Coronavirus – FCA issues further guidance on complaints handling during the lockdown - UK

• United Kingdom

• Financial services disputes and investigations
• Litigation and dispute management

05-05-2020

On 1 May 2020, the FCA published a statement clarifying its position on complaints handling and offering some relaxation of the rules in light of the practical challenges associated with the COVID-19 pandemic.  The regulator says it will review and update its position in three months’ time.

Key points

The FCA expects firms to prioritise:

1.   prompt payment to complainants who have accepted offers of redress

2.   the prompt and fair resolution of complaints from vulnerable customers

3.   sending timely holding responses to vulnerable complainants, where their complaints cannot be resolved promptly

If firms cannot deliver these priorities adequately and effectively through home working, the FCA considers that it could be appropriate for firms to maintain the minimal physical onsite presence needed to do so.  Firms will need to balance this with the Government’s guidelines for configuring workplaces to meet social distancing requirements. 

Other key points to note include the following:

• the FCA expects firms to consider the traditional definition of vulnerable consumers in light of the effect of COVID-19, which could exacerbate, or suddenly cause, vulnerability.  The FCA has also indicated that the concept of vulnerability should be extended to micro-enterprises and small businesses, as these customers may face circumstances that make them especially susceptible to harm if their complaints are not resolved promptly and fairly
• the FCA acknowledges that time limits for responding to complaints may need to be flexible.  Claims Management Companies are expected to allow firms a reasonable amount of extra time to provide a final response.  The Financial Ombudsman Service will take into account the current operational challenges faced by firms as part of its determination of referred complaints
• however, the FCA does not expect to see any reduction in the quality of complaint handling.  Nor does the FCA expect current circumstances to materially affect: (1) firms telling consumers about complaint procedures; (2) consumers’ ability to submit complaints; and (3) acknowledging receipt of complaints

What should firms do?

In light of the FCA’s statement, firms should move quickly to review and, where necessary, triage their complaints handling policies and processes to ensure that they are aligned with the FCA’s stated priorities.  In particular, firms should consider how they assess customer vulnerability and whether this needs to be re-evaluated, including in relation to micro-enterprises and small businesses.  Firms should also be monitoring to ensure that the quality of their complaints handling does not diminish as a result of the operational challenges they are currently facing. 

It is important for senior management to maintain, and be able to evidence, appropriate oversight over complaints handling during the coronavirus pandemic, and ensure that there is sufficient focus on preventing harm.  This will be even more acute where complaint handling arrangements are outsourced.

Useful links

FCA statement: Firm handling of complaints during coronavirus

FCA coronavirus (Covid-19) hub