European financial regulators have finalized the guidelines for a harmonized consumer complaints process for the banking, securities, and insurance sectors in the European Union.
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) issued a joint report detailing the guidelines, which will take effect two months after they are published in all 28 official languages of the EU. The guidelines were based on those already in use for the insurance sector through the European Insurance and Occupational Pensions Authority (EIOPA).
The agencies said the goal of the supervisory convergence was to boost consumer protection by offering a single set of complaint procedures for the insurance, banking, and securities sectors throughout the bloc, regardless of the type of product or where it was purchased, while also streamlining processes for businesses selling various products from different financial sectors and in different Member States. The regulators said the harmonized process also will help their national counterparts because they will benefit from standard requirements across all three sectors and only have to oversee implementation of one set of guidelines.
Feedback from a public consultation held last year was included in the final report, the agencies said, but there were no material changes made. Some text changes were suggested during the consultation, but ESMA and EBA said they wanted the guidelines to remain “fully aligned” with those of EIOPA. Some of the comments suggested the guidelines differentiate between client categories, taking into account whether a complaint was from a retail, professional, or market counterparty customer. But the regulators noted that other EU financial directives, like Undertakings for Collective Investment in Transferable Securities (UCITS), do not differentiate between customer categories.
The harmonized rules “should help to ensure a consistent approach to complaints-handling across the banking, investment, and insurance sectors,” the report said.
Under the guidelines, competent authorities should ensure that:
Firms adopt a written complaints management policy, endorsed and monitored for compliance by senior management. The policy should be available to all staff through an internal channel.
Firms have in place a complaints management function to investigate complaints fairly and mitigate any potential conflicts of interest.
Firms register internally complaints according to national requirements on timing and the method used.
Firms provide information on complaints and their handling of them to competent authorities or ombudsman. The guidelines do not specify the frequency of the reporting, but did say the information provided should include the number of complaints received, and any differentiation required by national law.
Firms analyze complaints-handling data on an ongoing basis in order to discover and address any systemic problems or potential risks. That analysis should look at the causes of individual complaints to identify root causes of common complaints, whether those identified problems may affect other aspects of the business not directly mentioned in the complaint, and correcting those root causes where possible.
Firms provide written information on their complaints-handling process on request or when acknowledging receipt of a complaint. Firms must publish details of their process in “an easily accessible manner,” such as pamphlets or on its website; provide accurate and up-to-date information about the process, including how to file a complaint, the process that will be followed and timelines; and keep the complainant informed about the handling of the complaint.
Firms attempt to gather and investigate all relevant evidence and information surrounding a complaint, communicate in clear, plain language, and respond “without any unnecessary delay” or within time limits set by national regulators. If an answer cannot be provided within the standard timeframe, the firm should notify the complainant about the delay and provide an estimate of when the investigation would be completed. Firms must provide a thorough, written explanation if they reach a decision that does not fully meet the complainant’s demand, and information on how to continue a complaint, such as with an ombudsman or alternative dispute resolution mechanism.
The guidelines do not apply to complaints about activities not under the supervision of a competent authority, or activities by another entity for which a firm does not have legal or regulatory responsibility.