'Call for input' about how best to handle mass financial complaints

The Financial Conduct Authority and the Financial Ombudsman Service have jointly launched an appeal for views from firms and their customers about how to improve the process for dealing with mass complaints

The City watchdog and the financial ombudsman are seeking views on how to tackle issues with mass complaints that cause uncertainty for firms and their customers.

The Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS) are both asking for input to tackle the problem head-on. They want to make sure customers get the right redress when things go wrong, and also want to help firms spot probelms early so they can sort out complaints more efficiently on their own.

They're also keen to speak with consumer and industry groups, so it's easier to flag problems with wider market impications. When customers and finance companies can't agree a resolution to a problem, the FOS is the go-to mediator. They've had their hands full in the past with issues such as the payment protection insurance (PPI) scandal, where people were sold insurance they did not want or need.

The FCA is currently looking into whether people could be owed compensation for being charged too much for car loans, following a high number of complaints. The call for input says: "In some cases, mass redress events have been precipitated by (professional representatives), for example high‐cost credit, packaged bank accounts and authorised push payment (APP) fraud."

"The greater the proportion of complainants represented by (professional representatives), the lower the proportion of redress paid to consumers overall, with some (professional representatives) charging up to 30% of the redress award in fees," warned the FOS.

The organisation noted that while the current complaints system works well for individual complaints about specific issues, sudden and significant increases can cause firms to struggle to effectively respond, delaying any customer redress that may be due.

This problem can be exacerbated if large numbers of complaints are submitted on behalf of consumers by professional representatives. The Dispute Resolution (DISP) rules, which dictate how firms and the FOS handle complaints, were last reviewed a decade ago.

The call for input will explore ways to modernise these rules. James Dipple-Johnstone, deputy chief ombudsman at the FOS, stated: "We are committed to continuously improving our service and helping create a redress framework fit for the future."

The initiative is expected to interest consumers, consumer groups, policymakers, firms, industry bodies, experts and commentators, academics, think-tanks, and professional representatives among others.

It will remain open until January 30, 2025 and views can be submitted through a form on the FCA’s website: www.fca.org.uk/publications/calls-input/modernising-redress-system.