FSA calms fears over use of adviser complaints records

The FSA will use new rules requiring firms to publish the complaints records of their advisers to help "build an overall picture" of individuals, but it has promised to investigate fully any cases that give it cause for concern and says it will only ban advisers as a last resort.

Advisers said relying solely on complaints data could give the regulator a skewed view of individuals because complaints are often unjustified.

The FSA yesterday proposed firms provide details including number and type of complaint alongside advisers' individual reference numbers in their twice-yearly Complaints Return Forms and their 'Notification of changes' (Form D) documents from 2013.

Currently the FSA collects complaints figures at a firm level only.

But Peter Smith, FSA head of investments policy, said it would not rely solely on complaints statistics to determine whether an adviser posed a risk to consumers.

"This data would only be one element we would gather about an individual. We have more information we can collect about individuals and firms, all of which is helpful in constructing an overall picture of where the problem might be.

"The fact there might be a handful of complaints about a particular adviser over a short period of time does not in itself prove anything.

"Before we take any action, we would look in some depth at all the circumstances and see if there is a real problem there or not. We would also give the individual in question the chance to offer their views on the situation.

"All this does is give the FSA a better capacity to identify potential problem areas and, therefore, a better chance of being more effective in our supervision."

Smith also said the FSA would not automatically ban individuals based on their complaints records.

"We would look at the case in question. Is the issue with the individual or is it with the firm?

"We would then take a proportionate regulatory response to address the problem. It could be saying you need to re-do some training or re-sit some examinations to demonstrate you can do something the evidence suggests you can't. In certain circumstances, yes, it may be going as far as removing someone's approval."

FSA data collection proposals

The FSA wants firms to publish complaints data on individuals, including:

• Number of complaints
• Number of complaints upheld/rejected
• Redress paid (£)

Firms will also be asked to provide information on an ongoing basis when:

• A complaint involves a claim of £5,000 or more
• An adviser is subject to three complaints or more in any 12 month period

The FSA says it does not intend to ask for detailed information about the complaint, but simply a notification of its occurence.

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