The Treasury appoints the FCA Board and the majority of the Board are non-executive members. The FCA will not need to have specific evidence of failure from each of the firms subject to the scheme. The FCA will be required to make an objective and evidence-based judgment on the overall suitability of a consumer redress scheme as a remedy.
Consumers that can be covered by a consumer redress scheme
That said, it would be possible for the Treasury to expand, through an injunction, the types of services that a consumer redress scheme can cover to include pre-regulation activities (see Section 404G of the Act). The section 404 jurisdiction can be used in relation to non-UK consumers if they are protected by the underlying law. The fact that a consumer "who may have considered using" a relevant service may be covered by a consumer redress scheme is unlikely to occur in many cases in practice.
An example of a case where it could be used is where there is widespread discrimination: the section 404 power could be used to secure redress for consumers who have been illegally denied access to a service, in violation of relevant equality laws . All the limitations and evidence requirements explained in ■CONRED 1 would apply equally to any scheme developed in this type of field. The Treasury may, by order, expand (or reduce) the type of consumers that may be covered by a consumer redress scheme (see Section 404G of the Act).
Applicability of a scheme to other situations
Operation of a consumer redress scheme
Investigation of cases under a consumer redress scheme
Firms that are no longer authorised by the FCA or have transferred their business to another firm
Other matters that may be included in the rules of a consumer redress scheme
Another important area where the FCA can set rules is to identify things to consider, or steps to take, by companies for the purpose of:. Again, the FCA can only do this if the matters set out have been or would be considered by a court or tribunal for the said purpose. In particular, the FCA cannot ignore the normal legal rules of causation or loss waiver.
It will also benefit businesses if complaints are subsequently forwarded to the Financial Ombudsman Service. This is because comprehensive communication can help the ombudsman understand at the outset that the company has carried out an investigation in accordance with the scheme. Businesses may also be required to bring the scheme to the attention of the Financial Ombudsman Service in any individual cases referred to it.
As such, the FCA will consult the Financial Ombudsman Service regarding the content of such communications. Fifth, the scheme rules could require companies to provide information to the FCA (e.g. information about how they conduct their investigations under the scheme, how many consumers have chosen to have their cases reviewed, etc.).
Issues that come to light during the period in which the scheme is running
The reference to "matters" refers to legally relevant considerations, not any procedural steps that companies may need to take. Examples of 'steps' are requiring companies to collect evidence through specified methods or to record their decision-making in some form. The consumer recovery plan rules will specify a start date (referred to as the "specified date" in Section 404(3) of the Act) and most likely also an end date (see Section 404A(1)(f) of the Act) to and evaluate sales.
A fourth area that may be covered in consumer redress scheme rules is the content of a firm's communication to consumers about the outcome of their investigation under a scheme. Detailing the content of the communications that consumers can expect to receive will ensure consistency across businesses as well as clarity for consumers. 404A(1)(b) of the Act), the FCA could amend the rules accordingly.
Alternatively, the FCA may provide general or individual guidance to firms on issues that arise during the operation of the scheme.
Types of redress a firm can be required to make under a consumer redress scheme
The FCA will endeavor to provide as much guidance as possible in the scheme rules on how compensation will be calculated (eg by setting a different formula or methodology) in order to assist both firms and the Ombudsman. The power of section 404 does not in itself take away a consumer's right to take a case to the courts. However, any redress obtained in court proceedings will be deducted from the compensation payable under a consumer redress scheme and vice versa.
The rules of the scheme would also address the situation where the consumer has previously received compensation from the Financial Ombudsman Service.
Waivers or modifications of the scheme rules
Dealing with complaints when a consumer redress scheme is in place
Non-compliance with the consumer redress scheme rules
Publication of the existence of a scheme
Role of the Financial Ombudsman Service and the Financial Services
How the Financial Ombudsman Service will deal with
Complaints received by the Financial Ombudsman Service before a scheme comes into effect
Complaints received by the Financial Ombudsman Service while a consumer redress scheme is in effect
Complaints received by the Financial Ombudsman Service after a consumer redress scheme has ended
Non-consideration and dismissal of complaints by the Ombudsman
Case fees
Time limits
Consumers will have six months from the date the firm sent them a rectification decision to complain to the Financial Ombudsman Service. If a firm has failed to secure a redress determination (eg because it did not deal with a particular consumer's case under the scheme), consumers will have more than six years from the event complained of and three years from the date on which the consumer was made aware (or should reasonably have been made aware) that they had grounds for complaint, to complain to the Financial Ombudsman Service (in accordance with the standard time limits existing in ■ DISP 2.8). A firm may not consent to the Ombudsman's review of a complaint outside of these standard timeframes where the complaint is a.
However, the Ombudsman may consider complaints outside these standard time limits where, in the Ombudsman's opinion, the consumer's failure to comply with the time limits was the result of exceptional circumstances.
Awards
Firm-by-firm past business reviews that have already been agreed by a firm before a consumer redress scheme is made
Waivers of the scheme rules for particular firms
Failures by firms that span the period before and after an activity became regulated by the FCA
The FSCS
Challenging a consumer redress scheme
Any person (eg firms, consumers or their representatives) can apply to the Upper Tribunal for a review of any rules made (see section 404D of the Act). Its usual role in relation to financial services is to hear referrals arising from decision notices or supervisory notices issued by the FCA. The judge presiding at consumer redress scheme proceedings in the Upper Tribunal will be a judge of the High Court, the Court of Appeal or the Court of Session (or any other person as agreed by the Lord Chief Justice, the Lord President or the Lord Chief Justice of Northern Ireland ; and the Senior President of Tribunals) (see section 404D(12) of the Act).
Dealing with consumer redress scheme cases
Nevertheless, in relation to two particular aspects of a consumer redress scheme, the Upper Tribunal will be able to conduct a full merits review to consider whether the FCA's interpretation of the law was correct (see section 404D(6) and (7) of the law. Act). In relation to these two aspects, the FCA is limited to what a court or Tribunal would do. As such, the Upper Tribunal's role will be to check whether the FCA has reached the correct position.
Procedure in the Upper Tribunal
Possible outcomes of an application to the Upper Tribunal
Imposing a consumer redress scheme on a firm under section
Triggers that must be met before the FCA can impose a consumer redress scheme under section 404F(7).
Triggers that must be met before the FCA can impose a consumer redress scheme under section 404F(7)
Further information about changing a firm's consent or changing or imposing requirements on the FCA's own initiative under section 55J or section 55L of the Act is set out in EC 8. The FCA has no power to consider an application from ' accept an authorized person to modify his consent. where the authorized person is a PRA authorized person (see sections 55H and 55I of the Act). For all other firms, an authorized person with a permit can voluntarily apply to the FCA to change this.
The FCA can refuse an application if it considers that this is desirable in furtherance of any of its operational objectives, such as the objective of consumer protection (see section 55H(4) of the Act). The FCA also has the power to introduce or vary a requirement under section 55L of the Act to establish and operate a scheme which is equivalent to or similar to a scheme established under section 404 of the Act. However, if the authorized person is a person authorized by the PRA (or is a member of a group that includes a person authorized by the PRA), the FCA must consult the PRA (see section 55L(7) of the Act).
As with voluntary requests to change a consent, the FCA may deny an application to voluntarily impose, change or cancel a requirement if it deems it desirable to do so to further one of its operational objectives. promote (see Section 55L(5) of the Act). More information about the voluntary change of a consent or the voluntary imposition or change of a requirement is set out in■SUP 6.
Consultation
Circumstances in which the FCA will engage section 404B
This exercise will be undertaken on a case-by-case and round-robin basis by looking at all the proposed terms, including any terms included to provide provisions equivalent to section 404B (under section 404F(7)(b) ). It is important to note that the inclusion of section 404B will not automatically or always advance one or more of the FCA's operational objectives, for example its consumer protection objectives, even if the other terms of the proposed scheme do. If Section 404B is employed, the ombudsman is generally required to decide a complaint referred to the Financial Ombudsman Service after the scheme comes into force on the basis of what after the assessment of the scheme.
This will mean that the Ombudsman will not determine the complaint by reference to what they consider to be fair and reasonable in all the circumstances of the case. To assist the Financial Ombudsman Service in identifying relevant cases, firms may be required to bring the scheme to the attention of the Financial Ombudsman Service in any individual cases referred to it. It is likely that many section 404F(7) schemes will be set up because, in the FCA's view, it is desirable to further the consumer protection objective of ensuring an appropriate degree of protection for consumers.
In determining what is desirable to further this objective, the FCA will take into account a wide range of factors. In other words, the extent of any difference in appeals between the proposed scheme and what consumers can receive through the Financial Ombudsman Service or the courts.
Consultation with the Financial Ombudsman Service when the FCA is considering engaging section 404B
Internal process to be followed if the FCA proposes to engage section 404B
Challenging a consumer redress scheme imposed under section 404F(7)
