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Though it doesn’t have quite the ring of a section 166, the statutory home of the new FCA super-complaint is section 234C of the Financial Services Act 2012. Four consumer bodies have this month been granted the power to present super complaints to the FCA on behalf of consumers. This may bring about a shift in power regarding which consumer issues are raised, and when.
Super-complaints have previously been made under the Enterprise Act 2002 to communicate PPI mis-selling to the OFT, for example, but this is the first time the appointed consumer bodies have the power to make super-complaints direct to the FCA. The newly appointed bodies are: Consumer Council Northern Ireland, Citizens Advice, The Federation of Small Businesses and Which?
How does the FCA use super-complaints?
Super complaints are one of many information sources which the FCA uses to identify how well finances services markets are working. Presence and degree of consumer detriment enable the FCA to prioritise issues in its risk outlook and market studies. Super-complaints, once accepted as valid by the FCA, are clear indicators of mass consumer detriment. For that reason the FCA sees them as a powerful source of information.
The FCA sees super-complaints in this light: they are “about getting the best possible input from consumer information”. The upshot is that section 234C is not simply a quick route to getting complaints resolved; super complaints are about raising issues that consumer groups can see and bringing them to the FCA’s attention.
How do super-complaints work?
A super-complaint is about market structures, a section of a market or firms’ conduct in that market brought by an appointed consumer body on behalf of consumers. This is not a complaint about one firm in particular. Consumers collectively “do not often have access to the kind of information necessary to make a judgement about market failure” according to the FCA, which is the power of the super-complaint.
Once a valid super-complaint has been made, the FCA is obliged to respond within 90 days. If it decides to act, the FCA can use its well-known, and growing, array of supervisory, investigative and enforcement powers. Super-complaints can also result in the instigation of a customer redress scheme under s.404 FSMA, a review of FCA rules and referral to another regulatory body which could deal with the complaint more effectively.
What do section 234C super-complaints really mean for firms?
This is a tricky one. As commentators have noted, firms are understandably reluctant to self-report widespread problems to the regulator or their competitors (in fact, this is the subject of another section, 234D, of the Financial Services Act). However, firms must get to grips with their own individual complaints or mis-selling issues. Seen this way, plan A is: look after your complaints and the super-complaints look after themselves.
Some firms still struggle with identifying their own customers’ complaints and acting on them. There is still more to be done on complaints root cause analysis, quality assurance outcomes testing and keeping an eye on those unexpectedly profitable products which are doing better than forecast.
Where firms cannot follow plan A: (look after your complaints and the super-complaints look after themselves), this is when market problems appear or may, in fact, be the cause. Firms can expect a more uncertain future about which market issues will be called out given the consumer bodies’ official voice on consumer detriment.
The FCA puts conduct and fair outcomes for customers high on the regulatory agenda. Section 234C may drive consumer driven issues even higher, in unexpected directions.