5. Complaints and Redress Flashcards
(37 cards)
IMPORTANT: What procedures should be included within a firm’s complaints-handling arrangements (what should they provide for)?
- the receiving of complaints
- acknowledging receipt of complaints
- responding to complaints
- appropriately investigating complaints, and
- notifying eligible complainants of their right to go to the FOS where relevant.
MEM & Important: How long do we have to resolve a complaint before we have to send a copy of the complaints procedure?
3 business days
MEM & Important: When should the complaint procedures be given to an eligible complainant? What is the ‘unless’?
Either:
-At first point of contact or when docs is first provided/at point of sales or immediately after
-On request
-When a complaint is received
UNLESS:
-The complaint is resolved in 3 business days
IMPORTANT Q: Firms must have written procedures in place for complaints which are in line with which of the following criteria?
a) Justifiable comlaints which are in writing only
b) Justifiable complaints one which are in writing or oral
c) Only where complaints are in writing, whether they are justifiable or not
d) Where complaints are in writing or oral, whether they are justifiable or not
D
MEM & IMPORTANT Q: What does the firm do (and timings) when a complaint is received?
- send the complainant a prompt written acknowledgement that the complaint is being dealt with
- keep the complainant regularly informed of progress
- within 8 WEEKS, send a written response to the complainant. This will either be a final response or a holding response.
-If complaint is unresolved in that time:
-Explain why and when it is likely to be
-Inform them that they can approach the FOS (financial ombudsman Service) within 6 months
IMPORTANT: Firms receiving over 500 complaints in a given 6 month period is required to publish:
-Total complaints opened and closed
-Number of complaints closed within 8 weeks
-% of complaints still open
IMPORTANT: A firm is obliged to publish specified data about its complaints records if it receives 500 complaints within what number of months?
A) 2
B) 3
C) 6
D) 12
C
MEM & IMPORTANT: How long should complaints records be kept for MiFID and non-MiFID firms?
MiFID firms: Minimum of 5 years from when the complaint was received
non-MiFID firms: Min of 3 years
MEM & IMPORTANT: List the types of eligible complainant.
They are small retail clients, NEVER authorised firms
* consumers – any individual acting in a private capacity
* micro-enterprises – businesses employing fewer than 10 persons and having a turnover or balance sheet figure not exceeding €2 million at the time the complaint is raised
* charities with an annual income of less than £6.5 million at the time the complaint is raised
* a trustee of a trust with a net asset value of less than £5 million at the time the complaint is raised
* certain SMEs (small&medium enterprises) – with an annual turnover of less than £6.5 million and (a balance sheet threshold of £5 million or fewer than 50 employees.)
A further condition for eligibility is that the complaint must arise out of a business relationship with the firm.
Which of these is an eligible claimant under the FSCS?
A
Trustees of a CIS
B
Trustee of a pension fund
C
Overseas financial institution
D
A shareholder who owns < 5% of an organisation
D - private individual.
MEM & IMPORTANT: If an individual is awarded money in respect of restitution, who is paid 1st?
The FCA, who then passes to the individual
IMPORTANT Q: As part of the requirements for business partnerships employing fewer than 10 persons, to be classed as ‘eligable complainants’ for complaints handling purposes, their annual turnover must be below what threshold?
a) EUR 210,000
b) EUR 500,000
c) EUR 2 million
d) EUR 1 million
C
What is the dispute resolution scheme?
The Financial Ombudsman Service
IMPORTANT Q: The Financial Ombudsman Service is:
a) A department within the FCA
b) A part of the Office of Fair Trading
c) An independent body
d) A organisation formed by member firms
C
IMPORTANT: What is the role of the FOS?
Resolve complaints about financial services firms quickly and with minimum formality. It’s free and private. It does not replace the court system and any complainant is entitle to take civil action against the firm but can’t if they’ve accepted the Ombudsman’s final decision.
IMPORTANT: What is the role of the Financial Ombudsman Service?
A Administer and operate a dispute resolution service for clients of FCA-authorised firms
B Take civil action against FCA-authorised firms for valid customer service complaints
C Replace the role of the court system with a free dispute resolution service to eligible
clients
D Make rules and regulations related to the handling of complaints about financial services
firms
A. Not C as it doesnt replace a court system, as the complainant can do that if they reject
IMPORTANT: What is the difference between compulsory jurisdiction and voluntary jurisdiction in relation to FOS?
CJ: extends to complaints from eligible complainants against FCA-authorised firms in relation to their regulated activities (and any ancillary activities) which the firm is unable to resolve to the satisfaction of the complainant within the timescales outlined above
VJ: covers complaints which are not within the CJ. Businesses can opt into the VJ by entering into a contractual arrangement with the FOS. Why would they do this? To give clients the fonidence that if things go wrong, they have the right to appeal.
MEM & IMPORTANT: What’s the max award/compensation to complainants after going to the FOS. What happens when complaintent accepts or rejects the award?
£355,000 for complaints referred to the FOS on, or after, 1 April 2020 about firms’ acts or omissions on or after 1 April 2019.
* £350,000 for complaints about firms’ acts or omissions between 1 April 2019 and 31 March 2020, on or after 1 April 2019.
* £160,000 for complaints about firms’ acts or omissions prior to 1 April 2019, and which are referred to the service after that date.
For any loss (pain, suffering, financial loss, reputation damage, distress, inconvience)
Accepts: It’s binding on the firm & complainant
Rejects: can pursue matter through the courts, but it’s no longer free or private
IMPORTANT: If a complainant accepts an adjudication decision made by the Financial Ombudsman Service (FOS), to what extent, if any, is it binding?
A It is binding on the complainant only
B It is binding on the firm only
C It is binding on both parties
D It is not binding on either party
C
IMPORTANT: What is the role of the FSCS (Financial Services Compensation Scheme)?
To pay compensation to eligible claimants for losses if an authorised firm goes into liquidation.
MEM & IMPORTANT: Who is the Financial Services Compensation Scheme funded by?
Authorised firms.
Which of the following best describes the relationship between the FCA, the PRA and theboard of the Financial Services Compensation Scheme (FSCS)?
A The board of the FSCS is appointed by the Bank of England on behalf of the FCA and PRA
B The Chairman of the board of the FSCS is appointed by theFCA
C There is no relationship between the FCA, the PRA and theFSCS
D The directors of the FSCS are appointed by HM Treasury onbehalf of the FCA
B -The FSCS is operationally independent of the Regulator, although it must account directly to theRegulator for its actions.
MEM & IMPORTANT: 3 claims under the FSCS that are eligible claimants only and 2 that are all clients. What’s the max claim for each?
Eligible claimants only, max claim £85,000:
-Deposits
-Investments
-Home finance
All clients (EXCLUDES MOST AUTHORISED FIRMS as FSCS is set up by auth firms for clients rather than themselves):
-Compulsory Insurance (long term) max claim: 100% of unused premium
-General Insurance (e.g. building insurance) max claim: 90% of unused premium
IMPORTANT Q: What compensation is available under the FSCS for protected deposits AND FAILURE OF A CREDIT UNION?
£85,000
