The Financial Conduct Authority (FCA) received 1,212 complaints in the 2021/22 financial year, 24% fewer compared to 1,596 in 2020/21, allowing the regulator to clear its complaints backlog.
The regulator added that it closed 2,211 cases last year – 170% more than the 820 it closed in 2020/21 – successfully targeting its oldest cases to drive down the backlog while also improving processes.
However, the Complaints Commissioner found the FCA’s approach to compensation, particularly in London Capital & Finance (LCF) cases was “unjustified” and that it “does not stand up to scrutiny”.
The commissioner added that given the way the FCA interpreted the complaints scheme terms, ex gratia compensatory payments “will never be available to complainants”.
Performance improved
The overall FCA complaints numbers were also down on the 1,261 received in 2019-20 but remains up on the 557 received for 2017-18, largely because 498 complaints were received in 2020/21 regarding LCF, but just 142 were made in 2021/22.
The regulator acknowledged its tactics led to a negative impact on service performance, particularly in the first half of the year, but said this performance had significantly improved since then.
The FCA further said it had continued to demonstrate improvements on last year, such as improving acknowledgements response in 2021/22 by 28 percentage points compared to the previous year, narrowly missing its target of 95%.
Having cleared its backlog of cases, in the second half of 2021/22 the FCA added it was able to improve performance for local area complaint completion to 82% between November 2021 and March 2022, and stage one completion to 87% between October 2021 and March ’22.
And the FCA said its expects the trajectory of improvement against the metrics to continue in 2022/23.
The FCA’s operating service metrics for responding to complaints are that it aims to acknowledge a complaint within five business days of receipt. Its voluntary target is that 95% of complainants should receive an acknowledgement within five business days of receipt.
For complaints dealt with by the local business area, it aims to complete an investigation and send a decision to the complainant within 10 working days.
Its voluntary target is that 95% of complainants should receive a decision within 10 working days of receipt. The response to the complainant should also inform them of their right to ask for a Stage 1 investigation (meaning handled by the independent internal Complaints Departments).
For completion (complaints dealt with by the central Complaints Department, known as Stage 1 complaints), the FCA aims to complete an investigation or provide the complainant with a reasonable timescale to investigate the complaint within 20 working days of receipt. Its voluntary target is that we should achieve this for 95% of Stage 1 complaints.
Largest ever case load for Complaints Commissioner
However, the Complaints Commissioner’s annual report into how financial service regulators consider complaints revealed the commissioner’s office dealt with 935 cases, including complaints, enquiries, subjects access requests and applications for judicial review.
This compared to just 393 in the previous year. The increase in cases was due in large part to 443 complaints about the FCA’s regulation of LCF.
Complaints commissioner Amerdeep Somal said this was by far the largest number of cases ever processed by her office and resulted in an increase in resources and a change of internal processes to manage the increased volume.
But the commissioner added that her officer met its published service standards – issuing decisions in 572 of the complaints received. In 462 of these, the regulators’ decision was only partially upheld or not upheld, and there were 74 recommendations and suggestions made.
The commissioner found the reason for most of the complainant’s dissatisfaction with the FCA centred upon its oversight role of LCF and the fact it will not pay ex gratia compensation except for, in some cases, a small ex gratia payment for complaint handling delays or small administrative failures on the part of the FCA complaints department which were issues also complained about.
The commissioner found the FCA’s approach to compensation, particularly in the LCF cases “unjustified” and that it “does not stand up to scrutiny”.
The commissioner further noted that de facto, compensatory payments on an ex-gratia basis due to supervisory or regulatory failings will never be available to complainants despite the FCA saying there are exceptional circumstances where it might be, so long as the regulator relies on three points:
- its self-devised test of ‘sole or primary cause’ test in its remedies statement;
- its binary interpretation of ‘direct dealings’
- and its self-devised test that such payments should only be made in ‘exceptional circumstances’, which is not encapsulated in the scheme, and not defined in detail by the FCA.
The FCA does not agree with me on this, Somal added.