Complaints Handling Under the General Code: An RE5 Guide

Every FSP will receive complaints. The General Code of Conduct does not judge an FSP for receiving them. It judges how they are handled. The RE5 tests this area through definitions and time periods.

What is a complaint?

A complaint is an expression of dissatisfaction by a client about a financial product or service, where the client alleges that the provider or its representative:

• contravened the Act or the Code and the client suffered, or is likely to suffer, financial prejudice or damage;
• wilfully or negligently rendered a service that caused, or is likely to cause, prejudice or damage; or
• treated the client unfairly.

A question about a statement or a request for a duplicate document is a query, not a complaint. The distinction matters because complaints trigger formal duties.

Who is responsible?

The board or governing body, and the key individuals, are responsible for effective complaints management. They must approve and oversee the complaints framework. For a sole proprietor, that is the proprietor.

An adviser's duties are practical: recognise a complaint when you hear one, tell the client how to lodge it, pass it into the process promptly and never discourage a client from complaining.

What the framework must do

An FSP's complaints management framework must be proportionate to the business and must include:

• clear, accessible procedures that clients can find and understand;
• people with the authority and skill to resolve complaints;
• fair and consistent decisions, with reasons;
• an escalation route for complex or serious complaints;
• record keeping and analysis, so the FSP learns from patterns;
• communication with the complainant in plain language throughout.

A complaint must be acknowledged promptly, and the client kept informed of progress.

Upheld, rejected and reportable

When a complaint is upheld, the FSP agrees with all or part of it. When it is rejected, the FSP must give the client clear written reasons and explain the client's right to take it further, including to the Ombud.

A reportable complaint is any complaint other than one that was:

• upheld immediately by the person who first received it, or
• upheld within the FSP's ordinary query-handling process within five business days of receipt.

So a complaint fixed on the spot by the call agent is not reportable. A complaint rejected after two days is reportable, however quick the decision was, because it was not upheld.

The Ombud for Financial Services Providers

If the FSP does not resolve the complaint to the client's satisfaction, the client may go to the FAIS Ombud. The main rules:

• The FSP normally gets six weeks to resolve the complaint first.
• The client then has six months from the FSP's final response, or from when that response was due, to submit the complaint to the Ombud.
• The Ombud must give the other party the details and an opportunity to respond before investigating.
• The Ombud tries to settle matters informally first. If that fails, the Ombud may make a final determination, which can include an award of fair compensation for financial prejudice or damage.

The Ombud does not withdraw licences or debar people. Those are functions of the Authority and the FSP.

Things an adviser must never do

• Ask a client to waive rights under the Code. Any such waiver is null and void.
• Tell a client a complaint must be in a particular form before it "counts".
• Promise an outcome the FSP has not agreed.
• Alter or remove records after a complaint arrives.

Typical RE5 questions

"A client phones, upset that her premium was debited twice. The agent refunds it during the call. Is this a reportable complaint?" No. It was upheld immediately by the person who received it.

"An FSP rejects a complaint. What must it give the client?" Written reasons, and information about the client's right to refer the matter onward, including to the Ombud.

"Who is responsible for effective complaints management?" The board or governing body, and the key individuals.

A simple way to remember it

Recognise it, record it, resolve it fairly, give reasons, and tell the client where to go next. If you remember those five steps and the periods of five business days, six weeks and six months, you have most of the marks.