FCA delays complaints process shakeup to April 2022

FCA delays complaints process shakeup to April 2022

The Financial Conduct Authority has delayed changes to its compensation rules for regulatory failings, which include a cap on the amount the regulator will award.

In an update this month, the regulator said in light of its independent review on interest rate hedging products, it now anticipates publishing the revised complaints scheme by the end of April 2022.

Under the scheme the regulators are able to make compensation payments either as an acknowledgment of regulatory shortcomings or of the fact that the complainant has suffered distress or inconvenience or financial loss. 

The FCA first proposed the changes in July and at the time, the regulator, Prudential Regulation Authority and the Bank of England said they intended to make the complaints process for regulatory failings more accessible to consumers.

They proposed to distinguish between payments made in relation to distress or inconvenience, and those in relation to financial loss and to publish guidance to help the regulators decide the appropriate compensation amount.

The proposals would see the maximum amount of compensation for financial loss capped at £10,000 in most cases, while up to £250 is paid where the complainant has experienced a moderate level of distress and inconvenience, £250-£500 is paid for a high level and £500-£1000 is paid for a very high level.

The regulatory complaints scheme allows consumers and firms to complain about the way regulators have acted, but the payments are often small. 

According to data from the Complaints Commissioner, between January 2017 and December 2019 most of the payments from the FCA were for amounts of £250 or less, with the most common payment amount being £50. 

There were nine payments in total for amounts greater than £1,000, with only three payments being for amounts greater than £10,000.

The consultation closed in October 2020 and the FCA originally intended to bring the revised complaints rules into force "as soon as reasonably practicable".

According to last November's board minutes, the FCA delayed this to summer this year.

In this month’s notice, the regulator said this would now be delayed to next year.

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