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The City regulator and the financial ombudsman are seeking views on how to tackle issues with mass complaints that can lead to uncertainty for firms and their customers.
The Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS) have jointly launched a “call for input”.
The call aims to help ensure that customers receive appropriate redress when something goes wrong and that firms identify harm at an early stage so they can resolve complaints more effectively themselves.
It will also look at how communications with consumer and industry bodies can be improved, making it quicker and easier to flag matters with wider market implications.
We are committed to continuously improving our service
James Dipple-Johnstone, FOS
Consumers can ask the FOS to step in when they cannot reach an agreement with a financial firm.
Major complaints issues that the ombudsman has dealt with in the past include the payment protection insurance (PPI) scandal, where people were sold insurance they had not asked for or did not need on a wide scale.
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.”
The FOS said 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.
The problem can be intensified if large numbers of complaints are submitted on behalf of consumers by professional representatives, it added.
The Dispute Resolution (DISP) rules which set out how firms and the FOS handle complaints were last reviewed 10 years ago.
The call for input will look at ways to bring the rules up-to-date.
James Dipple-Johnstone, deputy chief ombudsman at the FOS, said: “We are committed to continuously improving our service and helping create a redress framework fit for the future.”
The call may interest consumers, consumer groups, policymakers, firms, industry bodies, experts and commentators, academics, think-tanks, and professional representatives among others, those behind the initiative said.
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
