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| Annual Report 2007 Recommendations Complaints Handling by IPs The Report identifies several issues on which we believe improvements should be made in the regulatory requirements for the handling of complaints by personal debtors by IPs and their firms. Although their regulators require all IPs, as a condition of their licence, to provide a system for handling complaints by their clients, there is no requirement that these systems should provide for any redress (whether financial or otherwise) for complainants, whose complaint is upheld. Moreover, the complaints systems operated by the regulators themselves are essentially disciplinary in character and do not in general provide for any redress to the individual complainant, although the report notes that some of the regulators may sometimes provide informal mediation between complainants and IPs. The Consumer Credit Act 2006 partially addresses this situation by requiring that any debtor, who is dissatisfied with the service they have been given by a firm or an individual, such as an IP, who holds a standard consumer credit licence from the OFT, can eventually take their complaint to the Financial Ombudsman Service (FOS) provided it relates to a consumer credit activity, in this case debt advice or debt adjustment. However, a significant number of IPs who have been licensed by the accountancy RPBs are covered by a group consumer credit licence granted by the OFT to their RPB. In the case of these IPs, personal debtors do not have access to the Ombudsman and can only take their complaint to the relevant RPB. We believe that all personal debtors, who believe they have received bad advice or poor service from an IP or a debt advice firm, should have access to a complaints system, operated by the IP or firm, which provides for redress (whether financial or otherwise). In addition, like other consumers of financial services, personal debtors, who are dissatisfied with the handling of their complaint by the IP or debt advice firm should also have access to an independent complaints system, which has the power to offer financial or other redress. It seems likely that, as a consequence of the Consumer Credit Act 2006, those IPs who are covered by a group licence held by their RPB will be the only licensed debt advisers whose customers do not have access to an independent complaints system of this kind. We believe that this divergence of treatment is unacceptable. We emphasise that our recommendation here applies only in respect of personal debtors and not to customers or other stakeholders involved in corporate insolvencies. The interviews conducted by the researchers show that those IP and IVA firms, which do hold standard consumer credit licences take three different views on where the jurisdiction of the FOS stops, so that debtors seeking to make a complaint are likely to get different advice on whether or nor they can take their case to the Ombudsman. Any individual IP or firm can seek advice from the Ombudsman’s technical advice desk as to whether a particular case can be taken by the FOS. However, we believe it would be helpful if the insolvency regulators would seek clarification from the FOS on the scope of the latter’s jurisdiction, so that they can give general advice to all the IPs they license. It appears that IPs are not uniformly required to arrange for complaints against them to be examined by someone in the firm (or from outside) other than the IP, who has conducted business with the complainant. Although several of the regulators give formal or informal guidance to this effect and the larger firms interviewed by our researchers comply with it, in some of the smaller practices complaints may be handled solely by the IP about whom the complaint is made. We believe that tolerance of this may fall below the best practice in other professions. We will aim to verify this in our further research. We recognise that for the smaller IP practices it may be difficult to find someone independent within the firm and they may need some help from their regulators to deal with this problem. We recommend that: • The IS and the regulators should require all their IPs to ensure that their or their firms’ complaints handling systems include an option for making redress (whether financial or otherwise) when a complaint by a personal debtor is upheld as justified; • In addition the IS and the regulators should take steps to ensure that any personal debtor can take a complaint against any IP relating to poor debt advice or unsatisfactory management of debt problems to an independent arbitrator, whether inside or outside the regulatory bodies, who will be able to award redress (financial or otherwise) to a complainant whose complaint is upheld; • The IS and the regulators should seek clarification from the Financial Ombudsman Service on the limits to its jurisdiction in relation to complaints against IPs, holding individual licences, and give appropriate guidance to IPs and their firms about this, so that they can advise their clients appropriately; and • All IPs and their firms should be required to have internal complaints procedures, which provide for complaints to be examined at the appropriate stage by someone independent of the IP who has conducted business with the complainant. Sole practitioners could be required to nominate an independent complaints investigator in their annual returns, as they are now required to do in nominating a successor IP. The regulators should consider how they can help sole practitioners and small partnerships to find a suitable independent person to examine complaints against them. |
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