Financial regulators in the UK have removed a proposal for a £10,000 cap on compensatory payments for those who have complaints about their actions.
The Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA) and the Bank of England have finalised a revised scheme for those who have complaints about the regulators, following a consultation.
“The regulators carefully considered the responses received to their consultation,” the FCA said.
“In response to feedback, the regulators have removed the proposal that no compensatory payment relating to a financial loss will exceed £10,000, save in exceptional circumstances,” the FCA said today.
“They have confirmed that they will consider making a discretionary payment in recognition of financial loss if they have made a clear and significant error, and they are the sole or primary cause of that financial loss,” the FCA said.
That may not mean a huge increase in compensation amounts, however.
“Compensatory payments are unlikely to reflect the full amount of your loss,” the regulators noted.
The highest compensatory amount on the scheme is listed as £2,500 and above.
“Your complaint may fall into this category if there are exceptional circumstances, such as where our failings or the consequences for you are unusually severe,” the regulators said.
The scheme will come into effect for anyone who makes a complaint on or after 1 November 2023. This includes regulated businesses and consumers of financial services.
The regulators have also increased the levels of discretionary compensatory payments for non-financial loss and provided more clarity on eligibility.
“The appropriateness of these levels will be reviewed every two years,” the FCA said.
“The regulators believe these changes balance the statutory immunity of the regulators provided by Parliament against the need to make compensatory payments when at fault,” the FCA said.
Types of complaint
The types of complaint that the regulators can investigate under the scheme include allegations of a mistake, lack of care, unreasonable delay, unprofessional behaviour, bias and a lack of integrity.
But there are some other areas which the regulators say will not be included under the scheme, as they do not relate to relevant functions.
This includes complaints about the regulators’ relationship with their employees, contractual or commercial disputes that a person may have with the regulators that are not connected to how they carry out their relevant functions, complaints about the exercise of their legislative functions – such as rule-making and issuing general guidance, and the actions or inactions of the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS).
Under the scheme, the regulators say they also cannot investigate complaints about the firms they regulate. For that, people should make their complaints directly to the firm in question, and to FOS if they are not satisfied with the response received.
The revised scheme provides clarity around what people can expect when they complain, making it more transparent and user-friendly.
“Complaints are a valuable source of feedback that inform changes and improvements across the regulators,” the FCA said.
“Regulators take all complaints seriously and welcome the transparency and accountability that the scheme provides.”