There are many reasons why clients complain to firms. However, not all problems are grounds for complaint (e.g. poor investment performance alone is not normally grounds for a complaint). Typically, complaints arise where:

1. (1)

   a firm makes unexpected or excessive charges;

2. (2)

   a firm does not draw attention to a particularly strict condition in a contract;

3. (3)

   a firm does not give a client adequate notice about changes to a contract;

4. (4)

   a client loses money because of a firm's slow administration; or

5. (5)

   a firm does not warn a client adequately about the risks of a product.

If you receive a complaint from or on behalf of an eligible complainant (usually a private customer) about your firm's provision of, or failure to provide a financial service, you will need to follow certain procedures.

An example of an eligible complainant is a private individual. Private individuals can refer a complaint to the Financial Ombudsman Service (FOS) if they are unhappy with a firm's final response.

Your procedures must cover:

1. (1)

   receiving complaints;

2. (2)

   responding to complaints;

3. (3)

   the appropriate investigation of complaints; and

4. (4)

   notifying complainants of their right to go to the FOS where relevant.

You must have in place and operate appropriate and effective internal complaint handling procedures for handling any expression of dissatisfaction, whether oral or written, justified or not. The procedures must be written down.

The requirements are as follows:

1. (1)

   You must display a notice stating that the FOS covers your firm. The notice should be displayed in all of your branches or offices to which your customers have access.

2. (2)

   At or immediately after the point of sale, your firm must refer your clients in writing to the availability of your internal complaint handling procedures - for example, in your terms of business.

3. (3)

   If you receive a complaint (unless it is resolved by close of business the next day) or receive a request for a copy of the procedures, you must supply a copy of the complaint handling procedures to the complainant.

4. (4)

   All of your employees should be aware of the procedures.

You will want to resolve complaints quickly and efficiently, though the length of time that it will take you to investigate a complaint may vary. There are fixed periods within which you have to inform your client of your progress:

If you manage to deal with a complaint by the end of the next business day after receiving it, there is no need to supply your client with a copy of the complaints procedures.

Complaints that are resolved by the next business day do not fall under the requirements for:

1. (1)

   time limits;

2. (2)

   record keeping; or

3. (3)

   reporting.

You must keep records for a minimum of three years from when you receive a complaint. This is so that you meet our requirements and are able to co-operate with FOS if they ask for information about a complaint that is later referred to them.

You will need to send in a complaints report (unless your firm only conducts business with clients that are not eligible complainants, which, as a small personal investment firm would be very unlikely).

We collect complaints data to assist us in monitoring firms and their regulatory compliance.

You must send a report to us twice each year. The reporting periods are:

1. (1)

   1 April to 30 September; and

2. (2)

   1 October to 31 March.

Reports have to be sent to us within one month of the end of each reporting period, (e.g. a report for the 1 April to 30 September period has to be submitted by 31 October each year).

There is a standard form to use when submitting your return.

1. (1)

   On-line submission: the on-line system goes 'live' on the first day after the end of each reporting period e.g. 1 April for reporting period 1 October to 31 March. You will need a password to use the facility. Please contact your usual supervisory contact, which will normally be the IFD Contact Centre, if you do not already have a password.

2. (2)

   Paper form: there is a paper form that is available for firms that do not have an Internet facility. You will find it on the CD-ROM by clicking on 'Handbook', 'Forms', 'Dispute Resolution: Complaints' and then 'Annex 1R: Complaints return'.

The following sections of DISP are relevant:

1. (1)

   an explanation of what an eligible complainant is: DISP 2.4.3 R;

2. (2)

   the reporting periods: DISP 1.5.6 R;

3. (3)

   the Financial Ombudsman Service funding rules: DISP Chapter 5; and

4. (4)

   how to notify the FSA if you do not conduct business with eligible complainants: DISP 1.1.7 R- DISP 1.1.8 R.