Which? Why? More importantly, who else?

Which? and other similar consumer bodies have been granted 'super-complainant' status.  How will they use it and, of greater concern, who else might be so empowered?

The Treasury yesterday granted four consumer bodies 'super-complainant' status allowing them to report to the FCA if they believe that there are features of a financial services market that are, or could be, significantly damaging to the interests of consumers. The power for such bodies to make super-complaints to the FCA is set out in s. 234C FSMA and is one of three new powers for reporting to the FCA inserted into FSMA by the Financial Services Act 2012.

The four bodies to be appointed are: the Consumer Council Northern Ireland; Citizens Advice; The Federation of Small Businesses; and Which?. As one wit on an online comments board observed on reading the news: "Which? Why?" Perhaps a better question is 'Which? Who else?' Regulated firms will be wary of the government's statement that these are the "first consumer representative bodies". Although these bodies have a strong reputation for integrity, there will be concern if more activist bodies are granted the 'super-complainant' status, for example, CMCs. After all, where is the line drawn between a complaints manager, consumer champion and a lobbyist?

The procedure for super-complaints under s. 234E FSMA means that the FCA must respond to such complaints within 90 days. We anticipate that such a response could, given the recent upsurge in thematic review work, take the form of a thematic review or market investigation, with attendant enforcement risk for firms.

This development was anticipated. Up to this point only two of the three powers for reporting to the FCA brought into effect by the Financial Services Act 2012 had been set out by the FCA. Robbie wrote in June about the odd situation that existed at that time in which only FOS and regulated firms could report failures giving rise to consumer detriment to the FCA, and then, for firms, only about their own past activity.

Although FOS has not made use of the new reporting power to date, the latest issue of ombudsman news, issue 114, reports how the FOS "got in touch" with the FCA while it was carrying out a  thematic review into mobile phone insurance to feed in its own complaint data. This report gives a strong indication of how keen the FOS is to become involved with the FCA's thematic review work. After all, in the words of ombudsman news: "[w]e wouldn't be doing our job properly if we limited ourselves to just sorting out individual cases." Fancy that…