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Compliance insight: Alternative Dispute Resolution Directive update

ATEB Consulting’s Steve Bailey provides an update on the Alternative Dispute Resolution rule changes, which apply to complaints received from 9 July 15

In December 2014, the FCA and FOS consulted on changes to the Dispute Resolution: Complaints Sourcebook (DISP) in order to implement the Alternative Dispute Resolution (ADR) Directive.

The FCA has since issued a Handbook Notice and final rules, which you can access here.

All complaints received on or after 9 July 2015 must be treated in accordance with the new rules. The changes alter the way that you must deal with complaints and include extensive changes to the final outcome letter, which must now include prescribed wording.

The main changes are:

• FOS will be able to consider complaints where the firm has not already investigated the complaint, but only if both the firm and the client consent;

• Current complaints time limits will continue to apply. However, firms will be allowed to consent to FOS considering a complaint if it is referred outside the current time limits;

• There will be prescribed wording for firms to tell clients they consent to waiving the time limits – it is important firms incorporate the appropriate prescribed wording within any final response communication to a client who has complained;

• The definition of ‘eligible complainant’ will be extended to include professional clients and eligible counterparties, where the person is an individual acting for purposes outside his trade, business, craft or profession; firms need to bear in mind this extended definition of eligible complainant if and when client complaints are received.

The FCA/FOS December consultation also contained separate policy proposals to improve complaints handling. Therefore, we can expect a further policy statement later in the year.

Our View

These rule changes may not have a significant impact on how you deal with client complaints, but you must ensure your complaints handling procedures remain fit for purpose and meet the new requirements.

Suggested action

• Ensure you understand the changes that have come into effect and include the appropriate prescribed wording in final response letters to complainants;

• Review and update your complaints handling procedures

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