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CRED 17.1 Application and Purpose

CRED 17.1.1 R

This chapter applies to all credit unions.

CRED 17.1.2 G

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

CRED 17.1.3 G

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

CRED 17.1.4 G

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.

CRED 17.1.5 G

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.

CRED 17.1.6 G

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.

CRED 17.2 Internal complaint handling procedures: general requirements

CRED 17.2.1 R

A credit union must establish, maintain and implement appropriate and effective internal complaint handling procedures (which must be written down) for:1

1
  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 that credit union's provision of, or failure to provide, a financial services activity: and1

    1
  2. (2)

    referring to another firm, A, expressions of dissatisfaction about A's services, if the credit union markets (or has marketed) A's financial services or if the credit union's financial services are marketed by A.1

CRED 17.2.2 G

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.

CRED 17.2.3 G

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.

CRED 17.2.4 G

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.

CRED 17.2.5 G

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.

CRED 17.2.6 G
  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

CRED 17.2.7 G

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.

CRED 17.2.8 R

A credit union must:

  1. (1)

    refer in writing to the availability of its internal complaint handling procedures when, or as soon as possible after, a person is admitted as a member or juvenile depositor;

  2. (2)

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

  3. (3)

    display at its registered office a notice that it is covered by the Financial Ombudsman Service.

CRED 17.2.9 G

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.

CRED 17.2.10 G

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.

CRED 17.2.11 R

A credit union's internal complaint handling procedures must make provision for:

  1. (1)

    complaints to be investigated by a suitable person (officer, director or member of staff of the credit union) 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.

CRED 17.2.12 R

Where a credit union decides that redress is appropriate, it 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.

CRED 17.2.13 R

A credit union must take all reasonable steps to ensure that all relevant persons (whether officers, directors or volunteers) are aware of the credit union's internal complaint handling procedures and must endeavour to ensure that they act in accordance with them.

CRED 17.2.14 R

A credit union must put in place appropriate management controls and take reasonable steps to ensure that 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.

CRED 17.2.15 G

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

CRED 17.2.16 G

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

CRED 17.2.17 G

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

CRED 17.2.18 G

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.

CRED 17.2.19 G

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.

CRED 17.3 Eligible complainants

CRED 17.3.1 G

The definition of eligible complainant in DISP 2.4 applies for the purposes of this chapter.

CRED 17.3.2 G

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).

CRED 17.4 Internal complaint handling procedures: additional requirements

CRED 17.4.1 R

The additional requirements in CRED 17.5 - CRED 17.7 (on time-limits, record-keeping; reporting and cooperation with Ombudsman) do not apply:

  1. (1)

    where the credit union has taken reasonable steps to determine, and has determined, that the complaint:

    1. (a)

      is not made by, or on behalf of, an eligible complainant; or

    2. (b)

      does not relate to an activity of that credit union(or of any other firm with whom that credit union has some connection in marketing financial services) 1which comes under the jurisdiction of the Financial Ombudsman Service; or

    3. (c)

      does not involve an allegation that the complainant has suffered, or may suffer, financial loss, material distress or material inconvenience; or

  2. (2)

    where the complaint has been resolved by close of business on the business day following receipt.

CRED 17.4.2 G

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;.

CRED 17.4.3 G

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.

1Referring complaints

CRED 17.4.4 R
  1. (1)

    1A credit union which has reasonable grounds to be satisfied that another firm may be solely responsible for the fault alleged in a complaint may refer the complaint to that other firm but if it does so it must:

    1. (a)

      refer the complaint promptly and in any event within five business days of the date on which it became satisfied that such other firm may be responsible for the subject matter of the complaint;

    2. (b)

      make the referral using a durable medium; and

    3. (c)

      inform the complainant of the referral by way of a final response and include the other firm's contact details.

  2. (2)

    A credit union which has reasonable grounds to be satisfied that another firm may be jointly responsible for the fault alleged in a complaint, may refer the complaint to that other firm but if it does so it must:

    1. (a)

      refer the complaint promptly and in any event within five business days of the date on which it became satisfied that such other firm may be jointly responsible for the subject matter of the complaint;

    2. (b)

      make the referral using a durable medium;

    3. (c)

      at the same time inform the complainant of the referral and include the other firm's contact details; and

    4. (d)

      comply with the obligations in CRED as to the investigation of that part of the complaint that is the credit union's responsibility and, as soon as possible, inform the complainant of the outcome by a final response.

1Dealing with a referred complaint

CRED 17.4.5 R

1When a firm receives a complaint referred to it under CRED 17.4.4 R, the complaint is treated for the purposes of CRED as if made directly to that firm, and as if received by it when the referral was received.

CRED 17.4.6 G

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.

CRED 17.5 Time limits for dealing with a complaint

CRED 17.5.1 R

A credit union must send a written acknowledgement of a complaint to the complainant 1within five business days1of its receipt, giving the name or job title of the person handling the complaint within the credit union (together with details of the credit union's internal complaint handling procedures).

1
CRED 17.5.2 G

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.

CRED 17.5.3 G

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

CRED 17.5.4 R

By the end of eight weeks after its receipt of a complaint, the credit union must send the complainant either:

  1. (1)

    a final response; or

  2. (2)

    a response which;

    1. (a)

      explains that the credit union is still not in a position to make a final response, gives reasons for the further delay and indicates when it expects to be able to provide a final response; and

    2. (b)

      informs the complainant that he may refer the complaint to the Financial Ombudsman Service if he is dissatisfied with the delay and encloses a copy of the Financial Ombudsman Service's explanatory leaflet.

CRED 17.5.5 R

When a credit union sends a complainant its final response, the final response must:

  1. (1)

    inform the complainant that he may refer the complaint to the Financial Ombudsman Service if he is dissatisfied with the final response and that he must do so within six months; and

  2. (2)

    enclose a copy of the Financial Ombudsman Service's explanatory leaflet (unless it has already done so).

CRED 17.5.6 G

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

CRED 17.5.7 G

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.

CRED 17.6 Record Keeping and Reporting

CRED 17.6.1 R

A credit union must make and retain records of complaints (except those referred to in CRED 17.4.1 R) for a minimum period of three years from the date of its receipt of a complaint.

CRED 17.6.2 G

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

CRED 17.6.3 R

A credit union must provide the FSA, once a year, with a report in the format set out in CRED 17 Annex 1 R (Credit Union complaints return) which contains (for the relevant reporting period) information about:2

  1. (1)

    the total number of complaints received by the credit union (except those referred to in CRED 17.4.1 R) broken down according to the categories and in respect of each of the generic product types described in CRED 17 Annex 1 R(Credit union complaints return) which are relevant to the credit union;2

  2. (2)

    the number of complaints closed by the credit union:2

    1. (a)

      2within eight weeks of receipt; and

    2. (b)

      more than eight weeks after receipt;

  3. (3)

    the total number of complaints outstanding at the end of the reporting period; and2

  4. (4)

    the single contact within the credit union for complainants.2

CRED 17.6.4 G

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.

CRED 17.6.5 R

For the purposes of CRED 17.6.3 R2:

  1. (1)

    the relevant reporting period is from 1 April to 31 March each year; and 2

  2. (2)

    2reports are to be submitted to the FSA within one month of the end of the relevant reporting period.

CRED 17.6.6 G
  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

CRED 17.6.7 R

For the purposes of making reports under CRED 17.6.3 R, a closed complaint is a complaint:

  1. (1)

    where the credit union has sent a final response;

  2. (2)

    where the complainant has positively indicated acceptance of the credit union's earlier response; or

  3. (3)

    where the complainant has failed to revert to the credit union within eight weeks of the credit union's most recent letter.

CRED 17.6.8 R

A report under this section must be given or addressed, and delivered, in the way set out in SUP 16.3.6 R - SUP 16.3.16 G (General provisions on reporting) (see CRED 14.10.4 G - CRED 14.10.4F G) , except that:2

  1. (1)

    instead of the credit union's usual supervisory contact, the report should be given to or addressed for the attention of the Notification, Reporting and Data Maintenance department of the FSA; and

    2
  2. (2)

    in addition to the methods of submission of reports in SUP 16.3.9 R, a credit union may submit a report under this section through, and in the electronic format specified in, the FSA's Complaints Reporting System.2

CRED 17.6.8A R

2A credit union that has started but intends to stop submitting reports in electronic format under CRED 17.6.8 R (2) must first notify the Notification, Reporting and Data Maintenance department of the FSA in writing of this intention.

CRED 17.6.8B R

2If a credit union is unable to submit a report in electronic format because of a systems failure of any kind, the credit union must:

  1. (1)

    submit its report under this section through one of the alternative methods of submission of reports in SUP 16.3.9 R (see CRED 14.10.4 G); and

  2. (2)

    notify the FSA, in writing and without delay, of that systems failure.

CRED 17.6.9 R

For the purpose of inclusion in the public record maintained by the FSA, a credit union must provide the FSA, at the time of its authorisation, with details of a single contact within the credit union for complainants, and in its quarterly return must notify the FSA of any subsequent change.

CRED 17.6.10 G

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.

CRED 17.7 Cooperation by credit unions with the Ombudsman

CRED 17.7.1 R

A credit union must cooperate fully with the Ombudsman in the handling of complaints against it.

CRED 17.7.2 G

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.

CRED 17 Annex 1 Credit union complaints return

R

This annex consists only of one or more forms. Forms are to be found through the following address:

Credit union complaints return - FSA/docs/cred/cred17_ann1R_01082009.pdf21