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Role of the FCA and the ‘super-complaint’ process

The Financial Services Act 2012 came into force on 1 April 2013, creating a new regulatory framework for financial services and abolishing the Financial Services Authority (FSA). In this article we look at the impact on regulation.


Under the new regulatory architecture, the Financial Conduct Authority (FCA) is responsible for: regulating conduct in retail and wholesale markets; supervising the trading infrastructure that supports those markets; and regulating firms not regulated by the PRA. Essentially, the FCA has taken over the conduct and compliance remit of the FSA.

The single strategic objective of the FCA is to protect and enhance confidence in the UK financial system, knocked by conduct issues which have caused major concerns since the 90’s, particularly following instances of widespread mis-selling of financial products to retail consumers. These include personal pensions, mortgage endowment policies, split capital investment trusts and payment protection insurance (PPI).

Its new message is to ensure that the industry has a culture that puts the needs of the consumer at the heart of the firm and it categorises its main functions as:

Regulating: The FCA supervises the conduct of 26,000 financial firms and regulates the prudential standards of 23,000 of those.

Protecting: In addition to challenging unfair terms in standard form consumer contracts pursuant to powers under the Unfair Terms in Consumer Contracts Regulations 1999, the FCA works with firms to help them fight financial crime and protect themselves against criminal activities including fraud.

Championing: The FCA aims to ensure that the financial services industry treats consumers fairly and complies with financial services rules and standards. It requires firms to provide training to their staff to ensure unbiased informed advice is given on a broad range of products.

Enforcing: A robust approach to enforcement by;

  • bringing more enforcement cases and pressing for tough penalties for infringements of rules,
  • pursuing more cases against individuals and holding members of senior management accountable for their actions,
  • continuing to prioritise getting compensation for consumers.

The FCA plans to take a more proactive approach in regulation so that it is in a position to take early and decisive action to address risks before they cause harm, particularly by way of product intervention.  It is able to ban financial products for up to a year while considering an indefinite ban and has the power to instruct firms to immediately retract or modify promotions which it finds to be misleading, and to publish such decisions.

The ‘super-complaint’

The super-complaint has been introduced by the Financial Services Act 2012 to help the FCA achieve its regulatory objectives.  A super-complaint is a complaint by a designated consumer body alleging that features or a combination of features of the market for financial services in the UK is significantly damaging the interests of consumers.

Amendments to FSMA gives designated consumer bodies the right to bring super complaints to the FCA’s attention, although this will not affect the individual’s ability to make an independent complaint to FOS or the FCA in the usual way.

Complaints are expected to cover issues arising from characteristics of certain financial products or services, as well as conduct of FCA authorised entities.  It is thought that consumer groups may be better equipped to deal with such complaints as individuals are less likely to have access to the information necessary to bring them. There is a concern that the FCA will rely too heavily upon the consumer bodies before taking any proactive steps to investigate matters.

Organisations will need to apply to the HM Treasury in order to become a designated consumer body. Provided that an organisation appears to represent the interests of consumers, the Treasury may select it. Representatives of small and medium sized enterprises are also able to apply for designation. It has now been confirmed that the following have applied for super-complainant status:

  1. Citizens Advice Bureau;
  2. Consumer Association, Which?;
  3. Consumer Council, Northern Ireland;
  4. Federation of Small Businesses

The FSA produced a 19 page document setting out draft guidance on how a designated body should bring a complaint.  Following consultation, the FCA’s final guidance on these matters was published in late June along with a summary of the feedback received through the consultation and the FCA’s responses to the issues raised.

In essence, the guidance provides that the designated consumer body is required to present a reasoned case as to why a UK market for goods and services has a feature or features which is rare or appear to be significantly harming the interests of consumers. The complaint should be supported by facts and evidence. It is not necessary for the complainant to demonstrate that the interests of consumers have actually been damaged, just that they may be damaged. This could potentially result in complaints being made and pursued with little or no evidence of any loss being suffered by consumers.

On receiving the complaint the FCA may choose to carry out wider enquiries; such as making public requests for information, carrying out a review of the relevant regulated firm(s) and taking any other action it deems necessary.

Within 90 days of receiving a complaint, the FCA is required to publish a response setting out what action it will take which could include initiating a review of the relevant FSA rules or guidance, initiating a consumer redress scheme under s. 404 of the FSMA and taking regulatory action (including taking enforcement action against a firm or firms or varying permissions granted under FSMA).

The next year or so is likely to be a bad time to appear on the regulatory radar. Clearly,the FCA will be keen to make its mark and possibly an example of any wrongdoers to show it means business. However, with few consumer bodies rushing to apply for designation and the market already questioning the credibility of the new regulator’s new approach, whether the FCA will end up being all talk and no action, only time will tell.


For more information contact Charlotte Adol, Solicitor on +44 (0)20 7280 8925 or email charlotte.adol@dwffishburns.co.uk

By Charlotte Adol

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.