FSA finds small IFA firms are handling mortgage endowment complaints well but some issues remain
FSA PN/134/2005
9 December 2005
The Financial Services Authority (FSA) has found no evidence that small IFA firms are 'fobbing off' mortgage endowment complaints, but did discover some issues with complaints handling practices that firms must address.
Following concerns raised in independent research commissioned by the FSA, the regulator launched a project to examine the complaints handling of small firms in order to assess the level of compliance with regulations, to ensure customers were being treated fairly. Based on a sample of 51 firms and 412 files reviewed, the FSA's findings identified that in the majority of cases the decisions being made by small firms we visited to reject or uphold a complaint are appropriate.
FSA rules allow consumers to refer their complaint to the Financial Ombudsman Service (FOS) should they be dissatisfied with the outcome of the firm's investigation. Of the 562 complaints which were initially rejected by the firms and were subsequently referred to FOS:
- 42 complaints were found in favour of the complainant;
- 292 complaints were rejected; and
- 228 complaints are pending.
However, the FSA has found that some firms are not strictly adhering to rules that set out the time limits within which complaints must be dealt and with the general level of firms' internal complaints handling procedures (see Note 2). In a significant number of cases, the FSA found that these deadlines are not being met.
Mike Lord, the FSA's Head of Investments in the Small Firms Division, said:
"The FSA is greatly encouraged to discover that small firms are not fobbing off endowment complaints and are investigating complaints properly. However, issues still remain with smaller firms not meeting the deadlines our rules set out or when complying with their own systems and procedures when they are dealing with customer complaints."
"Firms must have in place and make proper use of appropriate and effective internal complaint handling procedures to help ensure that customers are treated fairly. These include meeting the deadlines for corresponding with complainants and ensuring an appropriate person investigates the complaint. We are publishing, on our website, information to help firms improve in this area."
"While we still see instances of firms not dealing with complaints properly, overall we were pleased with the decision making we saw firms making when undertaking this work."
Notes to editors
- For a full report on the findings of the project, please access the link below.
Mortgage endowment complaints handling within small investment firms - To comply with FSA rules, firms must acknowledge a complaint within five business days of it being lodged. Firms must also communicate with customers within four weeks to send a final response or explain why the complaint is still pending. By the eight week mark, firms must have either communicated a final response to customers or explain why there has been a delay and offer the customer the right to refer the complaint to the FOS. The final response from a firm must also outline the customer's right to refer the complaint to FOS if they are dissatisfied, and include a copy of the FOS's explanatory leaflet.
- 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; securing the appropriate degree of protection for consumers; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal, and improve its business capability and effectiveness.
