Increase to FOS award limit

By MICHAEL HANSON
•
15 Apr, 2019

YOUR COMPLIANCE MATTERS: Increase to FOS award limit

Relevance: All firms.

Action required: Complaints procedure update, effective 01.04.19

No sooner had we indicated to you that the access arrangements for the Financial Ombudsman Service (FOS) will change from 01 April 2019 but the proposed increase to the FOS award limit had not yet been finalised, when the FCA issues its confirmation that this too will be implemented from the same date.

The FOS is currently limited to awarding compensation to a maximum of £150,000.

But from 01 April 2019 this will increase to £350,000 for complaints about firms’ actions on or after that date.

For complaints referring to actions which took place before 01 April 2019, but are reported to the FOS after that date, the limit will increase to £160,000.

Both award limits will be adjusted each year to keep pace with inflation, as measured by the Consumer Prices Index (CPI).

If you need to discuss any aspect of this newsletter, please contact us. In the meantime, please find attached an updated complaints procedure.

Complaint Handling

It is inevitable even within the best run organisations that there will be occasions when individual customers are not happy with the service provided. We accept that in such circumstances, customers complain.

We are authorised and regulated by the Financial Conduct Authority (FCA) for insurance mediation activities. As such, we are required to establish, implement and maintain effective and transparent procedures for the reasonable and prompt handling of complaints and that these procedures should allow complaints to be made by any reasonable means and recognise complaints as requiring resolution.

The individual named in the Allocation of Responsibilities has overall responsibility for the correct handling of all complaints.

A copy of our complaints register is kept in the Compliance Operational File.

A complaint is defined by the FCA as:

“any oral or written expression of dissatisfaction – whether justified or not – about any financial services activity provided or withheld by a firm, where the complainant has suffered financial loss (or may do in the future), material distress or material inconvenience.”

We recognise and accept that the complaint may be made by the complainant themselves or by some other person or firm acting on their behalf.

All complaints will be handled according to our procedures but only those identified as “eligible complainants” will be able to refer their case to the Financial Ombudsman Service (FOS) if they remain dissatisfied with the outcome of our investigation.

An eligible complainant is:

(1) a consumer; or

(2) a micro-enterprise;

(a) in relation to a complaint relating wholly or partly to payment services, either at the time of the conclusion of the payment service contract or at the time the complainant refers the complaint to the respondent; or

(b) otherwise, at the time the complainant refers the complaint to the respondent; or

(3) a charity which has an annual income of less than £6.5 million at the time the complainant refers the complaint to the respondent; or

(4) a trustee of a trust which has a net asset value of less than £5 million at the time the complainant refers the complaint to the respondent; or

(5) (in relation to CBTL business) a CBTL consumer; or

(6) a small business at the time the complainant refers the complaint to the respondent; or

(7) a guarantor.

We will liaise with our Professional Indemnity Insurers where the complaint is of a complex nature or is likely to be for a significant amount if it is upheld, either in-house or after referral to the FOS.

Our Complaint Handling Procedure is illustrated in the attached flowchart.

A copy of our Complaint Handling Procedure will be given to any client who requests it and to any complainant with the acknowledgement letter.

We also include appropriate information about the FOS in our Terms of Business document and on our website.

Complaint Time Limits

Complainants have various time limits for raising their complaint;

· 6 months from the date of either the Summary Resolution Communication or Final Response;

· 6 years after the event complained of; or (if later)

· 3 years from when the complainant became aware he had cause for complaint.

Firms can consent to waive these time limits.

We have chosen not to consent to waive the time limits and our relevant communications will include the necessary wording.

‘You have the right to refer your complaint to the Financial Ombudsman Service, free of charge – but you must do so within six months of the date of this email/letter. If you do not refer your complaint in time, the Ombudsman will not have our permission to consider your complaint and so will only be able to do so in very limited circumstances. For example, if the Ombudsman believes that the delay was as a result of exceptional circumstances.’

If we receive a complaint which is outside the time limits for referral to the FOS, we may reject the complaint without considering the merits, but must explain this to the complainant in a Final Response letter.

3-day Complaint Resolution

Where we consider a complaint to be resolved within three business days after its receipt, we will send the complainant a “summary resolution communication”. This will:

· acknowledge the complaint and inform the complainant that we consider the complaint to be resolved;

· provide the complainant with the details of the Financial Ombudsman Service (FOS) including its website (https://www.financial-ombudsman.org.uk/), confirming that they can refer the complaint to them if they wish; and

· indicate that we do not consent to waive the relevant time limits.

Root-Cause Analysis

We have appropriate management controls and take reasonable steps to ensure that our complaint handling process includes a root cause analysis. Where we identify any recurring or systemic problems, we will take the appropriate action to remedy any failings, for example, in staff competence, sales practices or documentation.

Alternative Dispute Resolution

EU rules now require that consumers can use Alternative Dispute Resolution (ADR) rather than going to court. For financial services, the FOS has been designated as the relevant ADR. Therefore, any firm authorised and regulated by the FCA must ensure that they have pointed consumers to the FOS.

We do this by having a suitable paragraph in our Terms of Business document and also having a link on our website to the FOS website.

Online Dispute Resolution Regulation

The Online Dispute Resolution Regulation (ODR) is linked to ADR and applies to disputes about online contracts (both in the UK and the EU). An online platform has been established to facilitate communication between parties and the certified ADR provider. All businesses that allow consumers to complete a purchase online need to provide a link to the platform on their website.

Where we allow online purchases, we will include this link on our website.

FOS Award Limit

The FOS is limited to awarding compensation to a maximum of £150,000, but from 01 April 2019 this will increase to £350,000 for complaints about firms’ actions on or after that date.

For complaints referring to actions which took place before 01 April 2019, but are reported to the FOS after that date, the limit will increase to £160,000.

Both award limits will be adjusted each year to keep pace with inflation, as measured by the Consumer Prices Index (CPI).

Complaint Report

Customer name
Date of complaint
Nature of complaint
How was the complaint received? (‘phone, letter, email, raised in a meeting)
What action would potentially resolve the complaint?
Signed
Dated

Letter 1 - Initial acknowledgement to complainant

Name

Address

Dear ,

Re:

I acknowledge your complaint, received on the XXXXX.

I am disappointed to hear that you are not happy with our service. I will investigate your complaint personally and I will endeavor to resolve the issue as quickly as possible.

Please find attached details of our complaint handling procedure.

I will make further contact with you as my investigation progresses but if you wish to discuss any aspect of your complaint, please contact me on the telephone number shown.

Yours sincerely,

XXXXXXXXXX

For XYZ Insurance Brokers Limited

Client information on our complaint handling procedure

We are authorised and regulated by the Financial Conduct Authority (FCA). Although we endeavour to meet our customers’ expectations at all times, we understand that from time to time complaints may arise.

As such, we are required to establish, implement and maintain effective and transparent procedures for the reasonable and prompt handling of complaints and that these procedures should allow complaints to be made by any reasonable means and recognise complaints as requiring resolution.

Who will be investigating my complaint?

The name and contact details of the person handling your complaint will be contained in the letter which accompanies these procedures.

How long will it take?

We try to resolve any complaints as quickly as possible. However, in the event that the complaint is complex in nature or requires further investigation, we will utilise the following timescales:

· Within 5 working days of receipt of your complaint you will receive a copy of these procedures together with a covering letter identifying the details of the person dealing with your complaint. This is our Acknowledgement Letter. If by this time we have been able to resolve your complaint this will also be our Final Response Letter.

· We will keep you informed throughout the processing of your complaint.

· Within 4 weeks of receipt of your complaint we will endeavour to provide you with a Final Response Letter. If, however, we are not in a position to do so, we will write to you explaining why we are not yet in a position to resolve the complaint and give you an indication of when we will make further contact.

· Within 8 weeks of receipt of your complaint we will endeavour to provide you with a Final Response Letter. If, however, we are not in a position to do so, we will write to you:

* explaining why we are still unable to give a final response;

* giving reasons for the delay;

* indicating when you should expect to receive a final response;

* providing details of any right you may have to refer the matter to the Financial Ombudsman Service (FOS), together with a copy of their leaflet.

What should I do if I am still not satisfied with how my complaint is being handled?

If you remain dissatisfied, you may have a right to refer the matter to the Financial Ombudsman Service for further advice and guidance. This will not affect your legal rights.

Please note that if you exercise your right to refer your complaint to the Financial Ombudsman Service, free of charge – but you must do so within six months of the date of our Final Response Letter/Email. If you do not refer your complaint in time, the Ombudsman will not have our permission to consider your complaint and so will only be able to do so in very limited circumstances, for example, if the Ombudsman believes that the delay was as a result of exceptional circumstances.

Further information on the Financial Ombudsman Service can be found on their website at:

www.financial-ombudsman.org.uk; or you can telephone them on 0800 023 4567; or by writing to The Financial Ombudsman Service, Exchange Tower, London, E14 9SR

Letter 2 - Summary Resolution Communication to complainant

Name

Address

Dear ,

Re:

I acknowledge your complaint, received on the XXXXX.

I am disappointed to hear that you are not happy with our service. I have conducted an investigation into your complaint personally and confirm that I believe the matter has now been resolved.

However, if you are not satisfied with this outcome your may refer your complaint to the Financial Ombudsman Service ("FOS"). The FOS is an independent service for resolving disputes with financial firms - their consumer leaflet is enclosed for your reference.

Their contact details are:

Address:	The Financial Ombudsman Service, Exchange Tower, London, E14 9SR
Telephone:	0800 023 4 567
Email:	complaint.info@financial-ombudsman.org.uk
Internet:	www.financial-ombudsman.org.uk; (for further information on FOS services)

Please note that if you exercise your right to refer your complaint to the Financial Ombudsman Service, free of charge – but you must do so within six months of the date of this email/letter. If you do not refer your complaint in time, the Ombudsman will not have our permission to consider your complaint and so will only be able to do so in very limited circumstances, for example, if the Ombudsman believes that the delay was as a result of exceptional circumstances.

Yours sincerely,

XXXXXXXXXX

For XYZ Insurance Brokers Limited

DO NOT FORGET TO INCLUDE THE FOS CONSUMER LEAFLET WITH THE LETTER, IF APPROPRIATE.

Letter 3 – Final Response to complainant

We have not attempted to provide a format for the Final Response letter as this will need to be bespoke.

HOWEVER, the Final Response letter MUST cover the following:

· a summary of the complaint;

· a summary of the outcome of the investigation;

· whether we acknowledge any fault on our part;

· details of any offer we have made to settle the complaint;

· how long any offer to settle the complaint will remain open;

· for clients eligible for access to the FOS why – if we believe this is so – we think the complaint may be outside the FOS rules. But we should explain that it is for the FOS, not us, to decide this;

· AND, we must still tell consumers they have the right to refer the complaint to the ombudsman within six months of our final response. BUT if they don’t, the Ombudsman will not have our permission to consider their complaint unless exceptional circumstances apply.

Eligible complainants must also be given a copy of the FOS leaflet.

As a reminder the following can access the FOS: