UK financial regulators consult on changes to complaints process

The Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and the Bank of England are now consulting on the contents of this report, which is required under section 20 of the new Small Business, Enterprise and Employment Act. The regulators have asked firms and consumers to respond to their proposals by 9 March.

"The apparent lack of transparency at both the FCA and PRA in how complaints are handled has long been a point of contention for many firms and individuals," said financial regulation expert Michael Ruck of Pinsent Masons, the law firm behind Out-Law.com.

The new report had the potential to "shed greater light" on the process of how the regulators respond to any complaints which are subsequently upheld, although "only time will tell" if it would be successful at doing so, he said.

The 2012 Financial Services Act requires the UK regulators to run a complaints scheme, overseen by an independent 'complaints commissioner' appointed by them, to investigate any complaints made against them. This scheme has operated since April 2013 and is based on a similar scheme, operated by then regulator the Financial Services Authority (FSA) for over a decade.

The new provisions will require the complaints commissioner to prepare and publish an annual report on his or her work, and to send copies of the report to each regulator and the UK Treasury. If the report makes any recommendations or criticisms about the regulators' handling of complaints, each regulator must respond to both the commissioner and Treasury and publish its response.

The new report will have to contain information on any general trends emerging from the complaints commissioner's investigations during the reporting period, and any recommendations about how the regulators should respond to these trends that the commissioner considers appropriate. The commissioner must also review the effectiveness of the regulators' complaints handling procedures during the reporting period, an assessment of how accessible and fair those procedures were and any recommendations about how those procedures could be improved, according to the consultation.