This chapter replaces DISP 1 (Complaints Handling Procedures for firms). which does not apply to credit unions (DISP 1.1.1 R).

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. (3)

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

4. (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 in DISP 2.4, 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. (3)

   the appropriate investigation of complaints;

4. (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.

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 in DISP 2.4 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 2.6 sets out the activities which come under the jurisdiction 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 (other than restricted credit);

4. (4)

   paying money by a plastic card (other than a store card);

5. (5)

   the provision of ancillary banking services;.

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.

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.

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

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.