Developing an Internal Complaints Process
As a Financial Service Provider (FSP) you or your organisation are required to have an internal complaints
process for handling complaints relating to the financial services you provide. This is one of the requirements
of joining FDR, and is an obligation as set out by the Financial Service Providers (Registration and Dispute
Resolution) Act 2008.
What are the benefits of a good internal complaints handling process?
An internal complaints handling policy and process is a valuable tool for any organisation or business. Every
complaint is an opportunity to assess business processes and improve them wherever possible. A good
complaints process provides a way for customers to give feedback on your service; it serves as a quick and
efficient means of resolving difficulties as they arise, and it promotes good relations and communication with
customers. You may wish to also use it for handling compliments.
What is a good internal complaints process?
Complaints are usually caused through a breakdown in communication, and can often be quickly resolved
when the facts, evidence and circumstances are established.
It is important that a complaints process is:

open and visible to customers

highlighted as part of any disclosure documentation

has a dedicated person responsible for ensuring that it remains up-to-date, and

is responsive to customers.
Setting up a Complaints Process:
Any complaints handling process, for any size organisation, should be based on the six internationally
accepted benchmarks for industry-based customer dispute resolution schemes. The following is a brief
explanation of how the principles could be applied to a complaints process:
(contd.)
Accessibility: A complaints process should be easy to find, and use. It should be written in plain English
(and/or in the language appropriate for your customers) so it is easy to understand. There should be simple
instructions about how to make a complaint, and it should be emphasised that complaints from customers are
welcomed as a way of improving the quality of service provided.
Independence: The person who handles the complaints process should be independent from the people,
or area of business, that is being complained about.
Fairness: The process should provide equal opportunities to all parties in a dispute, and ensure that their
submissions are given as much weight and respect as one another.
Accountability: Who is accountable for the complaints process? Who is responsible for handling complaints
and for implementing any improvements identified via a complaint? A good complaints scheme clearly
identifies to whom the scheme is accountable and clearly identifies the people who are responsible for each
aspect of the process.
Efficiency: A complaints process should be efficient. It should have timeframes regarding response times, and
resolution targets. E.g. all complaints will be responded to in writing within five working days, and an attempt
made to resolve the complaint within 20 working days.
Effectiveness: The complaints process should be effective – the people, policy and resources should be in
place so that every effort is made to make it effective. This includes having a referral to an independent
dispute resolution scheme as the last step in the process.
In addition, a complaints process should be confidential and flexible. Rules and processes are necessary to
ensure consistency, but they should not be so rigid that they can’t be adjusted to the complainant’s needs and
requirements, nor so rigid that they can’t be adapted to new situations.
Please note that a complaints process does not have to be complicated. Your complaints process may be as
simple as receiving a complaint, registering it (giving it a reference number) and referring it directly to your
dispute resolution scheme.
Implementation:
The steps to developing and implementing a good internal complaints process are:

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Develop a complaints-handling policy, including accountability and timeframes. The policy should
include:

a step-by-step explanation of how complaints can be received (written or verbal, or
both) and will be handled

response timeframes

any restitution measures that can be taken

a definition of when a complaint is considered to be ‘deadlocked’ – i.e. it can’t
progress any further. It is at this stage a complaint should be referred to your external
dispute resolution provider.

Appointment of an in-house Disputes Manager at a senior level.

Development of a Register of Complaints. This should include a numbering system for recording
complaints, the name of the complainant, the date the complaint was received, the nature of the
complaint and the date of the event that gave rise to the complaint, and a record of any actions
taken to address the complaint.

Define ‘deadlock’ and start a register for complaints that have reached deadlock.

Staff training in communication skills and giving staff the authority to resolve a dispute, where
possible, or access to more senior management if required.
A complaints handling template:
This is a sample process that could be used as the basis for a complaints handling policy.
receive a complaint
 Acknowledge receipt of the complaint and outline the next steps to the complainant in writing,
including FDR’s role in the complaint process
 Capture key complaint information, e.g.
o date complaint lodged
o name & details of complainant
o details of complaint and when it occurred
 Allocate an unique complaint reference for each complaint
 Keep information in a central secure system, e.g. a spreadsheet and any supporting complaint
information on file ensuring that it is kept confidential to the parties except with the consent of the
complainant
investigate complaint
 Investigate the complaint and decide how you want to respond.
 Keep in mind that it is good practice to try and resolve complaints at the earliest opportunity.
 Keep the complainant informed of your investigation and ensure you set realistic timeframes
for any communications.
resolve complaint
Issue a decision notice in writing to the complainant that includes;
 a summary of the complaint, with the outcome of your investigation and your view of the issues
raised
 an acknowledgement of any fault on the part of your business
 details of any offer you are making to settle the complaint (including any timeframes for
acceptance)
If the decision notice is not accepted, issue a deadlock notice in writing to the complainant stating
that you have reached the view that you are unlikely to resolve the complaint internally and outline
clear next steps that the complainant may take in relation to the FDR scheme.
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What should happen next?
If a complaint cannot be resolved internally, or the complainant is unhappy with the outcome, the complainant
is able to contact FDR (within time limits).
Before FDR accepts the complaint it will check that it is within their jurisdiction. The complaint must have been
made to the organisation involved, and that organisation must have had an opportunity to respond. FDR will
check that the organisation involved is a member of the FDR scheme, check the timeframes of the date of the
complaint, and the date of the event that gave rise to the complaint. FDR will also make sure the complaint
has reached ‘deadlock’.
In order for this to happen smoothly and quickly, it is necessary for your internal complaint process to include
clear communication with clients, including information about timeframes and the issuing of deadlock notices.
The Legislation
The legislative requirements for FDR Scheme Members are:
Duties on members to have own complaints resolution procedures
(1) A member must—
a) establish (either itself or through membership or arrangement with another body) proper
procedures for dealing with complaints about the provision of financial services by the
member; and
b) publicise to customers those procedures for making a complaint; and
c) receive and consider complaints under those procedures; and
d) use its best endeavours to resolve complaints under those procedures.
(2) At a minimum, the procedures must ensure that—
a) the receipt and nature of a complaint is documented, the complainant receives an
acknowledgement that the complaint has been received, and the steps taken to resolve
the complaint are documented; and
b) the complainant is informed, at the time of acknowledging receipt of a complaint, that if a
complaint is not resolved through these procedures that the complainant may take the
complaint, free of charge, to the Reserve Scheme [FDR]; and
c) the complaint, and any information provided or created in relation to the complaint, is kept
confidential to the parties except with the consent of the complainant; and
d) the member gives written notice (with reasons) to the complainant—
I. of any decision it reaches on the complaint under those procedures; and
II. that it has reached the view that the parties are unlikely to resolve the complaint
under those procedures (a deadlock notice); and
e) any decision or deadlock notice also states that the complainant may take the complaint,
free of charge, to FDR and the time limits.
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Time Limits (Reserve Scheme Rules)
Complaint must be made to member first (and referred to reserve scheme within time limit)
1) A complaint is not covered by the reserve scheme unless—
(a) the complainant has first made that complaint (or substantially the same complaint) to the member
concerned; and
(b) 1 of the following things has occurred:
(i) the member has given the complainant written notice of its decision (a decision notice); or
(ii) the member has given the complainant written notice that it has reached the view that the parties
are unlikely to resolve the complaint under the member’s complaints procedures (a deadlock notice); or
(iii) at least 3 months has passed after the complainant first made that complaint to the member; and
(c) the complainant then refers the complaint to the reserve scheme within the following applicable time limit:
(i) within 3 months after receiving a decision notice or deadlock notice under paragraph (b) if that notice
complies with subclause (2):
(ii) within 2 years after first making that complaint to the member in any other case.
(2) A decision notice or deadlock notice must advise the complainant of the right to refer the complaint to the
reserve scheme, free of charge, and the time limit for doing so.
Whilst there is no requirement for a complainant to respond to say, a Decision Notice, it is recommended you
set out a timeframe for response in your Decision Notice. 10 working days seems reasonable, so that there is
still time to possibly consider a response. But once the Decision Notice is issued, the responsibility lies with
the complainant.
It is conceivable that you may need to take more than 3 months to fully investigate and decide upon a
complaint. If the reasons for the delay are communicated to the complainant, the complainant may be willing
to wait, and not take their complaint directly to FDR.
It is advisable for you to remind complainants of the time limits when communicating delays, so that the
complainants do not lose their rights in the belief that you are resolving the issue.
A complainant can go directly to FDR at any time within 3 months of you issuing a Decision Notice, or
Deadlock Notice, without first getting back to you.
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What customers expect
Complaints resolution is a process between two or more parties, and all parties should be treated fairly and
with respect. It can be useful to consider what customers can reasonably expect as part of a complaints
process:

To be treated with respect and in a fair and courteous manner. This includes ensuring that the
customer understands the language that is being used, i.e. not industry terms, commercial names
for products and technical jargon.

A clear understanding of their options. This includes how to make a complaint, the steps involved
in resolving the complaint, and their next level of recourse if the complaint cannot be resolved
internally.

A fair hearing and a clear explanation of the outcome of the complaint even if it is not favourable
to them. If the customer’s complaint is valid, a suitable resolution should aim to place the
complainant in the position that they would have been in had things not gone wrong.

An assurance that the company acknowledges any wrongdoing or error, and that the same
situation will not happen to other people.
This is the foundation for the development of an effective internal complaints handling process. FDR is
available for more advice and FDR’s parent body, Dispute Resolution Services Ltd., is also available on a
consulting basis if required.
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