FSA unveils new customer complaint rulesby
The City watchdog has unveiled new rules to ensure that customer complaints are handled fairly and promptly, while also upping the amount of compensation that consumers can be paid for mistreatment to £150,000.
The Financial Services Authority said that the changes would be introduced in July next year because of "inappropriate use" of the current system, which gave financial service firms two opportunities to respond to customer complaints before the situation went to the next level.
The problem with this approach was that the first response was often "poorly drafted" and could put consumers off from pursuing their complaint, even if it was justified. As a result, under the new rules, the first response would be the final one and, if the customer was unhappy with it, they could take it to the Financial Ombudsman Service.
In addition, from January, 2012, the Ombudsman will be able to award a maximum compensation of £150,000 if they find in favour of the customer, up from £100,000 now.
Sheila Nicoll, the FSA’s director of conduct policy, said: "We would rather customers were not put in a position where they had to complain, but when they do, we want them to be treated fairly by their firm, with their complaint resolved promptly and being provided with redress when needed."
Good complaints handling contributed to customer loyalty and should provide firms with the opportunity to put right any problems in product design or sales before they became widespread, she added.
"But we have found major failures with the way firms handle customer complaints and have since taken enforcement action against two firms as a result of poor complaints practices," Nicoll said.
The watchdog fined Bank of Scotland £3.5 million for its poor handling of customer complaints only last week, after finding almost half of the criticisms that the bank rejected should have been upheld.