Investigating complaints against the FSA

The Complaints Schemes is an integral part of the FSAs wider accountability framework. The complaints handling process will be robust and properly resourced with scope for compensatory payments for those affected by misconduct or maladministration on the FSAs part. Complaints will be investigated quickly and there will be a key role for a Complaints Commissioner who will be completely independent of the FSA.

The Commissioner will have the resources to conduct full investigations and to publish reports if he considers there are matters which should be brought to public attention. The appointment requires Treasury approval, and to enhance the Commissioners independence it is proposed that:

• the Commissioners office will not be on FSA premises and will be staffed by people who do not work for the FSA;

• a Panel consisting of the non-executive Deputy Chairman of the FSA, the Chairman of the Financial Services Practitioner Forum, the Chairman of the Financial Services Consumer Panel and a former Civil Service Commissioner acting in a personal capacity will advise the FSA on the selection and appointment of the Commissioner.

The key points of the Complaints Scheme are set out in a Consultation Paper published today. It describes the procedure for inquiring into allegations of misconduct by the FSA arising from the way in which it carries out its functions other than its legislative functions. It covers complaints about maladministration by the FSA generally, including negligence, unreasonable delay, unprofessional behaviour, bias and lack of integrity. Complaints from firms, individuals within firms and from consumers will be covered.

Notes for editors

1. The Financial Services and Markets Act (Schedule 1 - paragraphs 7 and 8) requires the FSA to set up a Complaints Scheme for investigation of complaints against itself. The Complaints Scheme will come into effect from the date when the FSA begins to discharge its functions under the Act.

2. In line with the provisions of the Act the FSA will not normally investigate complaints under the scheme which could be dealt with more appropriately in some other way, for example by referring the matter to the Financial Services and Markets Tribunal or by institution of other legal proceedings.

3. The scheme envisages that there may be two distinct stages for handling each complaint. In the first stage the FSA will carry out an initial investigation of any complaint which appears to fall within the Scheme. These investigations will be carried out by a member of staff of appropriate seniority who has not been involved in the issue complained of. The aim will be to resolve the matter to the satisfaction of the complainant. Where the FSA finds a complaint well-founded, it will consider how best to put the matter right. This can include apologising to the complainant, explaining what went wrong, putting in place procedures to avoid a recurrence of the error, and making a compensatory payment.

4. If a complainant is dissatisfied with the outcome of the FSA''s investigation of his case or how it has been handled, he can require the FSA to refer the complaint to the Commissioner. Under this second stage of the process, the Commissioner''s role will include conducting a full and thorough inquiry into any complaint which he decides to investigate; reporting to the complainant and the FSA on the results of his investigation; and in appropriate cases publishing his report (or any part of it) and requiring the FSA to publish the whole or part of its response. He can also recommend that the FSA make a compensatory payment to a complainant.

5. The Commissioner will publish an Annual Report on investigations concluded by him during the year. This may include information on trends in the subject matter of complaints and on the general lessons which he considers the FSA should learn. The FSA will respond to the Commissioners points in its own Annual Report.

6. The FSA intends to issue a short guidance booklet which will explain, in a user-friendly way, how the complaints handling arrangements will work.

7. Consultation Paper 73 "Investigation of complaints against the FSA is available on the FSA Website under Publications.

8. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

9. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.