MiFID II – complaints handling rules

Important Note

This is a summary of detailed analysis that ATEB has undertaken of the requirements detailed in the MiFID II Policy Statement. Our full analysis will be discussed with ATEB clients as part of our ongoing service arrangements.

This article is one of a series. It is biased towards ‘typical’ ATEB clients. It is a very high-level summary and does not therefore cover every MiFID connotation. It does include our interpretation of the requirements, where there is a lack of clarity, and should therefore be used with discretion and read with a questioning attitude.

All firms should read the Policy Statement.

Accessing the FCA Handbook

We do not replicate FCA rules in this article, but refer to them. The made rules are contained in the annex to the Policy Statement but to access the relevant rules as they will be in their final context, you will need to forward date the FCA handbook. To do this:

  •  Go to the FCA Handbook;
  • Click on ‘Show Timeline’;
  • Select a date well into 2018; 
  • Access the relevant handbook

 

Complaints handling under MiFID II

The FCA consulted about the proposed changes to MiFID complaint rules in CP16/19 and CP 16/43 and published its Policy Statement PS 17/14 earlier this year. 

For non-MiFID business (including firms with an Article 3 Exemption) the good news is the rules that apply to complaints are unchanged.

There is an amended definition of a complaint, which is:

 ‘any oral or written expression of dissatisfaction, whether justified or not, from, or on behalf of, a person about the provision of, or failure to provide, a financial service or a redress determination, which alleges that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience.’ 

For MiFID business the new complaint handling requirements apply not just to retail clients but also to professional clients and eligible counterparties. However, access to the Financial Ombudsman Service will still be limited to eligible complainants which are, primarily, retail clients and some small businesses.  

The following is a very brief summary of the complaints handling rules for MiFID complaints (DISP 1.1A). 

  • A MiFID firm must establish a Complaints Management Function (CMF) that has responsibility for investigating complaints;
  • Complaints process should be published and include information about the Financial Ombudsman Service (FOS) and its website;
  • A firm must establish, implement and maintain effective and transparent complaints management policies and procedures for the prompt handling of clients’ or potential clients’ complaints;
  • Complaints must be investigated free of charge, competently, diligently and impartially, obtaining additional information as necessary;
  • There are rules about the final response that includes enclosing the FOS explanatory leaflet and what to do if dissatisfied with the outcome;
  • MiFID complaint resolution rules are very similar to those already in existence for non-MiFID firms with the main difference that the complainant must be informed in the final outcome letter that ‘they may take civil action’ in addition to referring to FOS;
  • Firms will have to provide data to the relevant regulator.

 

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

For non-MiFID business – no change.

Firms dealing with MiFID business will need to familiarise themselves with the DISP rules relevant to them; primarily 1.1A.

They will need to expand their complaints procedure to reflect the additional rules.

Action Required By You

  • Ensure you are aware of the changes to the rules;
  • Appoint a Complaints Management Function;
  • If you deal with MiFID business update your complaints handling rules to reflect the changes;
  • ATEB clients should speak with their account manager as necessary; otherwise contact ATEB here to find out how we can help.
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About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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