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Course for complaint

Peter Hamilton is a barrister specialising in financial services at 4 Pump Court

The great majority of authorised firms try their best to comply with the FSA’s rulebook but from time to time there will be disagreements between the FSA and a firm about how a particular issue should be resolved.

The FSA is a powerful body with resources that, practically speaking, are limitless. The prospect of taking the FSA on is daunting. But if the firm considers, reinforced no doubt by competent advice, that it is right and the FSA is wrong, the firm should stand up to the FSA. We should have the courage of our convictions. We all owe ourselves the duty to stand up for what we believe to be right.

If the disagreement relates to the application of the Financial Services and Markets Act 2000 or the FSA’s rules, the matter should be resolved in accordance with the procedures set out in the handbook. The matter may end up as an issue of enforcement or even discipline but, in either event, the firm has the opportunity to put its case to the regulatory decisions committee and then the financial services tribunal.

The prospect of having to justify its position to the RDC or the tribunal will act as a strong incentive to the FSA to make sure it is being reasonable and the result may well be that the firm’s position is accepted. Its stand will have been vindicated.

There may be circumstances in which it is necessary to contemplate taking the FSA on judicial review. As with any litigation, that carries risks but if the issue is significant enough, it may be appropriate for the firm to be supported by others including its trade association.

If, however, the matter relates to the way in which the FSA has conducted itself, then the firm should make a complaint to the FSA under its own complaint scheme. However, very few firms do so. Firms may feel that it would be counter-productive because they have to live with the FSA and the complaint will not improve relationships.

That may well be true but if no action is taken, the chances of an improvement in conduct or attitude are not high.

If there is a complaint, the FSA has committed itself to investigating it carefully and thoroughly. If it is well founded, the FSA says it will take action to ensure its conduct or attitude improves. Every firm with grounds for a complaint should therefore act and make the complaint.

The FSA also says: “Our complaints team takes the matters raised by complainants seriously – focusing its efforts on handling and resolving complaints quickly and impartially while treating complainants with courtesy and sensitivity, respecting confidentiality at all times… Senior management regularly monitor and review the effectiveness of the system and ensure that all staff are aware and trained appropriately.”

The basis of the complaint against the FSA must be of misconduct or maladministration arising from the way in which it has carried out or failed to carry out its functions. This will include complaints alleging:

  • mistakes and lack of care;
  • unreasonable delay;
  • unprofessional behaviour;
  • bias; and
  • lack of integrity.

The sooner a complaint is made the better, it is then more likely to be effective. In any event, a complaint should be made within 12 months of the date on which the complainant first became aware of the circumstances giving rise to it. The FSA does not make a charge for the operation of its complaint scheme.

If the firm feels it has not obtained satisfaction from the FSA’s complaint-handling team, it can renew its complaint to the Office of the Complaints Commissioner. He has no power to compel the FSA to take any particular action but his recommendations are usually accepted by the FSA.

Those recommendations include the making of an apology, taking corrective action and also the making of payments to compensate for the loss caused by the act or omission which constituted the fault of the FSA.

Generally, the commissioner will not investigate a complaint until the FSA has had the opportunity to do so but the complaint to him must be made quickly, that is, not more than three months after the FSA has refused or failed to deal with the matter properly.

However, in exceptional circumstances the commissioner can investigate a complaint without the FSA first having had the opportunity to do so.
Many firms also have problems with the way in which the Financial Ombudsman Service goes about its job. Again, the only hope of securing an improvement is by making a complaint.

The FOS has a scheme for handling complaints in relation to its standards of service, including matters such as rudeness, delay and failure to answer reasonable questions.

The complaint must first be made to the chief ombudsman or one of the principal ombudsmen or the service review manager.

If the firm remains dissatisfied after the FOS’s response, it can renew the complaint to the independent assessor within three months of the response. He is appointed by the board of the FOS.

It goes without saying that he has no power to examine whether the FOS was right to uphold or reject a complaint against a firm by a client.

In other words, he is not an appeal tribunal against the finding that the FOS makes. The FOS website states: “The independent assessor will consider the information you provide and look at all our papers on the case. He will then decide whether your complaint about our service is justified. If he thinks the service we gave you was satisfactory, he will tell you why. If he thinks our service was not satisfactory, he will explain his reasons and will recommend the steps we should take to put things right.”

If the independent assessor considers that a service complaint should be upheld in whole or in part, he may recommend to the chief ombudsman that the FOS makes an apology or pays appropriate compensation (equivalent to that which the FOS would award against a firm in similar circumstances) for any damage, distress or inconvenience caused by the failure in the standard of service to the person or firm making the complaint.

If the chief ombudsman does not accept that recommendation, the independent assessor must refer the matter to the board of the FOS. If the board declines to comply with a recommendation referred to it by the independent assessor, it must inform the independent assessor and the person or firm making the complaint of its reasons for doing so and must publish them in its annual report.

These procedures are tortuous and to make a complaint may seem to be a distraction from the main business of the firm, which is to provide a good service to clients. But if those employed by the FSA and the FOS all know that any departure from high standards of professional service and normal courtesy will result in a complaint against them, they will strive to comply with those standards. That may even rub off on the standard of the work they do, who knows?


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  1. Thank you Peter that was most useful. I am now out in South East Asia- I said goodbye to the industry in the UK over 10 yrs ago. Sesame have just informed me I lost an endowment case and I have to pay 3500 whiich is pretty steep. Basically I ticked the box balanced and they say NO they are cautious. Easy stuff really I am so happy I can’t wait to wire funds! NOT. So beginings the painstaking matter of justice, sorry, I am laughing again. But at least you have set me in the right direction- or just say sod the whole thing and let’m do their worst look s like the have done so anyway. I would like to leave the whole unhappy episode of regulators behind me.

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