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New FSA crackdown on complaints

The FSA will force firms to report all complaints involving claims for over £5,000, even when they are disputed and not upheld by the Financial Ombudsman Service.

The FSA’s consultation on data collection, published this week, says firms will be required to break down their complaints record according to advisers’ individual reference numbers.

Head of investment policy Peter Smith says this would include complaints that have been dismissed by the firm and the FOS.

He says: “We are interested in resolved or dismissed complaints because it shows the pattern of firms’ and individual advisers’ interactions with customers. Complaints data is no more than an indicator of potential issues but if an adviser is getting complaints all the time, regardless of whether they are dismissed or not, it raises the question of why that is the case.”

Smith concedes that within the FSA there has been debate about the level of disclosure needed for complaints.

Under the FSA’s proposals, firms will also be required to provide a breakdown of the adviser charging models they use as part of their retail mediation activities return.

This would include whether the firm is providing independent or restricted advice, initial or ongoing advice and whether payment is collected directly from clients, via product prov-iders or via platforms.

Firms would also have to provide details on minimum and maximum charges, whether adviser charging is on an hourly or percentage of investment basis and client numbers.

The FSA estimates that the proposals will cost the industry £6.7m in one-off costs and £2.9m in annual ongoing costs. The consultation closes on July 8.

Paladin Financial Services managing director Tim Purdon says: “On adviser charging, I question whether the FSA’s proposals would end up interrupting the free market. It is up to advisers and clients to agree charges, it is not for the regulator to intervene.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. What about the complaints that are completely ignored or the clients are given the run around for months or years on end? Insurers are often not informed so claimants are unlikely to be recompensed in many cases. There needs to be a consumer claims notification system at the FOS which has the necessary data collection systems, the FSA simply tells claimants about the complaints system and walks away, that is unacceptable.

  2. Phil Westwood 12th May 2011 at 1:25 pm

    As in my experience (as per the comment above) firms will simply pretend that a complaint hasnt happened or lie to the FSA – especially where the complaint involves an element of lying to the FSA in the first place!

    Perhaps the FSA should be collecting complaints data from the complainants rather than the firms and then fully communicating with the complainant to ensure openness.

    Unfortunately that would mean talking to the ‘man in the street’ something that the FSA refuses to do prefering to hide behind various secrecy clauses in FSMA.

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