The FCA has committed to look again at making sure consumers know when they can and cannot use the Financial Services Compensation Scheme and Financial Ombudsman Service.
In an update in its work on smarter communications today, the FCA responded to feedback from firms on proposals to require them to use the FSCS logo on their product literature to increase awareness of the scheme.
It also responded to feedback on proposals to use a traffic light style system to inform consumers when they may or may not be entitled to compensation.
The regulator has decided against forcing firms to include an FSCS logo because of the complexity of investment product protection. It has also opted against mandating a visual system like traffic lights.
The FCA says: “Although using the FSCS badge for deposits where issues of eligibility are much less complex is uncontroversial, the protection applicable through the FSCS for investment products is more complex.
“We also have noted firms’ concerns that a simple label could potentially create a misconception that investment loss is covered when FSCS compensation would only be available in circumstances where a firm’s actions had led to the loss (and not for losses due to market movements).
“We will explore further how to raise awareness and understanding of the FSCS and its coverage.”
The FCA adds firms could prevent unnecessary referrals to the FOS through better signposting on their websites.
Its paper says: “The Financial Ombudsman Service settles individual disputes between consumers and businesses providing financial services. However, it currently also receives enquiries from consumers who are not looking to have a complaint investigated, but are trying to identify what to do when they have a comment or query about a product or service that is not operating in line with their expectations.
“We are supportive of the role of the FOS in resolving disputes between consumers and firms, providing a quicker, easier alternative to the courts. We welcome firms’ initiatives aiming to reduce unnecessary referrals to the FOS: for example, by offering consumers comprehensive ‘contact us’ details.”