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DISP 1.2 Internal complaint handling procedures: general requirements

Requirement to have internal complaint handling procedures

DISP 1.2.1RRP

A firm, A,4 must have in place and operate appropriate and effective internal complaint handling procedures (which must be written down) for:

  1. (1)

    handling any expression of dissatisfaction, whether oral or written, and whether justified or not, from or on behalf of an eligible complainant about A's4 provision of, or failure to provide, a financial service; and4

    4
  2. (2)

    referring to another firm, B, expressions of dissatisfaction about B's services, if A markets (or has marketed) B's financial services or if A's financial services are marketed by B.4

DISP 1.2.1AR

3If the expression of dissatisfaction is from, or on behalf of, a person who is not an eligible complainant, and relates to insurance mediation activity carried on by an insurance intermediary, then unless the insurance intermediary is an insurer, the insurance intermediary must have in place and operate appropriate and effective procedures for registering, and responding to, the expression of dissatisfaction.

DISP 1.2.2RRP

An eligible complainant is a person who would be eligible to refer a complaint to the Financial Ombudsman Service, as defined in DISP 2.4

DISP 1.2.3GRP

Firms 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 customers.

DISP 1.2.4GRP

The internal complaint handling procedures should provide for:

  1. (1)

    receiving complaints;

  2. (2)

    responding to complaints;

  3. (2A)

    referring complaints to other firms;4

  4. (3)

    the appropriate investigation of complaints; and

  5. (4)

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

DISP 1.2.5GRP

When deciding what constitutes an appropriate complaint handling procedure (see DISP 1.2.1 R), a firm 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 likely number of complaints it will receive and have to investigate.

DISP 1.2.6G
  1. (1)

    DISP 1.2.1 R does not prevent the use of a third party administrator for the purposes of handling complaints.4

  2. (2)

    It is acceptable for two or more firms 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.4

DISP 1.2.7G

In establishing their internal complaint handling procedures, firms may wish to take account of BS ISO 10002:2004 'Quality management. Customer satisfaction. Guidelines for complaints handling in organizations'. This is available from BSI. To purchase copies contact them directly on 020 8996 9001 or orders@bsi-global.com.

DISP 1.2.8G

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

Publicising the procedures

DISP 1.2.9R

A firm must:

  1. (1)

    Refer eligible complainants1 in writing to the availability of its internal complaint handling procedures at, or immediately after, the point of sale;

  2. (2)

    publish details of its internal complaint handling procedures, supply a copy on request to an eligible complainant1, and supply a copy automatically to the complainant when it receives a complaint from an eligible complainant1 (unless the complaint is resolved by close of business on the next business day); and

  3. (3)

    display in each of its branches or sales offices to which eligible complainants have access a notice indicating that it is covered by the Financial Ombudsman Service.

DISP 1.2.10G

The requirements in DISP 1.2.9 R(1)-(3) relate to the internal complaints procedures required by DISP 1.2.1 R.

DISP 1.2.11G

In order to comply with DISP 1.2.9 R(1), a firm may include reference to its complaint handling procedures in contractual documentation, for example:3

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  1. (1)

    (where the firm is subject to the requirements in COB) in a terms of business letter, key features document or client agreement;3

  2. (2)

    (where the firm is subject to the requirements in ICOB), as part of status disclosure (see ICOB 4.2 and ICOB 8.3), in a policy summary or policy document; or3

  3. (3)

    (where the firm is subject to the requirements in MCOB) in an initial disclosure document or offer document.3

DISP 1.2.12G

Where a complaint is also subject to the more detailed requirements in DISP 1.4 - DISP 1.6, the firm may send out a copy of its complaint handling procedures (as required by DISP 1.2.9 R (2)) at the same time as the acknowledgement required by DISP 1.4.1 R.

DISP 1.2.13G

For the purposes of satisfying DISP 1.2.9 R(2) a firm may wish to produce a leaflet which summarises its internal complaint handling procedures.

DISP 1.2.14G

Firms' literature and correspondence relating to complaints should be in clear and plain language.

DISP 1.2.15G

A firm 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 eligible complainants, provided that it does so in a way which is not misleading.

Particular matters for which procedures must make provision

DISP 1.2.16R

A firm's internal complaint handling procedures under DISP 1.2.1 R must make provision for:

  1. (1)

    complaints to be investigated by an employee of sufficient competence who, where appropriate, was not directly involved in the matter which is the subject of the complaint;

  2. (2)

    the person charged with responding to complaints to have the authority to settle complaints (including the offering of redress where appropriate) or to have ready access to someone who has the necessary authority; and

  3. (3)

    responses to complaints to address adequately the subject matter of the complaint and, where a complaint is upheld, to offer appropriate redress.

Providing compensation

DISP 1.2.17R

Where a firm decides that redress is appropriate, a firm must provide a complainant with fair compensation for any acts or omissions for which it was responsible and comply with any offer of redress which the complainant accepts.

DISP 1.2.18G

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

DISP 1.2.19G

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.

DISP 1.2.20G

DISP App 2 contains guidance to firms on the approach to assessing financial loss and appropriate compensation in circumstances where a firm regards a complaint in relation to the sale of an endowment policy (which is sold for the purposes of repaying a mortgage) as justified.

Using the procedures

DISP 1.2.21R

A firm must take reasonable steps to ensure that all relevant employees (including employees of appointed representatives) are aware of the firm's internal complaint handling procedures and must endeavour to ensure that they act in accordance with them.

DISP 1.2.22R

A firm must put in place appropriate management controls and take reasonable steps to ensure that in complying with DISP 1.2.1 R it handles complaints fairly, consistently and promptly and that it identifies and remedies any recurring or systemic problems, as well as any specific problem identified by a complaint.