Your Gain, Their Pain: The UK Regulators Paying for Missteps in New Complaints Scheme

<p>Major
regulators, including the <a href="https://www.financemagnates.com/terms/f/financial-conduct-authority-fca/">Financial Conduct Authority (FCA</a>), the Prudential
Regulation Authority (PRA), and the Bank of England, have finalized a revised
scheme for regulatory complaints. The redesign came after a consultation period
and aims to improve clarity and transparency for those lodging complaints,
providing a more user-friendly approach.</p><p>The UK’s Regulators Update
Complaints Scheme</p><p>In today’s
(Thursday’s) press release, the regulators acknowledge the value of complaints
as a vital source of feedback, which is instrumental in driving the necessary changes and
improvements. They have committed to taking all complaints seriously,
recognizing the scheme as a vehicle for enhanced transparency and
accountability.</p><p>In
developing the revised scheme, regulators considered the feedback received during
their consultation back in 2020. A notable change is the
introduction of a discretionary payment in response to clear and significant
errors on their part. </p><p>Initially,
there was a proposal to cap compensatory <a href="https://www.financemagnates.com/terms/p/payments/">payments</a> at
£10,000 for financial losses, barring exceptional circumstances. However, after considering the
feedback received, this proposal was removed. This means that monetary
compensation will
not be limited in the event of an actual fault on the part of the regulator.</p><p>Further
changes see a hike in the levels of discretionary compensatory payments for
non-financial loss. Although, more clarity has been provided on eligibility for these
payments, as well as a biennial review has been planned to evaluate the
appropriateness of payment levels. The regulators stated that these
modifications strike a balance between statutory immunity granted by
Parliament and the necessity to offer compensation in the case of their fault.</p><p>“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 FCA’s
press release stated.</p><p>The <a href="https://www.financemagnates.com/tag/fca/" target="_blank" rel="follow">FCA </a>added that the Complaints Scheme should not be perceived as an alternative route for
consumer redress related to actions or inactions of firms. Consumers have other
recourses available to them, including redress through the firm in question,
the Financial Ombudsman Service (FOS), or the Financial Services Compensation
Scheme (FSCS).</p><p>While these
changes may provide additional recourse for some specific situations where the
regulators are at fault, they do not fundamentally change existing compensation processes for consumers and retail investors regarding issues with the firms
they deal with.</p><p>The new
scheme is scheduled to be implemented from 1 November 2023. Any complaints made
before this date will be processed under the existing scheme. </p><p>The FCA's Recent Regulatory
Action</p><p>In a fresh
regulatory initiative, <a href="https://www.financemagnates.com/forex/fca-to-control-finfluencers-and-illegal-promotions-on-social-media/" target="_blank" rel="follow">the FCA has indicated its intent to enhance measures
against unlawful financial promotion</a>. The newly proposed social media
guidelines will contemporize the content companies should employ when
advertising their financial goods or services online.</p><p>Furthermore,
in a recently published annual report, the regulator stated that it has
persisted in formulating prudential requirements for businesses that are <a href="https://www.financemagnates.com/cryptocurrency/uk-crypto-firms-might-come-under-prudential-rules-as-fca-designs-policy/" target="_blank" rel="follow">engaged in
crypto asset activities</a>. However, the UK regulatory body pointed out that it
will only commence the guidelines of public consultation once it secures government and legislators' support.</p><p>Moreover,
the financial market watchdog <a href="https://www.financemagnates.com/forex/fca-unveils-consolidated-tape-to-lower-trading-costs-in-the-uk-financial-market/" target="_blank" rel="follow">has introduced</a> various novel strategies to
strengthen the UK's position as an international financial center. The proposed
modifications range from initiating a consolidated tape (CT) for trading
information to a thorough revamping of the regulatory architecture.</p>

This article was written by Damian Chmiel at www.financemagnates.com.