Central Bank warns financial firms

IRELAND’s stockbroking and investment firms need to up their game when dealing with customer complaints, the Central Bank has warned.

In its latest series of regulation compliance investigations, the bank noted that — while results were broadly positive — there exists “room for improvement” in the way firms handle complaints.

In all, six firms — representing nearly 60% of the retail client market — were the subject of on-site investigations, while another 160 firms were remotely reviewed and a separate desk-based analysis was carried out on a further 53 firms who deal with retail clients.

The Central Bank said that its on-site inspections were positive, with firms generally acknowledging complaints, keeping a record of them and updating clients on their progress. All of these firms had processes in place for dealing with escalating complaints, while the 53 firms had written complaints procedures.

However, it added that in other companies investigated “concerns were identified in relation to the procedures, including failures to provide a definition of a complaint; to acknowledge complaints in a timely manner; to keep the complainant updated on the status of the complaint and to advise the complainant of their right to refer the matter to the Financial Services Ombudsman”.

“Clients expect that all investment and stockbroking firms will handle their complaints promptly, fairly and transparently if and when they arise,” according to Sharon Donnery, head of consumer protection at the Central Bank.

“Complaints provide firms with the opportunity to put things right when they go wrong and, in so doing, enhance their reputation and trust with their existing and potential clients. It’s important that firms use complaints information to identify possible trends, to continuously improve procedures and controls where relevant and to prevent similar related complaints in the future,” she added.

While no sanctions are expected, the Central Bank has written to all companies concerned and has advised them to review their current procedures.

Yesterday’s announcement marks the second time this week that the Central Bank has highlighted instances of non-compliance with MiFID (markets in financial instruments directive) regulations. On Thursday, it noted that it had found instances of non-compliance amongst financial spread betting firms; adding that it is considering taking enforcement action against a number of them- a sanction which can carry fines of up to €5m.