Complaints Handling after 1 January 2016 – Part II

Following on from Monday’s article on changes to the definitions of “complainant” and “complaint”, Alan Holton provides some of the more practical insights you will need to consider when amending your Complaints Management Procedures.

In dealing with complaints, FSP’s must have regard to all the indications provided by the regulator on what will be expected from a market conduct point of view.

These include, at the very least, the following:

Retail Distribution Review (December 2014)

This paper outlines the results of the Retail Distribution Review (RDR) carried out by the Financial Services Board and proposes far-reaching reforms to the regulatory framework for distributing retail financial products to customers in South Africa. The review was undertaken against the background of a new approach to regulating market conduct in the financial sector, informed by the Treating Customers Fairly (TCF) framework.

The TCF approach focuses on the extent to which regulated financial institutions deliver fair outcomes for financial customers and entails a more proactive and interventionist approach by regulators and policymakers to dealing with market failures.

The TCF framework requires regulated financial institutions to demonstrably deliver a set of six fair treatment outcomes, at all levels of their organisations and at all phases of the financial product lifecycle. Importantly, it requires institutions to be able to demonstrate that a commitment to delivering these outcomes is embedded in their organisational culture and strategies, and is supported by their governance frameworks.

Appropriate management information systems and operational controls are expected to be in place to support TCF delivery. This applies particularly to complaints handling.

Draft Market Conduct Framework (December 2014)

Under the rubric “Treating customers fairly” on page 50, this document makes reference to a project plan to improve internal Complaints Management Procedures (CMP)

It will be necessary for any firm to develop, implement, monitor and internally report on an appropriate and effective internal process to manage customer complaints. In addition, firms are expected to use customer complaint information as an important source of management information to measure their delivery of the full set of TCF Outcomes. To confirm these regulatory expectations, the regulatory framework will set consistent obligations for all firms to develop and implement complaints management processes, and set consistent standards which those processes should meet.

It is accepted that complaints handling requirements need to be proportional to the nature, scale and complexity of the business concerned, as well as sufficiently flexible to cater for different types of products, services and business models. The Draft Market Conduct Framework proposes that a set of overarching standards and requirements for complaints handling be prescribed. These standards and requirements will be mainly principles based, but may be supplemented by specific rules where appropriate, either for all sectors or for specific sectors or situations, as the case may be.

Although not yet a legal requirement, the FSB, as part of its onsite visits, are looking into current practices to assist FSPs with the implementation of complaints management procedures. Moonstone Comprehensive Compliance and Protector clients have access to a comprehensive generic document for adaptation to their personal requirements. This document was compiled using the extensive guidelines provided by the FSB.

For more information visit Moonstone Compliance.

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