The Revised Payment Service Directive (PSD2) became effective on 13 January 2018. It updated the requirements for dispute resolution which encompasses revised timeframes for complaint handling and decision making deadlines. The complaints related to financial services must be resolved within those timeframes to stay compliant with the regulation.
Furthermore, the PSD2 complaints section included additional requirements for complaint reporting which came to effect shortly after the PSD2 deadline, 13 July 2018. It established a major difference in response time between PSD2 complaints and the rest of financial sector related complaints. Companies must ensure compliance with PSD2 and cater for such complaints accordingly, which means the adoption of new systems, processes and even practises if such measures are needed. Depending on the size of a financial institution these adjustments can cause significant investment which was estimated to reach up to £9 million for larger companies.
Below we will look into the fundamental changes that impact further complaint handling and provide additional information on aspects that financial institutions should address to ensure compliance with PSD2.
- The time frame to respond. If a complaint is related to rights and obligations under PSD2 a company must respond in writing within 15 business days. In case there are exceptional circumstances or a case of force majeure the deadline can be extended to 35 business days. Until PSD2 complaint requirements came to effect the timeframe was much longer and a complaint could have been answered within 8 weeks.
- Status information to a complainant. A company that received a complaint must inform the complainant if their complaint is classified as exceptional or if there is a case of force majeure. It also must provide the reasons for the delay.
- Financial Ombudsman Service (FOS) complaint. Even if the party that received the complaint answers it within the mandatory time frame (15 business days) a person behind it can refer their complaint to FOS. However, it should be done after receiving the final response.
When a consumer submits the complaint and receives confirmation they then have 35 business days to refer it to FOS. In cases where a consumer doesn’t get a response within 15 business days, they can proceed to refer it to FOS immediately.
- Reporting to Financial Conduct Authority (FCA). Previously Payment Service Providers (PSPs) and e-money issuers had to complete the Payment Services Complaint Return twice a year, but with PSD2 complaint requirements, it became an annual task.
Details to consider for financial institutions:
- Financial institutions should guarantee that their employees can distinguish a PSD2 complaint from a non-PSD2. This includes multifaceted complaints which require separating PSD2 and non-PSD2 elements.
- Financial institutions must ensure timely response time within the required 15 business days. They should also distinguish special circumstances and have a clear PSD2 complaints distribution among employees.
- In case of a failed payment execution, a company should have established liability for possible complaint scenarios.
- Financial institutions should ensure adequate staff training and up to date competencies to handle complaints appropriately.
- Companies are advised to test the new processes and handling time frames to ensure compliance. In case of failure to meet the requirements, a financial institution could face regulatory scrutiny.
- FCA requires accurate complaint data submission, therefore, a financial institution should investigate their reporting systems together with current processes and implement any enhancements or upgrades needed.
- Companies should re-evaluate their policies and procedures to match new regulations and complaint handling requirements. The necessary updates should be done instantly to avoid unnecessary disturbances.
The future with PSD2 complaints
Any company that prepares in advance can utilise the PSD2 complaints’ changes to their advance. It is crucial to understand complex legislation for full compliance and implement needed changes without hesitation as failure to do so may lead to severe consequences.
Find out more information at https://nordigen.com/en/psd2/complaints/
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