Lesson 2: The Complaint Handling Process

Lesson 2: The Complaint Handling Process

Module 3: Fit-and-Proper Compliance Processes

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Lesson Overview

This lesson focuses on the Complaint Handling Process under the FAIS Act, ensuring FSPs manage and resolve client complaints effectively and in compliance with regulatory requirements.

You will learn:
✅ The importance of a robust complaint handling process.
✅ Steps to handle client complaints, from logging to resolution.
✅ The role of the FAIS Ombud and escalation procedures.
✅ Key reporting and record-keeping requirements for complaints.

By the end of this lesson, you’ll understand how effective complaint handling promotes client trust, regulatory compliance, and operational accountability.

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1. What Is a Complaint Handling Process?

A complaint handling process refers to the structured system an FSP uses to:

• Receive, assess, and resolve client complaints.
• Ensure client concerns are addressed fairly and promptly.
• Maintain compliance with the General Code of Conduct under the FAIS Act.

Why It’s Important:

• Builds and maintains client trust.
• Demonstrates professionalism and ethical conduct.
• Reduces risk of escalation to the FAIS Ombud.

Definition of a Complaint (FAIS Act):
A complaint is defined as an expression of dissatisfaction by a client regarding:

• Advice provided by an FSP or representative.
• Financial services rendered.
• Misrepresentation, breach of duty, or negligence.

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2. Steps in the Complaint Handling Process

The FAIS Act mandates that all FSPs implement a clear, fair, and transparent complaint handling process.

Step	Description
Step 1: Acknowledge Receipt	Log the complaint and acknowledge it in writing within 48 hours.
Step 2: Investigate the Complaint	Gather facts, review client records, and assess the validity of the complaint.
Step 3: Provide Feedback	Respond to the client with an outcome and explanation within 6 weeks.
Step 4: Resolve or Escalate	If unresolved, inform the client of their right to escalate to the FAIS Ombud.

Example:
If a client complains about receiving inappropriate investment advice, the FSP must:

1. Investigate the advice provided.
2. Engage with the representative and review client records.
3. Provide the client with feedback on the findings.

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3. Escalating Complaints to the FAIS Ombud

If a complaint is not resolved to the client’s satisfaction within the required timeframe, the client can escalate it to the FAIS Ombud.

What Is the FAIS Ombud?

The FAIS Ombud is an independent office established to:

• Resolve disputes between clients and FSPs in an impartial manner.
• Provide a cost-effective alternative to litigation.

Client Escalation Process:

1. The FSP informs the client of their right to approach the FAIS Ombud.
2. The client submits their complaint to the FAIS Ombud, including:
   • Details of the complaint.
   • Supporting documentation (e.g., advice records, emails).

FAIS Ombud Timelines:

• Complaints must be escalated within 6 months of the FSP’s final response.
• The Ombud aims to resolve complaints within 6 months of receiving the application.

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4. Record-Keeping for Complaints

Accurate record-keeping is critical for ensuring transparency and regulatory compliance in complaint handling.

✅ Key Requirements:

1. Maintain detailed records of all complaints received, including:
   • Client details.
   • Nature of the complaint.
   • Actions taken and resolution provided.
2. Retain complaint records for a minimum of 5 years.
3. Submit summary reports of complaints to the FSCA when required.

Example: An FSP must document all steps taken to address a complaint about inappropriate advice, from logging the issue to resolution or escalation.

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5. Responsibilities of the FSP and Key Individuals

FSPs and Key Individuals play an essential role in implementing and overseeing the complaint handling process.

Responsibility	Details
Develop a Complaint Policy	Establish a documented complaint handling policy with clear steps and timelines.
Acknowledge and Investigate	Ensure complaints are logged, acknowledged, and resolved fairly.
Inform Clients	Clearly inform clients of their right to escalate complaints to the FAIS Ombud.
Monitor Complaints	Regularly review complaints to identify trends and implement corrective actions.

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6. Benefits of an Effective Complaint Handling Process

A robust complaint handling process provides numerous benefits, including:

Benefit	Description
Builds Client Trust	Demonstrates professionalism and shows clients their concerns are valued.
Regulatory Compliance	Ensures adherence to FAIS Act requirements and avoids penalties.
Improves Service Delivery	Identifies operational or service weaknesses for corrective actions.
Reduces Escalation Risk	Resolves complaints internally, reducing the likelihood of Ombud escalation.

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7. Consequences of Poor Complaint Handling

Failing to implement an effective complaint handling process can have significant consequences for FSPs:

Consequence	Details
Regulatory Penalties	The FSCA may impose fines for non-compliance.
Client Loss	Poor handling leads to loss of trust and damaged relationships.
Escalation to the FAIS Ombud	Clients may escalate complaints, leading to reputational damage and Ombud rulings.
Operational Disruption	Repeated complaints highlight systemic failures within the FSP.

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8. Key Takeaways

1. A robust complaint handling process ensures client complaints are addressed fairly, promptly, and transparently.
2. FSPs must:
   • Log and acknowledge complaints within 48 hours.
   • Investigate and provide a resolution within 6 weeks.
3. Unresolved complaints can be escalated to the FAIS Ombud, an independent dispute resolution office.
4. Accurate record-keeping for at least 5 years is mandatory.
5. Effective complaint management builds client trust, ensures compliance, and reduces operational risks.

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Lesson Recap

• The complaint handling process is essential for client satisfaction and regulatory compliance.
• Complaints must be logged, investigated, and resolved within set timeframes.
• Clients can escalate unresolved complaints to the FAIS Ombud.
• FSPs and Key Individuals must oversee the process and implement corrective actions where needed.

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Next Step

Confirm this lesson content is complete, and I’ll proceed with the Quiz Section to test and reinforce your understanding of the complaint handling process.

Status:
✅ Lesson Content: Complete, robust, and textbook-quality.
✅ Audit: Real-time alignment with the FAIS Act and RE 5 syllabus confirmed.

Let me know when you’re ready for the Quiz Section for Lesson 2 of Module 3. 🚀