This chapter replaces DISP 1 (Treating complainants fairly).2 which does not apply to credit unions (2DISP 1.1.5 R (2)2).

This chapter is also relevant to eligible complainants who might wish to refer a complaint to the Financial Ombudsman Service.

DISP 2 - DISP 4 (which cover jurisdiction and procedures of the Financial Ombudsman Service) and FEES 5 (which covers funding of the Financial Ombudsman Service) apply to credit unions.

The purpose of this chapter is to set out the rules relating to the internal handling of complaints by a credit union, including:

1. (1)

   the procedures which a credit union must put in place;

2. (2)

   the time limits within which a credit union must deal with a complaint;

3. (2A)

   the referral of complaints;1

4. (3)

   the records of a complaint which a credit union must make and retain; and

5. (4)

   the requirements for a credit union to report information about complaints to the FSA.

This is to ensure that complaints are handled fairly, effectively and promptly, and are resolved at the earliest possible opportunity, thereby minimising the number of unresolved complaints which need to be referred to the Financial Ombudsman Service. This purpose is compatible with the FSA'sconsumer protection statutory objective.

An eligible complainant is a person who would be eligible to refer a complaint to the Financial Ombudsman Service. The term is defined for all firms inDISP 2.72, but guidance for credit unions is provided at CRED 17.3 below.

Credit unions are not obliged to restrict their internal complaint handling procedures to expressions of dissatisfaction from eligible complainants. They may, if they wish, also establish procedures for handling complaints from other persons.

The internal complaint handling procedures should provide for:

1. (1)

   receiving complaints;

2. (2)

   responding to complaints;

3. (2A)

   referring complaints to other firms;1

4. (3)

   the appropriate investigation of complaints; and1

5. (4)

   notifying complainants of their right to go to the Financial Ombudsman Service, where relevant.

When deciding what constitutes an appropriate complaint handling procedure, a credit union should have regard to:

1. (1)

   the type of business it undertakes;

2. (2)

   its size and organisational structure;

3. (3)

   the nature and complexity of the complaints it is likely to receive; and

4. (4)

   the number of complaints it is likely to receive and have to investigate.

1. (1)

   A credit union is not prevented from using a third party administrator (for example, an outside organisation) for the purposes of handling complaints.1

2. (2)

   It is acceptable for two or more credit unions to set up arrangements, such as a one-stop shop for complaints handling under a service level agreement, provided that this still secures for complainants an equivalent standard of service and, if appropriate, redress. Any such arrangements should be made clear to an eligible complainant.1

In establishing their internal complaint handling procedures, credit unions may wish to take account of British Standard 8600:1999 - Complaints Management Systems - Guide to Design and Implementation. This is available on request from the FSA.

In order to comply with CRED 17.2.1 R, a credit union may include reference to its complaint handling procedures in documentation supplied to members, for example its membership pack or the first piece of correspondence sent to a member or juvenile depositor after he joins the credit union.

A credit union may also, if it wishes to do so, disclose the fact that it is covered by the Financial Ombudsman Service by including the Financial Ombudsman Service logo in any marketing literature or correspondence directed at members or juvenile depositors, provided that it does so in a way which is not misleading.

The internal complaint handling procedures should enable complainants to make a complaint by any reasonable means (for example by letter, telephone, or in person).

A credit union's correspondence and literature relating to complaints should be in clear and plain language.

The FSAwill take account of the size and nature of the credit union in applying the requirements.

In deciding whether or not to accept a complaint and what would be appropriate redress, credit unions may wish to consider any relevant guidance published by the FSA or the Financial Ombudsman Service.

Appropriate redress will not always involve financial redress. It may, for example, simply involve an apology. Where financial redress is deemed appropriate, it may include a reasonable rate of interest.

The definition of eligible complainant inDISP 2.71 applies for the purposes of this chapter.

The FSA regards the general definition of eligible complainant as meaning, in the credit union context:

1. (1)

   those having a direct relationship with the credit union:

   1. (a)

      members, potential members and former members of the credit union;

   2. (b)

      juvenile depositors, potential juvenile depositors and former juvenile depositors of the credit union.

2. (2)

   those having an indirect relationship with the credit union:

   1. (a)

      businesses with a turnover of less than £1million (where, for example, the business has guaranteed a member's loan); if in doubt a credit union should assume that the business is eligible;

   2. (b)

      beneficiaries of those having a direct relationship with the credit union (where, for example, a person has been nominated to receive property on a person's death).

3. (3)

   the representatives of those having a direct or indirect relationship with the credit union (where, for example, a person is acting on behalf of a deceased member).

DISP 2.3 (To which activities does the Compulsory Jurisdiction apply?) 3sets out the activities which come under the Compulsory Jurisdiction3 of the Financial Ombudsman Service, as follows:

1. (1)

   regulated activities;

2. (2)

   lending money secured by a charge on land;

3. (3)

   lending money (excluding restricted credit where that is not a consumer credit activity);3

   3
4. (4)

   paying money by a plastic card (excluding a store card where that is not a consumer credit activity);3

   3
5. (5)

   providing ancillary banking services;3

   232
6. (6)

   consumer credit activities;2

or any ancillary activities, including advice, carried on by the firm in connection with them.3

Financial loss includes indirect or future loss, in addition to actual loss. For example, a complaint may involve an allegation that the complainant may suffer financial loss which has not yet occurred.

1On receiving a complaint referred by a firm, the standard time limits will apply from the date on which the credit union receives the referral. In particular, CRED 17.5.1 R requires the credit union to send a written acknowledgement to the complainant within five business days. A credit union should copy this acknowledgement to the firm which made the referral.

A credit union that is able to provide a final response within five business days of receipt of a complaint may combine its acknowledgement of the complaint with the final response.

A credit union should aim to resolve complaints at the earliest possible stage.

Copies of the Financial Ombudsman Service's explanatory leaflet may be reproduced under licence or can be obtained from the Financial Ombudsman Service.

Under CRED 17.5.4 R and CRED 17.5.5 R:

1. (1)

   even if the credit union has failed to resolve the complaint within eight weeks, the complainant may decide to give the credit union more time before exercising any right he may have to refer a complaint to the Financial Ombudsman Service; and

2. (2)

   the six month time limit within which a complainant must refer a complaint to the Financial Ombudsman Service begins at the date when the final response is sent by the credit union.

The records required are for the purposes of monitoring by the FSA and also to ensure that the credit union is able to cooperate, as necessary, with the Financial Ombudsman Service. These should include:

1. (1)

   the name of the complainant;

2. (2)

   the substance of the complaint; and

3. (3)

   any correspondence between the credit union and the complainant, including details of any redress offered by the credit union; and4

   4
4. (4)

   documentation relating to the referral of a complaint under CRED 17.4.4 R.4

For the purpose of CRED 17.6.3 R, and upon completing the return, the credit union should note that:3

1. (1)

   Where a complaint could fall into more than one category, the complaint should be recorded against the category that the credit union considers to form the main part of the complaint.3

2. (2)

   Where a complaint has been upheld under CRED 17.6.3 R (3)(a), a credit union should report any complaints to which it has given a final response which accepts the complaint and, where appropriate, offers redress, even if the redress offered is disputed by the complainant. Where a complaint is upheld in part, the credit union should treat the whole complaint as upheld for reporting purposes. Where a credit union rejects a complaint, yet chooses to make an ex-gratia payment to the complainant, the complaint should be recorded as rejected.3

3. (3)

   Where a credit union reports on the amount of redress paid under CRED 17.6.3 R (4), redress should be interpreted to include any amount paid, or cost borne, by the credit union, where a cash value can be readily identified, and should include:3

   1. (a)

      amounts paid for distress and inconvenience;3

   2. (b)

      a free transfer out to another provider which transfer would normally be paid for;3

   3. (c)

      ex-gratia payments and goodwill gestures;3

   4. (d)

      interest on delayed settlements3

   5. (e)

      waiver of an excess on an insurance policy; and3

   6. (f)

      payments to put the consumer back into the position the consumer should have been in had the act or omission not occurred.3

4. (4)

   Where a credit union reports on the amount of redress paid under CRED 17.6.3 R (4), such redress would not, however, include repayments or refunds of premiums which had been taken in error (for example where a credit union had been taking, by direct debit, twice the actual premium amount due under a policy). The refund of the overcharge would not count as redress.3

1. (1)

   Financial penalties may be imposed for the late submission of the complaints report required by CRED 17.6.3 R.2

2. (2)

   Details of the FSA's policy and procedures on financial penalties are given in CRED 15.5 (Financial penalties for late submission of reports) and CRED 15 Annex 3 G. 21

The contact point in CRED 17.6.3 R and CRED 17.6.9 R2 can be by name or job title and may include, for example, a telephone number.

Cooperation with the Ombudsman includes, but is not limited to, producing requested documents, adhering to any specified time limits, attending hearings when requested to do so and complying promptly with any settlements or awards.