Major regulators, including the Financial Conduct Authority (FCA ), the Prudential Regulation Authority (PRA), and the Bank of England, have finalized a revised scheme for regulatory complaints. The redesign came after a consultation period and aims to improve clarity and transparency for those lodging complaints, providing a more user-friendly approach.

The UK’s Regulators Update Complaints Scheme

In today’s (Thursday’s) press release, the regulators acknowledge the value of complaints as a vital source of feedback, which is instrumental in driving the necessary changes and improvements. They have committed to taking all complaints seriously, recognizing the scheme as a vehicle for enhanced transparency and accountability.

In developing the revised scheme, regulators considered the feedback received during their consultation back in 2020. A notable change is the introduction of a discretionary payment in response to clear and significant errors on their part.

Initially, there was a proposal to cap compensatory payments at £10,000 for financial losses, barring exceptional circumstances. However, after considering the feedback received, this proposal was removed. This means that monetary compensation will not be limited in the event of an actual fault on the part of the regulator.

Further changes see a hike in the levels of discretionary compensatory payments for non-financial loss. Although, more clarity has been provided on eligibility for these payments, as well as a biennial review has been planned to evaluate the appropriateness of payment levels. The regulators stated that these modifications strike a balance between statutory immunity granted by Parliament and the necessity to offer compensation in the case of their fault.

“While the approach to compensatory payments has been made clearer, in practice, it is expected payments made under the Scheme will continue to be modest,” the FCA’s press release stated.

The FCA added that the Complaints Scheme should not be perceived as an alternative route for consumer redress related to actions or inactions of firms. Consumers have other recourses available to them, including redress through the firm in question, the Financial Ombudsman Service (FOS), or the Financial Services Compensation Scheme (FSCS).

While these changes may provide additional recourse for some specific situations where the regulators are at fault, they do not fundamentally change existing compensation processes for consumers and retail investors regarding issues with the firms they deal with.

The new scheme is scheduled to be implemented from 1 November 2023. Any complaints made before this date will be processed under the existing scheme.

The FCA's Recent Regulatory Action

In a fresh regulatory initiative, the FCA has indicated its intent to enhance measures against unlawful financial promotion. The newly proposed social media guidelines will contemporize the content companies should employ when advertising their financial goods or services online.

Furthermore, in a recently published annual report, the regulator stated that it has persisted in formulating prudential requirements for businesses that are engaged in crypto asset activities. However, the UK regulatory body pointed out that it will only commence the guidelines of public consultation once it secures government and legislators' support.

Moreover, the financial market watchdog has introduced various novel strategies to strengthen the UK's position as an international financial center. The proposed modifications range from initiating a consolidated tape (CT) for trading information to a thorough revamping of the regulatory architecture.