Regulators publish revised Complaints Scheme

Following a joint consultation between FCA, PRA and BoE in July 2020, the regulators have set out final changes to be made to the Complaints Scheme.

The revised Complaints Scheme and policy statement was initially due in April 2022, but FCA announced a delay in order to consider the publication of the IRHP review, the Office of the Complaints Commissioner report on its handling of complaints relating to London Capital & Finance, and the Royal Assent of FSMA 2023.

The regulators expect the revised document to give a clear understanding of when a complaint can be made, when the regulators will investigate, and what may follow in terms of outcomes. The revised framework will come into force on 1 November 2023. Complaints made before this date will be considered under the existing regime.

A large proportion of respondents did not support proposals concerning compensatory payments in recognition of financial loss, particularly the suggestion of a £10,000 limit on payments save for exceptional circumstances. Regulators considered that payments ought to be modest because:

• They are immune from liability in damages unless found to have acted in bad faith or breached human rights;
• The Scheme is not designed to consider complex issues of causation; and
• The Scheme is funded by regulated firms’ fees, so the costs would ultimately fall on the firms, and via them, consumers.

The regulators have confirmed that the Scheme will continue with the use of the proposed payment levels, noting that the Scheme is for the investigation of complaints about the regulators, not a consumer redress scheme such as FOS. The £10,000 limit provision has been removed, but the policy statement makes clear that this does not affect the regulators’ view that payments made under the Scheme are likely to be modest because to do otherwise would risk undermining their statutory immunity. It also recognised that setting a ceiling of £10,000 could act as a target, and undermine its intention to manage expectations.

Several respondents also raised concerns with the ‘sole or primary’ cause condition when considering such payments, highlighting that regulators will almost certainly never be the ‘sole’ cause of loss, and they are highly unlikely to ever be the ‘primary’ cause of loss. The policy statement confirms that this condition will be adopted as proposed, because the measure is appropriate in providing a realistic expectation of the likelihood of compensatory payment in recognition of financial loss being paid.