The Financial Conduct Authority and other regulators have scrapped a proposal to cap compensation for regulatory failings at £10,000.
It, the Prudential Regulation Authority (PRA) and the Bank of England have finalised a revised scheme for those who have complaints against them.
This follows a consultation and the new scheme will apply from 1 November 2023.
Complaints made prior to this date will be considered under the existing scheme.
The revised scheme provides clarity around what people can expect when they complain, making it more transparent and user-friendly.
Complaints are a valuable source of feedback that inform changes and improvements across the regulators.
In a statement the FCA said regulators take all complaints seriously and welcome the transparency and accountability that the scheme provides.
And all the regulators carefully considered the responses received to their consultation.
They have confirmed that they will consider making a discretionary payment in recognition of financial loss if they have made a clear and significant error, and they are the sole or primary cause of that financial loss.
In response to feedback, the regulators have removed the proposal that no compensatory payment relating to a financial loss will exceed £10,000, except in exceptional circumstances.
The regulators have increased the levels of discretionary compensatory payments for non-financial loss and provided more clarity on eligibility.
The appropriateness of these levels will be reviewed every two years.
The regulators believe these changes balance the statutory immunity of the regulators provided by parliament against the need to make compensatory payments when at 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 Complaints Scheme is not an alternative route to consumer redress for the actions or inactions of firms.
Consumers have access to recourse through the firm, and redress may be available through the Financial Ombudsman Service or the Financial Services Compensation Scheme.
I think we can take with a barrel of salt the FCA’s claim that it takes all complaints seriously and welcomes the transparency and accountability that the scheme provides. Absolute cobblers actually. Next thing we know, it’ll be claiming to protect consumers from the harm caused by bad conduct in financial services.
Such largesse is very easy to agree when the compensation is funded by those they regulate.
It’s another reason why the Government should stop taking the annual fines and using it to subsidise other areas and projects.
Well said Alan!
And why should the FCA give a toss anyway? Nothing it pays out costs it a bean. The only way the removal of this cap would make any difference would be if those responsible had to pay the compensation from their own resources which, of course, the FCA would fight tooth and nail. On this very subject, Hector Sants said that were employees of the regulator to be held personally accountable for their failings, no one would be prepared to work for it. Nothing since has changed.
“They (FCA) have confirmed that they will consider making a discretionary payment in recognition of financial loss if they have made a clear and significant error, and they are the sole or primary cause of that financial loss.”
LOL …..
That’s like Putin saying …I promise an open and fair election process.
And lets not forget, regulatory dogma is such the FCA is infallible and to disprove that …well it just wont happen will it !
Regrettably, I have memory going back too far for comfort…
Notwithstanding, it IS the regulators who licence the companies which provide the (approved and packaged products) the retail industry offers to clients..
Hence, advisers are rarely in trouble for offering the above as, by inference at least, the regulators are or would be to blame also when things go astray.
The degree of Teflon coating of Govt.and their oily rags – FCA, BoE, PR… ZZZzzz – never more exemplified by the Teflon twins – Brown & Blair – is immense…
BCCI, Eq. (sic) Life, and, more recently, London & C.
As a consumer, am I entitled to believe licenced products are both safe and fit for purpose? Actually, how do regulators assess as fit for purpose the ENTITIES which, either directly or through advisors, are allowed to offer their products with a nod.
Much more information should be made available regarding the above, is a suitable product still good if the provider has poor solvency? How providers are approved, the various standards they have to meet, and any record of falling short in any area, is as important to a client as any other – particularly with long term products.
I would personally make the above part of a CPD process both to advisers AND internal training of providers. NWest, allowed to inform children in school time, how money works and the pitfalls, could do with some of this.
Why, their former CEO needs a new job – start with her unless she would struggle on a teacher’s salary @ 1/150th of her former, and, as well, the BoE will be behind her as they believe non working seniors are to blame for inflation! Can you keep a secret? Psst.. it is never too late to learn…
Hmm.. I wonder when any of the NWest board last went to a CPD?
Still, with schools they are, at least, on safe ground… there are few secrets amongst children. Looks like even the hideous protection afforded to the top of faceless PLCs won’t be enough for this Farage affair; still the board that remains should get time and a half for the 01.00 shift surely..bless.
The regulator will never attempt to regulate products. To do so would, in so many ways, be quite impossible.
Good point… however, banks are regulated by the BoE and have solvency and stress tests to pass…
If good advice involves an approved product, how do I know the underlying worth and security of same – life companies, especially mutuals, have or had appointed actuaries to ensure they remain, errm… solvent and able to pay claims.. except many did not, and only survived by writing back life book surplus’ onto their trading balance sheets.
Or, worse, allocated with profits surplus’ into their books as a ‘smoothing’ exercise – I suspect the smoothing ensured bonus’ were protected as, clearly, Eq. Life clients were not!!