Complaints

Introduction

Within the financial services sector and particularly for regulated companies, it is important to handle customer complaints, however trivial or unjustified, with extreme tact and care. The reasons for doing so are as follows:

Arjent Limited ("Arjent") must treat customer fairly and we must analyse whether a complaint indicates a failure to meet FSA Principles for business- especially Principle 6.
FSA requires Arjent to handle any complaint properly particularly those relevant to Arjent's compliance with the regulatory system.
The breach of any FSA Rule can lead to disciplinary action against Arjent as an Authorised Person and any of its Approved Persons. The range of penalties includes fines, restriction of business, suspension and expulsion depending on the circumstances.
Under the general law Arjent could be open to claims for misrepresentation, deceit, breach of contract, tort or breach of fiduciary duty.

Arjent's policy is to maintain good customer relations, which requires complaints (and criticisms which do not amount to complaints) to be dealt with promptly and courteously.

Definition of "complaint"

In the FSA rules there are two definitions of what constitutes a complaint. The definition which regulated companies must use for its complaints handling procedures is "any expression of dissatisfaction, whether oral or written, and whether justified or not, about a service or activity relating to financial services offered, provided or withheld by Arjent". This is a wide definition and may capture information which may not be a reportable complaint. For complaints reports to the FSA only those complaints which "involve an allegation that the complainant has suffered, or may suffer, financial loss, material inconvenience or material distress" need to be included.

"Complaints" do not include queries that can be answered to the full satisfaction of the customer and Arjent by the next business day (e.g. by reference to the relevant voice recordings).

"Complaints" can include queries where the customer seems dissatisfied with the information Arjent is able to provide within a reasonable time scale.

Arjent's policy is to take seriously all complaints, whether in writing, in person or on the telephone. For this purpose, "complaints" means both complaints that have to be recorded and criticisms, including trivial and unfounded criticisms, regarding alleged inefficiency or any other matter whatsoever. An apparently trivial criticism, if mishandled or left unchecked, might lead to unpleasant consequences as described above.

Complaints Procedure

Arjent undertakes Regulated Activities for both Retail Clients and Professional Clients. Retail Clients are informed that they are Eligible Complainants at the point they receive their Client Categorisation Notification letters and Professional Clients are informed they are not Eligible Complaints and are not, therefore, entitled to refer their complaint to the Financial Services Ombudsman or seek redress through the Financial Services Compensation Scheme.

Retail Clients are Eligible Complainants while Professional Clients are not. Despite there being a distinction, Arjent will follow the same complaints procedures for both types of clients but it should be noted that for Professional Clients;

Arjent is not required to send the client details of the Financial Services Ombudsman's Services as Professional Clients will not entitled to use FOS; and,
If the Professional Client remains unhappy with the outcome or the way the complaint has been handled they are only entitled to pursue the case in law.

The Compliance Officer oversees the handling of complaints from clients that have not been resolved immediately and is responsible, as far as is practicable, for ensuring that actions and recommendations resulting from the complaints procedure are properly carried out.

Complaints received by letter should be passed immediately to the Compliance Department for action.

Complaints may be received by telephone or by personal contact with a client by any Arjent director or employee. If he is unable to deal with the complaint immediately to the client's satisfaction, the director or employee concerned should state that he is making a full written record of the complaint, that he will pass the written record to the account director and/or Compliance Officer for action and that the complainant must be told that they will receive, in writing, an acknowledgement of and actions being taken in regard to their complaint within 5 days. The written record should then be dated and filed in the Complaints Register.

The account director or the Compliance Officer should discuss the matter with the relevant personnel. The Compliance Officer should take such subsequent action with a view to resolving the complaint as he considers appropriate.

All complaints which involve a claim for financial loss must be disclosed to the PII insurer on the basis that the Firm is obliged to make the insurer aware of any possible claim so as not to invalidate that claim in the event the Firm wished to refer this claim to the insurer. This should be reported to the insurers by the Compliance Officer in a manner outlined by the insurers but first having obtained approval from the Board.

The following procedures must be followed: -

the Company must refer in writing to the availability of its internal complaints handling procedures at or immediately after the point of sale and publish and supply a copy of them on request and automatically when it receives a complaint from an Eligible Complainant unless the complaint is resolved by the Company on the next business day.
any complaint must be investigated by an employee of sufficient competence who, where appropriate, was not directly involved in the matter which is the subject of the complaint and have the authority to settle complaints including offering redress where appropriate. This person will be the Compliance Officer or such other persons as may be considered appropriate in the circumstances;
the Company must send a written acknowledgement of the complaint within 5 business days of its receipt giving the name or job title of the individual who will be handling the complaint for the Company and details of the Company's complaints handling procedures;
within four weeks of receiving the complaint, the Company must either give the complainant its final response or a holding response explaining why it is not yet in a position to resolve the complaint and indicating when it will make further contact which must be within 8 weeks of receipt of the complaint;
the Company must by the end of eight weeks after receipt give its final response or a response which explains that it is still not in a position to make a final response and explaining when it expects to be able to do so giving reasons for the further delay and, in the event the complainant is an Eligible Complainant that he may complain to the Financial Ombudsman if he is dissatisfied and enclosing a copy of the Financial Ombudsman's Service explanatory leaflet; and
the Company's final response, in the event the complainant is an Eligible Complainant, it must inform an Eligible Complainant that he may refer the complaint to the Financial Ombudsman's Service if he is dissatisfied and must do so within six months and enclose a copy of the Financial Ombudsman's Service explanatory leaflet (if it has not already done so).

All complaints (whether written or oral, or otherwise) received should be noted in a register kept by the Compliance Officer who is responsible for handling complaints, giving details of:

the name of the complainant;
the substance of the complaint; and
any correspondence between the Company and the complainant, including details of any redress offered by the Company.

Records of complaints must be maintained for a minimum period of five years from the date of receipt of the complaint by the Company. The Company must provide the FSA twice a year with a report on complaints by any Eligible Complainants pursuant to and containing the information set out in DISP 1.5.4 and in a format set out in the DISP Annex 1R.

Financial Services Compensation Scheme ("FSCS")

FSCS covers claims against firms where they are unable to pay claims against them. In general this is when a firm is insolvent or has gone out of business. These are described by FSCS as being "in default".

The primary aim of the scheme is to provide protection for private individuals, although small businesses are included. Larger businesses are generally excluded, aside from cover for compulsory and long term insurance policies. FSCS will require assignment of rights from claimants which allows FSCS to try to recover funds from both the firm "in default" and third parties. Recoveries will be paid into the fund from which the compensation was paid.

The FSCS replaced:

The Building Societies Investors Protection Scheme
The Deposit Protection Scheme
The Friendly Societies Protection Scheme
The Investors Compensation Scheme]the PIA Indemnity Scheme
The Policyholders Protection Scheme
The Section 43 Scheme

In addition, FSCS will take over Pensions Review claims made by spouses and dependents of deceased investors, currently dealt with by the ABI. It is expected that Credit Unions will be included in the Scheme in future.

There are limits to the cover the Scheme provides. Consumers do have to accept they should take some responsibility for their money and the decisions they make. The Scheme is only triggered when a firm is unable, or likely to be unable to pay claims against it. The maximum levels of compensation are:

Deposits £35,000 (100% of the first £35,000)
The Scheme is triggered when an authorised deposit taker goes out of business, or is likely to be unable to repay its depositors.
Investments £48,000 (100% of £30,000 and 90% of the next £20,000) The Scheme covers two kinds of loss:
1. When an authorised investment firm goes out of business and cannot return investments or money
2. Loss arising from bad investment advice, or poor investment management.
Investments covered include : stocks and shares; unit trusts; futures and options; personal pension plans and long term policies, such as endowments.
Insurance
Long term insurance (e.g. pensions and life assurance): 100% of the first £2,000 plus 90% of the remainder of the claim.
General Insurance
1. Compulsory insurance (e.g. third party motor): 100% of the claim
2. Non-compulsory insurance (e.g. home and general): 100% of the first £2,000 plus 90% of the remainder of the claim
Policy holder protection is triggered if an authorised firm is unable, or likely to be unable, to meet claims against it.

The actual level of compensation paid will depend on the basis of the claim. It should be noted that Financial Ombudsman Service ("FOS") handles complaints from consumers against "live" firms - those that are still trading. If consumers (falling into the category of "Eligible Complainants") have a complaint against a firm which is still in business, they should go through that firm's complaint procedures. If the issue is not resolved, they can turn to the FOS to look at the case. The FOS will refer the matter to FSCS if deemed appropriate.

The address of FOS is South Quay Plaza, 183 Marsh Wall, London E14 9SR.