HM Treasury has announced the four bodies that will be able to make super-complaints to the financial watchdog, the Financial Conduct Authority (FCA). Allowing the FCA to receive super-complaints is considered to be a major advance, as previously grievances of this nature could only be made to the Office of Fair Trading (OFT), which does not have as wide-ranging powers as the FCA.
Super-complaints are made when one of the eligible bodies believes that features of a particular financial services market are not working in the interests of consumers.
The four bodies that will be able to make complaints of this nature to the FCA are:
- Citizens Advice
- Federation of Small Businesses
- Consumer Council Northern Ireland
The Federation of Small Businesses is included in the super-complaint system for the first time.
The FCA will be required to respond to super-complaints within 90 days. The regulator may decide to act solely on the basis of evidence provided in the complaint, or it may decide to conduct its own investigation. Depending on the nature of the issues identified, the FCA may then decide to: ban certain activities, alter its conduct rules for firms, take action against offending firms or put in place a system for paying compensation to disadvantaged customers. If the FCA believes no action is required, it must set out in detail why it believes this.
Financial Secretary to the Treasury, Sajid Javid MP, said of the new system: “Super-complainants have an important role, and coupled with the strong remit of the Financial Conduct Authority to protect consumers, these measures are a significant step in our drive to tackle bad practice in the financial services sector ever more rapidly and robustly.”
Which? Executive director, Richard Lloyd, explained the need for the super-complaint system by saying: “For too long, consumers have suffered from a series of financial scandals. That’s why we need the regulator to proactively monitor the market, respond to evidence from consumers and take tough action against bad practice.”
Although the OFT’s powers were limited, its response to some previous super-complaints has achieved effective outcomes for consumers. The FCA’s predecessor, the Financial Services Authority (FSA), was the body charged with regulating the conduct of firms who mis-sold payment protection insurance (PPI), but the OFT’s actions following a Citizens Advice super-complaint had arguably the biggest impact on the PPI market. The OFT chose to refer the PPI market to the Competition Commission, which subsequently banned PPI from being sold at the same time as the loan.
Following other super-complaints, the OFT persuaded the Government to restrict surcharges on credit and debit card purchases; and persuaded the FSA to introduce new rules on cash ISA transfers and interest rate disclosure.