The FCA published its complaints figures for regulated firms for the first half of 2019 in October 2019. The statistics show that complaints increased by 9.7%, rising from 3.91m in the second half of 2018 to 4.29m in the first half of 2019.
PPI continued to lead the way, making up 49% of all complaints. However, excluding PPI, total complaints decreased from 2.32m to 2.18m during the period, which marks the lowest volume of complaints since new reporting rules came into effect in 2016.
Excluding PPI complaints, the most complained about products remain current accounts (14% of reported complaints), credit cards (8%) and motor and transport insurance (6%). However, all of these are down from the previous period.
The Financial Ombudsman Service's ("FOS") first quarter statistics for 2019/20 show 136,681 new enquiries and 70,304 complaints, out of which 12,538 complaints were passed to an ombudsman for a final decision; on average, 30% of the complaints were resolved. Again, PPI continued to be the most complained about product (31,005 new complaints), followed by a significant amount of complaints relating to consumer credit, especially high-cost lending.
In the areas of Banking and Credit, Mortgages and Home Finance, General Insurance, PPI, Investments, Life & Pensions and Decumulations, the top five business groups complained about were Lloyds, Barclays, RBS, HSBC and Santander, making up a total of 77,540 complaints.
Since 1 April 2019 the FOS has been able to consider complaints about claims management companies (CMCs). Between April and June 2019 the FOS received 262 enquiries and 117 new cases relating to PPI CMCs, 17 of which were referred to an ombudsman; 43% of the complaints were upheld.
These complaints figures reflect the current landscape of consumer finance and firms' performance in handling consumers' dissatisfaction in the UK. From a regulatory perspective, the overall decrease in complaints can only be interpreted as a positive development, showing that firms continue to focus on ensuring their customers are well served and that complaints are dealt with quickly and effectively.
The Revision to the Stewardship Code
In October 2019, the Financial Reporting Council (FRC) published the 2020 Stewardship Code, which takes effect for reporting years beginning on or after 1 January 2020. It is not obligatory to sign up to this Code but the FRC will publically list who has signed up to it and who has not.
In the FRC's press release, it stated that "the new Code substantially raises expectations for how money is invested on behalf of UK savers and pensioners" and, despite the Kingman Review being critical of the effectiveness and usefulness of the 2012 Stewardship Code, the FRC claims that the new Code "directly addresses the issues raised by Sir John Kingman's independent review of the FRC in respect of the previous Code."
The 2020 Code introduces a definition of "stewardship": "responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society". The Code consists of 12 "apply and explain" principles for asset managers and asset owners and 6 "apply and explain" principles for service providers. The previous Code applied only to asset managers.
The principles are to be reported on in an annual Stewardship Report (Report), which must contain details of all of the stewardship activities undertaken in the previous 12 months and of the outcomes of those activities in that time. The Report must also explain the investment strategy and culture of the signatory and show how this has been reflected in its governance.
Signatories are expected to take into account environmental, social and governance factors in their running of their businesses and to ensure that their investment decisions are in accordance with their clients' needs. Signatories should have regard to the UK Corporate Governance Code and other governance codes, to directors' duties, to capital structure, risk, strategy and performance, to diversity, remuneration and workforce interests, to audit quality and to compliance with covenants and contracts.
For asset managers in particular, the new Code comes against the backdrop of a growing consensus that they should be taking such matters into consideration or potentially face claims if, as a result of failing properly to consider such matters, losses have accrued to their clients. For example, asset managers could face claims if they had purchased stocks without fully considering the risks to their portfolios of a changing climate or if they had held onto assets for too long and, as a result, climate change risks had brought about sharp price corrections. Thus, building consideration of such matters into everyday decision-making and reporting on those decisions might limit such exposures.
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