Financial services

The Financial Services Authority (FSA) has warned mortgage endowment providers not to use the Financial Ombudsman Service (FOS) as an alternative to properly handling complaints themselves.

 

In a letter sent to the chief executives of larger mortgage endowment firms and financial advisers the regulator comments that while many firms are achieving the required standards and taking seriously the concerns of policyholders, there are some firms that are failing to meet the required standards.

 

Stakeholder Response: Association of British Insurers

Chris Kenny, director of life and pensions at the ABI, said: "The FSA’s letter makes clear that most financial services firms are dealing with endowment complaints in an effective way, and recognises the significant progress that has been made in recent months.

 

"It also suggests that for a minority of firms, improvement is still needed.

 

"Firms have a duty to their customers to investigate their complaints promptly and properly. Complaints should certainly be subject to proper internal scrutiny before being passed to the FOS.

 

"For its part, the insurance industry is continuing to work hard to improve its complaints handling systems, including by benchmarking against best practice and providing further information on how to complain for customers."

 

Stakeholder Response: Which?

 

Louise Hanson, head of campaigns at Which?, said: "The number of companies the FSA has identified who are 'failing to meet the required standards' in dealing with complaints is depressing, especially considering it's nearly three years since John Tiner wrote a similar letter to companies outlining the FSA's concerns about the ways in which complaints are being handled and asking for a review of procedures. 

 

"We are astounded at the bad faith shown by companies who make millions of pounds worth of profit from consumers but are trying to wheedle their way out of paying compensation when it's due - sometimes waiting right up to the point of court action. It can't be a surprise to anyone that consumers have lost faith in the financial services industry.

 

"John Tiner's letters are clearly not having the desired effect. The FSA should order these companies, under FSA supervision, to re-investigate all rejected complaints to determine whether they have acted reasonably. The FSA must continue to take these bad apples to task by immediately naming and shaming them, and then implementing significant fines where rules have been broken."