1. The Building Societies Association (the BSA) represents mutual lenders and deposit takers in the UK including all 47 UK building societies. Mutual lenders and deposit takers have total assets of over £375 billion and, together with their subsidiaries, hold residential mortgages of £245 billion, 20% of the total outstanding in the UK. They hold more than £250 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for 31% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.
2. The BSA is pleased to provide comments on CP12/30 (the CP), which consults on the arrangements for the investigation of complaints against the regulators - the Bank of England (the Bank), the Financial Conduct Authority (the FCA), and the Prudential Regulatory Authority (the PRA). The CP refers to the Financial Services Bill but, since the CP’s publication, the Bill has received Royal Assent and is now the Financial Services Act 2012 (the 2012 Act). The relevant provisions in the 2012 Act are sections 84-88 in Part 6 (replacing the earlier provisions in paragraph 7 of Schedule 1 to the FSMA). By section 86, the regulators must consult on the proposed arrangements.
3. As the CP notes, the proposed arrangements are similar to the current ones, comprising investigation of a complaint (a) by the regulators themselves and (b) by an independent person (the Complaints Commissioner), but there are additional processes to permit complaints to be brought against more than one regulator at a time.
Scope and coverage (chapter 2)
Question 1: Please let us know what you think of the coverage of the proposed Scheme.
4. Because of the significant level of statutory immunity enjoyed by the regulators, it is particularly important that there should be a robust and effective complaints scheme.
5. We note that section 85 of the 2012 Act excludes the regulators’ legislative functions from the scheme including the making, issuing or giving of rules, codes, statements, directions and guidance by the FCA or PRA under various statutory provisions. Since this is a matter prescribed by the legislation, the BSA has no comments.
6. In light of such a wide exclusion it is important that any further exclusions under the Scheme are limited to those that are clearly reasonably required and consistent with the duties placed on regulators by the Financial Services and Markets Act 2000 (as amended by the Financial Services Act 2012). The exclusions set out in paragraphs 3.5 and 3.6 of the draft Complaints Scheme (in appendix 1 to the CP) appear to be fair; namely
the exclusion in respect of dissatisfaction with a regulator’s general policies etc, which is appropriately caveated by a requirement that the regulator may decide not to investigate on such grounds only where the regulator “reasonably” considers the relevant condition to be met, and
the exclusion of complaints that the regulator reasonably considers should have been dealt with more appropriately in another way eg by reference to the Upper Tribunal.
Investigation of complaints by the regulators themselves (chapter 3)
7. The BSA notes, and endorses, the key elements of the arrangements including fair and equal disposal of complaints, no charge to complainants, speedy investigations (usually completed within 4 weeks), transparency about the arrangements, escalation to the Complaints Commissioner etc.
Co-operation between the regulators (chapter 4)
Question 2: Please tell us what you think about the operational aspects of the proposed Scheme.
8. The BSA welcomes the development of a single scheme within which each regulator is required to investigate complaints against them and co-operate with each other to ensure that the Scheme operate as a single unitary process. We welcome the decision that the FCA will act, in effect, as a ‘single gateway’ for all relevant complaints whether against the Bank, the FCA or the PRA.
Transitional arrangements (chapter 5)
Question 3: Please tell us what you think about the proposed transitional arrangements.
9. These arrangements appear to be sensible.
The Complaints Commissioner (chapter 5)
Question 4: Please tell us what you think about the proposed arrangements for the appointment and tenure of the Complaints Commissioner.
10. The BSA considers it appropriate to continue the arrangement whereby HM Treasury must approve an appointment or dismissal. This is a sensible governance measure
Question 5: Do you agree with our proposed arrangements for administrative and other support for the Complaints Commissioner?
11. We also endorse the confirmation (set out in paragraph 4.5 of the draft Scheme) that the regulators will provide the Complaints Commissioner with adequate resources. However, we do not envisage any need for the Complaints Commissioner to advertise or market his or her services, the availability of which will be well known to those likely to make use of the complaints facility (for example, through the media referred to in chapter 8 of the CP). The proposals concerning independence of the Complaints Commissioner’s staff are appropriate.
Question 6: Do you agree with our proposed arrangements for reporting on the results of investigations?
12. The proposed arrangements appear to be largely in line with existing ones and appear to be suitable.
Compensation payment on an ex gratia basis by the regulators (chapter 7)
Question 7: Please tell us what you think of the proposed approach to making compensatory payments on an ex gratia basis to those whose complaints are upheld.
13. We believe that it would have been preferable for the Complaints Commissioner to have had a direct power to award compensation for regulatory maladministration (as suggested by the joint Committee during the pre-legislative scrutiny of the Financial Services and Markets Bill in 1999). However, the power for the Complaints Commissioner to recommend that a regulator should make an ex gratia compensation payment should suffice, provided the regulator in question is transparent about its reasons if it declines to act on such recommendation.
Publication of the proposed scheme (chapter 8)
14. Noted – these arrangements appear to be sensible and proportionate.
5 February 2013