The Financial Regulators Complaints Commissioner (“FRCC“) has published its Annual Report (“the Report“) covering the period from 1 April 2019 – 31 March 2020.
In the Report, the Complaints Commissioner (“the Commissioner“) speaks of how the Complaints Scheme (“the Scheme“) provides a means by which individuals can obtain redress for problems caused by the actions or inactions of the financial services regulators. The Commissioner notes that without this Scheme there is a risk that the regulators could exercise (or fail to exercise) their powers in a way which damages individuals with no system for holding them to account.
While the Financial Conduct Authority (“FCA“) has been candid about the problems it faces and the data suggests that its performance is beginning to improve, the the Commissioner acknowledges that the Scheme has not been operating satisfactorily. He says the causes of this are threefold:
- FCA’s complaints function is not coping with the volume and complexity of its work. While the Complaints Team is working hard, FCA has still not succeeded in dealing with its backlog or effectively strengthening its quality control.
- There are clear examples of significant regulatory issues not being identified, despite complaints investigations. Although there are examples of the FCA responding to complaints with system improvements other matters are not being identified as they should be.
- The regulator’s failure to address suggestions for improvement to the Scheme, and to clarify the policy on compensation under the Scheme suggests, the Commissioner says, a reluctance to give the needs of complainants sufficient priority. The Commissioner is however pleased to see that FCA intends to consult on the issue.
The Commissioner notes that these shortcomings not only affect individual complainants – sometimes very significantly – but also have the potential to undermine confidence in the regulatory system.
He says the following should be given serious consideration in order to address the current shortcomings:
- Improving the Scheme to make it more readily understandable to
complainants, and clarifying the policy on compensation under the Scheme;
- Giving the Commissioner (or another independent person) a wider role in periodic quality assurance of the operation of the regulators’ complaints functions; and
- Regular publication of the steps taken by FCA to review the operation of its
functions and to address concerns, including those arising from the
Scheme – for example, the triaging of data received by the Supervision Hub,
the maintenance of the Register, and the effectiveness of supervisory responses to intelligence.