How Financial Services Firms Should Handle Complaints During Covid-19

The outbreak of Coronavirus (Covid-19) and the associated public health measures have posed many operational challenges to financial services firms.  This includes the handling of consumer complaints and the FCA has recently set out its expectations for how financial businesses handle complaints in the following:

Handling and prioritising complaints

Firms should not take the current situation as an opportunity to delay unnecessarily or to not deal at all with complaints and they should take all reasonable steps to ensure that complaints can be dealt with by staff members working from home, where this can be done fairly and adequately.

Where firms have a reduced capacity to handle complaints, the FCA expects firms to prioritise:

  • Prompt paying of complainants who have accepted redress offers
  • the efficient and fair handling of complaints coming from:
    1. consumers who are likely to be vulnerable to harm if the complaint is not resolved
    2. micro-enterprises and small firms who are likely to have serious financial problems
  • sending timely holding communications to complainants in 2 above where their complaints cannot be resolved within the required timescales.

Where a firm is not able to deliver these three priorities adequately and effectively through working from home, the FCA advises firms to maintain the physical presence onsite needed to carry out the necessary complaint handling processes. Social distancing onsite, therefore, should apply for as long as the government guidelines insist.

Vulnerable consumers

It is important to note that the coronavirus outbreak is likely to intensify personal circumstances that can cause vulnerability and, indeed, can cause some individuals who might not ordinarily be deemed to be vulnerable to become vulnerable. Such cases include the:

  • loss of income from losing employment or being furloughed,
  • the impact of isolation on mental and physical health, and people’s ability to work and care for others,
  • increasingly demanding working conditions and greater exposure to the virus itself, especially for key workers.

This should not just apply to individuals, as it is possible that small businesses can also face circumstances that can make them vulnerable to harm especially if a firm fails to handle complaints promptly and fairly.

Maintaining the quality of complaint handling

Whilst it may take longer to review complaints when working remotely, the FCA does not expect any reduction in the quality of firms’ complaint handling procedures. Firms should continue to meet the relevant obligations, including investigating complaints competently, diligently and impartially, and paying appropriate compensation or making other necessary remediation.

The current circumstances should not prevent firms from:

  • informing consumers about their complaint procedures and those of the Financial Ombudsman Service
  • enabling consumers to submit complaints (although firms might need to limit more resource-intensive complaints channels to customers who cannot use other channels)
  • acknowledging receipt of complaints, especially where the firms have the technology required to generate automatic responses by email or through online submission of complaints.

Firms facing difficulties

As complaint handling may take longer than normal, it is acknowledged that some firms might be unable to meet the timescale requirement set in DISP 1.6. Particularly, the requirement to provide a final response to complainants (generally within 8 weeks of receipt, less for some business types), or to provide a timely explanation why they are unable to provide a final response.

Firms facing difficulties to meet those requirements are encouraged to inform their usual supervisory contact or contact, conveying the steps they are taking to manage and address the non-compliance.

It is important to note that, whilst the FCA acknowledges that some firms may struggle at this time in meeting their regulatory obligations, these firms are likely to be those that receive large volumes of complaints.  Complyport would expect that, in the majority of cases, firms that only deal with a small number of complaints are unlikely to be materially affected by the Covid-19 disruption and, therefore, should be expected to handle complaints in the normal way.


Claims management companies (CMC) and referrals to the Financial Ombudsman Service (FOS)

Based on the current operational challenges that firms face, the FCA expects CMCs to allow firms a reasonable amount of extra time, beyond 8 weeks, to give a final response before referring complaints to the FOS . unless there is any particular urgency in the individual complaint or the situation of the complainant.

Similarly, the FOS is expected to take current circumstances into consideration and may return a complaint to the CMC and ask the firm to communicate with the CMC directly to discuss and resolve the complaint. Professional cooperation between CMCs and the FOS will also ensure that the latter can focus on resolving complaints referred by vulnerable customers.

Additionally, CMCs are required to take these circumstances into consideration when dealing with their clients.  In particular, CMCs should keep clients updated on their complaints and relevant developments as per CMCOB 6.1.9 and they should consider the client’s specific circumstances when collecting fees.

The FCA is also encouraging CMCs to take account of the current circumstances when submitting Data Subject Access Requests as firms may have difficulties in responding within the defined timeframes. Therefore, CMCs should communicate with firms to understand those problems, consider guidance from the Information Commissioner’s Office (ICO) and, where issues cannot be resolved with firms, speak to the ICO directly before making complaints to it about those firms.


The Financial Ombudsman Service’s general approach

The FCA expects the FOS to take is guidance in the current environment into account when considering a firm’s compliance with the complaint handling rules.


PPI complaints

The considerations outlined by the FCA apply to all complaint including those relating to PPI.  The FCA reminds CMCs of the Dear CEO letter on PPI complaints. The letter still reflects the FCA’s and the Ombudsman Service views.


How we can help: Should you need any guidance or assistance in dealing with issues related to Coronavirus (COVID-19) or matters relating to compliance with FCA or related regulatory matters, please contact:

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