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FMA told to tweak guidance on complaints handling

The Financial Markets Authority will need to refine its guidance on complaints handling processes if its proposed transitional license standard is to be effective, one complaints expert says.

Tuesday, July 9th 2019, 6:00AM 2 Comments

The FMA is consulting on two standard conditions it wants to propose as part of transitional licensing, starting later this year.

They are a requirement for full record-keeping, and for businesses to have robust internal complaints-handling processes.

Businesses would need to have a system that meant complaints were acknowledged as soon as practicable, retail clients were given information about the process and how it worked, complaints were resolved and a response provided as soon as practicable, and records were kept of complaints.

But Trevor Slater, general manager of The Resolution Institute, and formerly of FSCL and FDR, said it was problematic that the FMA had indicated in its consultation document that a complaint "means a statement of dissatisfaction communicated to you by a client about your financial advice service, other than a statement of dissatisfaction that is trivial or vexatious, or the client indicates it is not intended to be a complaint".

Slater said that was the definition from the old code of conduct, and not in line with modern standards for complaints handling.

It meant advisers would have to assess each complaint to determine whether it was legitimate, he said, rather than having a process to deal with all complaints received.

"For some people, every complaint is going to be trivial."

Slater said it was an advantage to advisers to have good complaints processes because it stopped problems escalating, and gave the business a chance to fix them.

There could be brand damage if complaints were not dealt with well, he said.

"Complaints are great business intel."

He said there had been an industry shift to pay more attention to complaints.

External disputes resolution schemes seemed to be working well for advisers, he said, but had to overcome the stigma of being compulsory.

He said they were now trying to add value beyond simply resolving complaints and had dropped their fees, making their proposition more compelling.

Tags: complaints FMA

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Comments from our readers

On 9 July 2019 at 6:46 pm LNF said:
We seem to have moved from disputes to complaints. Huge difference. The figure of 900 going to exit the industry might be on the light side
On 11 July 2019 at 8:54 am Mr Slater said:
@LNF the DR schemes have since incpetion of the Act always talked about complaints e.g. how to make a complaint, your internal complaint process etc. And reality there is no difference between a complaint and a dispute. Both have two parties in disagreement.

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