global insurance management

Proposed changes to complaint handling rules

Oct 28 2010

Proposed changes to complaint handling rules

Relevance: All firms

Action required: None at this stage. You need to be aware of proposals and the impact on current complaint handling procedures. If you wish to participate in the consultation, the deadline is 31.12.10.

As part of its ongoing “consumer protection strategy”, the FSA has now issued a further Consultation Paper (CP) with proposals that are intended to improve complaint handling across the financial services industry.

The proposals are to:
• abolish the two-stage complaints handling process,
o this process was prone to misuse and may not give additional benefit to the consumer;
• require firms to nominate a senior individual responsible for complaints handling,
o the nominated individual must be someone holding a Governing controlled function (CF1-CF6);
• underline the requirement for firms to carry out root cause analysis,
o collecting and analysing management information; and
• provide additional guidance for taking account of the ombudsman service’s decisions,
o summarise, analyse and communicate relevant material to complaint handlers.

In addition, the amount of the Financial Ombudsman Service (FOS) award limit is being raised from £100,000 to £150,000.

This paper is part of previous work on consumer redress, in particular a review of complaint handling in banking groups reported on earlier this year.

However, we believe that most of these items should not lead to a massive change in how firms handle complaints, because current procedures should show that:
• any/all complaints are be recorded in the complaints register;
• the complaints register provides management information on how well complaints are handled;
• the person responsible for complaint handling is a senior member of management;
• complaint handling staff are properly trained and kept informed of relevant developments;
• guidance from FOS and other bodies is available to assist complaint handlers.

The closing date for responses to this CP is 31 December 2010, with the rule changes to be published in April 2011.

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