Financial services firms are alerted to the fact that the length of time customers will have to refer complaints to the Financial Ombudsman Service (FOS) will increase within the next 12 months or so.
At present, the FOS will not consider a complaint, unless there are exceptional circumstances, if it is more than six months since the date of the firm’s final response letter. However, the European Parliament has now passed the Alternative Dispute Resolution (ADR) Directive, and all European Union (EU) member states, including the UK, have until July 9 2015 to implement the provisions of the Directive.
Amongst other changes to the Financial Conduct Authority (FCA)’s complaints rules, firms will need to give their customers at least 12 months from the date of the final response to refer the matter to the FOS. Exact details are still to be finalised, but the new timescale may apply to complaints submitted before the change, not just to new grievances.
The Government’s Department for Business Innovation and Skills will announce shortly how it intends to implement the Directive, and the FCA will then conduct a consultation in autumn 2014 on the proposed changes to its Dispute Resolution (DISP) rules.
The FCA says that no action is required from regulated firms at present.
The provisions of the Directive are also likely to apply to other dispute resolution and Ombudsman schemes, such as the Legal Ombudsman. A central aim of the Directive is that no EU consumer should have to go to court to resolve a dispute with a supplier.
Another requirement of the Directive is that the dispute resolution service will be subject to a 21 day deadline should it wish to refuse the complaint. It is unclear how the FOS will be able to implement this, given that it receives some 500,000 complaints a year, and often takes many months, and sometimes a few years, to reach a final judgement.
In the foreword to a Government paper on the subject, Jenny Willott MP, the Minister for Employment Relations and Consumer Affairs says:
“The UK currently has several established and well-regarded ADR schemes in regulated sectors including financial services, where the Financial Ombudsman Service deals with a huge volume of disputes. The ADR Directive gives us the chance to examine the UK landscape and ensure we have a system which works for both consumers and business.”