Services Bill receives final approval.

"In operation for over a decade, the FSA complaints scheme has been an effective and efficient way of dealing with complaints," the consultation paper said. "Recognising how closely the requirements set out ... mirror those in [the Financial Services and Markets Act (FSMA), we propose adopting a very similar approach."

The Financial Services Bill, a draft of which is currently before Parliament, requires the regulators to establish how they will investigate complaints against them. The Bill will dismantle the FSA and hand most of its day-to-day regulation and supervisory powers in relation to banks, building societies and insurers to the PRA, which will be based within the Bank of England.

A new Financial Policy Committee (FPC), also within the Bank, will address wider 'macro-prudential' issues that may threaten economic and financial stability. The FCA will take over the FSA's conduct and compliance functions, as well as the prudential supervision of those firms not supervised by the PRA. It also has the power take over responsibility for consumer credit regulation from the Office of Fair Trading (OFT).

The new scheme will apply to complaints about the way in which the regulators have acted or failed to act. This includes complaints alleging mistakes and lack of care, unreasonable delay, unprofessional behaviour, bias and lack of integrity. The FCA will process complaints submitted centrally through published channels, even if the complaints are about one of the other regulators.

Complaints about the regulators' legislative functions are excluded from the new scheme, as are complaints about the actions or omissions of the Financial Ombudsman Service (FOS), the Financial Services Compensation Scheme (FSCS) and the Money Advice Service (MAS). In addition, the regulators will not investigate a complaint that they "reasonably consider amounts to no more than dissatisfaction with the regulators' general policies or with the exercise of, or failure to exercise, a discretion" which does not relate to "unreasonable, unprofessional or other" misconduct.

The consultation states that complaints will be dealt with within four weeks. If this is not possible, the regulator will write to the person making the complaint within this timeframe to set a timetable for dealing with the issue. If the person making the complaint is unsatisfied with the outcome or considers that the regulators are taking too long, that person will be able to refer the complaint to the Complaints Commissioner free of charge.