Summary of Complaints Policy
Firms must have effective and transparent procedures for the fair and prompt handling of complaints. Furthermore, firms are required to recognise that complaints need to be resolved.
2. Complaint vs. MiFID complaint
A complaint can be regarded as any oral or written expression of dissatisfaction, whether justified or not, concerning the provision of a financial service and which alleges that the complainant has suffered (or may suffer) material distress or material inconvenience.
A MiFID complaint basically relates to MiFID business, although the Handbook definition refers to a complaint “to which Article 26 of the MiFID Org Regulation applies”.
3. MiFID complainant vs. Eligible complainant
The MiFID complaints handling requirements apply to clients’ or potential clients’ complaints. As such they are applicable to retail clients, professional clients and to eligible counterparties.
An ‘eligible complainant’ is a UK concept and refers to either a ‘consumer’ (see below), a micro-enterprise”, small charities (less than £1m annual income) and a trustee of a small trust (less than £1m net asset value) – see DISP 2.7.3 for further information.
A consumer is any natural person acting outside of their trade, business or profession. Therefore, a consumer, and hence an eligible complainant, can be an individual that is either a retail client or a professional client.
Given the above, a ‘MiFID complainant’ could also be an ‘eligible complainant’.
The distinction is important as only an eligible complainant is permitted to refer a complaint to the Financial Ombudsman Service (FOS) where eight weeks have elapsed since receipt of the complaint.
DISP 1 (‘Treating complainants fairly’) sets out the procedures to be followed by a firm when a complaint is received.
As a generalisation, the handling of MiFID complaints is addressed in DISP 1.1A with other parts of DISP 1 applicable to either complaints received from eligible complainants or from unitholders. The application of DISP 1, depending upon type of respondent firm and category of complainant, can be complex and reference should be made to the Table in DISP 1 Annex 2.
4. Complaints handling oversight and monitoring
The Firm has established, and maintains, complaints management policies and procedures for the prompt handling of clients’ complaints. The policy has been endorsed by the Firm’s management body.
The Firm is required to establish a ‘complaints management function’ responsible for the investigation of complaints. This role is carried out by the compliance function.
The Firm’s compliance function, even where it is not the appointed ‘complaints management function’, is specifically charged with responsibility for analysis of complaints and complaints-handling data to ensure that risks and issues are identified and resolved e.g. identification of root causes and the impact upon other processes or products, including those not directly complained of. The compliance monitoring undertaken by the Firm addresses this requirement.
For the avoidance of doubt, responsibility for implementation of the complaints management policy and for monitoring compliance with it rests with the Firm’s senior management.
5. Complaints awareness
Details of the Firm’s complaints handling process is made available to clients or potential clients on request or when acknowledging a complaint (see below). The details will include information about the complaints management policy and the contact details of the complaint management function (see below).
Any complaints received from a client should be referred to the Compliance Officer. In practical terms there should be no major difference in the Firm’s approach to the resolution of complaints from any complainant.
All complaints must be acknowledged promptly, confirming receipt of the complaint and that it is being dealt with. The acknowledgement must be accompanied by a copy of the Firm’s published complaints handling process (see ‘Complaints awareness’ above).
If the complainant is an eligible complainant, then when communicating to the client they should be informed that if the complaint is not resolved they may be entitled to refer it to the FOS (see “Complaints awareness” above). In general, this option will only apply when either the Firm has sent its final position to the complainant or when eight weeks have elapsed since the Firm received the complaint (DISP 2.8).
A complaint must be investigated competently, diligently and impartially, obtaining additional information as necessary.
The complaint must be assessed fairly, consistently and promptly, giving due attention to the need to determine whether it should be upheld and what remedial action and/or redress may be appropriate.
The complainant must be kept informed of the progress being made in the resolution of their complaint.
The Firm must comply promptly where any offer of remedial action or redress is accepted by the complainant.
When communicating the Firm’s position on the complaint to the client they must be informed about their options, including, where an eligible complainant, that if dissatisfied then they may refer the complaint to the FOS. In this situation the communication should be accompanied by a copy of the FOS’s standard explanatory leaflet and confirmation of their website address.
There are time limits after which the FOS cannot consider a complaint. The above communication to an eligible complainant must indicate whether the Firm consents to waiving these time limits (see DISP 2.8.2 for further details).
Note that an alternative approach is permitted where a complaint is resolved by close of the third business day following the day on which it was received (DISP 1.1A.23). As mentioned above, reference to DISP 1 Annex 2 (‘Application of DISP 1 to type of respondent/complaint’) may be useful.
ESMA and the EBA have issued joint Guidelines for complaints-handling to which reference should be made when dealing with a complaint.
7. Reporting (and publication)
The ‘complaints reporting rules’ in DISP 1.10 require a twice-yearly report to be provided to the FCA concerning complaints received from eligible complainants. By virtue of DISP 1.1A.39 they also apply to MiFID complaints, except that information must be included about such complaints received from retail clients, professional clients and, where relevant, eligible counterparties rather than eligible complainants.
Reports must be submitted to the FCA within 30 business days of the end of the relevant reporting periods.
The relevant reporting periods are:
The six months immediately following the Firm’s accounting references date; and
The six months immediately preceding the Firm’s accounting reference date.
Although unlikely to be relevant to us, for the record a firm is required to publish on its website a summary of the complaints data (informing the FCA that it has done so) where 500 or more complaints are submitted in one of the reports above. See DISP 1.10A for further details.
8. Record keeping
A firm must keep records for every complaint it receives, including the measures taken for resolution (DISP 1.9). Records must be retained for at least five years. Records of all complaints and the Firm’s responses will be kept by the Compliance Officer.
It should be noted that there are no additional SEC requirements in this area.