Financial services compensation scheme (FSCS)
The Financial Services Compensation Scheme (FSCS) is the UK’s statutory fund of last resort for customers of authorised financial services firms. Financial ombudsman Services (FOS) the independent service for settling disputes between businesses providing financial services and their customers
Important information about compensation arrangements
We are covered by the Financial Services Compensation Scheme (FSCS). The FSCS can pay compensation to depositors if a credit union is unable to meet its financial obligations. Most depositors – including most individuals and small businesses – are covered by the scheme. In respect of deposits, an eligible depositor is entitled to claim up to £85,000. For joint accounts each account holder is treated as having a claim in respect of their share so, for a joint account held by two eligible depositors, the maximum amount that could be claimed would be £85,000 each (making a total of £170,000). The £85,000 limit relates to the combined amount in all the eligible depositor’s accounts with the credit union, including their share of any joint account, and not to each separate account. For further information about the scheme (including the amounts covered and eligibility to claim) please ask at your local branch, refer to the FSCS Website or call 0800 678 1100.
Financial Ombudsman Service
The Financial Ombudsman Service (FOS) has been set up by law to help settle individual disputes between consumers and financial firms. The FOS will only look at complaints if the credit union has had the opportunity to investigate the complaint first and provide a response.
We have an internal complaints procedure to resolve any issues or concerns. In the event that a member has a complaint that we are not able to resolve, it can be forwarded to the Financial Ombudsman Service, within six months of the credit union’s final response letter.
If you are not happy with a final response given to a complaint or if no final response has been provided within an eight-week period from the date of initial complaint, you are eligible to contact the Financial Ombudsman Service and request that they investigate the matter on your behalf. No charge is made for this and any decisions made are binding on the financial institution concerned.
More information on the Financial Ombudsman Service can be found at:
Distance Marketing Directive Policy (DMD)
Definition of a distance contract Article 2 of the Directive defines ‘distance contract’ as: “Any contract concerning financial services concluded between a supplier and a consumer under an organized distance sales or service provision scheme run by the supplier, who, for the purpose of that contract, makes exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded.”
and “means of distance communication” as:
“any means which, without the simultaneous physical presence of the supplier and the consumer, may be used for the distance marketing of a service between those parties.””
What this means for credit unions is that both account opening and loan agreements that are concluded using distance communication only, i.e. with no face to face contact will be effected by the DMD. The most common forms of distance communication are, telephone, internet, email or post. However if there is any interface with a human e.g. returning a form to a collector, the transaction is no longer at a distance.
Implementing the DMD
There are two main elements involved in implementing the distance-marketing directive, which applies to both account opening and loan agreements.
1. Disclosure of Information
Content – Name, address and status of credit union (i.e. that is that the credit is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority)
Key features/characteristics of the service on offer, and in the case of loan agreements the total price to be paid by the member
Cancellation rights (14 days in both cases)
Form and timing
- In a durable medium
- In good time (i.e. enough time for a person to consider the service on offer)
- Before the applicant is bound by the terms of membership, or the loan
Credit unions affected, should arrange for pre-printed literature containing this information to be available, and for staff and volunteers to be trained as to when in the process it should be given to the potential member.
2 Cancellation Rights CRED
Under the DMD the member will have the right to cancel their membership with the credit union, or their loan agreement without penalty within 14 days of the day of the conclusion of the contract, or from when they received the contractual terms and conditions. However if a member needed to borrow within 14 days, this would be deemed to be an acceptance of membership. The credit union will not charge interest accrued on the loan before the member cancels. It is the normal practices that the new members pay £5 when they apply to join the credit union. If they then decided to take up the DMD option and cancel their membership, the credit union will refund £3 only as £2 will be payable as an administration fee. If a member does decide to exercise their cancellation rights, the credit union must return, no later than 30 days after the date, any money paid to the credit union. The credit union reserve rights to request that the members pay for any services provided up to the date of cancellation provided it does not amount to a penalty. Information on how to go about cancelling any agreements concluded at a distance will be provided with the Terms and Conditions of the service you require, but if you are unsure, please contact the credit union.
- The DMD will only apply where there is ‘an organized distance sales or service-provision scheme run by the supplier’. Therefore the DMD will only apply where the credit union has set up facilities to enable members to deal with the credit union at a distance. If the credit union normally operates purely on a face to face basis then the rules will not apply. A one-off transaction dealt with at a distance will not be required to comply with the rules.
- Where the member is recruited by telephone they can give consent to receive a more limited range of information before the conclusion of the contract. However full information, in a durable medium must be provided immediately after the conclusion of the distance contract.
If an employer simply makes information and application packs available to employees, any resulting contract would be a distance one and would have to meet the DMD requirements regarding disclosure and cancellation. However, if for example a work place rep met face to face with potential members to talk about credit union membership, or terms and conditions of loans this would not constitute a distance contract.
Where there is a joint account and only one of the members is physically present at the time of opening the account, this does not constitute a distance contract, as it is not entered into exclusively by distance means.
London Mutual Credit Union will ensure that Distance Marketing information is included with the welcome letter, which we sent to all new members when they join. For new members, a one off Membership Fee of £2 will be deducted from their share account towards administration charges prior to the refund. If a member does decide to exercise their cancellation rights, the credit union must return, no later than 30 days after the date, any money paid to the credit union. This could include their joining fee. The credit union reserve rights to request that the members pay for any services provided up to the date of cancellation provided it does not amount to a penalty. The credit union will not charge interest accrued on the loan before the member cancels.
Internal complaints procedure
We aim to offer our members consistent, high quality and value for money services. We can only do this with your help. If you have a concern about our services please tell us.
If you make a complaint we believe that you deserve five things:
- To be heard
- Action as soon as possible
- To be understood
- To be respected
- An explanation
A complaint is defined as:
Any expression of dissatisfaction oral or written whether justified or not, from or on behalf of an eligible complainant about London Mutual Credit Union’s provision of, or failure to provide, one of its financial services activities.
Our commitment to you
We aim to deal with your complaint as thoroughly and as quickly as possible.
- Investigate your complaint immediately.
- Acknowledge receipt of your complaint within five working days. If appropriate we will also offer an apology and a full explanation at this time.
- If we cannot resolve the issue, or need more time to investigate, we will confirm when you can expect a response and keep you advised of the progress.
- Try to resolve your complaint within four weeks.
- Advise you of our progress and if we need more time.
- Send a final response within a maximum period of eight weeks.
Your first steps
You MUST give the Credit Union chance to resolve any complaint before taking your issue further. The best way to complain depends how the situation arose. If you are already dealing with a member of staff then contact that person or their Supervisor, directly either by telephone or by letter. You could also make an appointment to see them in person. Many complaints are due to a misunderstanding and can often be resolved instantly. If you have followed these guidelines and are still unhappy, please address your complaint directly to the Complaints Officer.
Tips on making a written complaint
- Include your full name, address and any reference or Membership number, at the top of the letter
- The date you made your complaint (you can then monitor the time it takes to receive a response)
- Write a brief summary of your complaint at the beginning of your letter
- List the facts clearly and in a sensible order of events
- Do not go into too much detail and try not to be repetitive
- Send photocopies of any relevant documents – but be sure to keep the originals
- Keep a photocopy of every letter you write
If you are still unhappy
In the majority of cases, complaints can be resolved very quickly and to everyone’s satisfaction. If not you can take your complaint to the Complaints Officer. This person has special responsibility for complaints within the Credit Union. They will undertake an independent review on your behalf and provide you with a written response according to the aforementioned time-scale.
If your complaint has been taken through the Credit Union’s Internal Complaints procedure and you are dissatisfied with the final response letter, you may be able to take your complaint to the Financial Ombudsman Service. This must be within 6 months of our final response. A booklet detailing how to do this will be enclosed with your final response letter.
What can you do if you are not satisfied with our final response?
If you are not satisfied with our final response, you may be entitled to refer the matter to the Financial Ombudsman Service (FOS):
South Quay Plaza,
183 Marsh Wall,
London, E14 9SR
Tel: 0845 080 1800
How long do you have to make such a referral?
You have six months from the date of our final response letter to make such a referral. This procedure is described in more detail in the Financial Ombudsman Services leaflet “Your Complaint and the Ombudsman”. This explains the service they offer and how you may proceed.
How will the Financial Ombudsman Service help you?
If your complaint is eligible for further investigation, the FOS will listen to what you say and will listen to what we say and look at all the facts. If they think we have treated you fairly, they will tell you why. If they don’t think we have treated you fairly, they can make us put things right for you.
Will my complaint be eligible for investigation by the Financial Ombudsman Service?
Whilst the majority of complaints are eligible for further investigation by the FOS, it is important that you are aware this does not apply in every instance. If you are in any doubt about whether your complaint is eligible for further investigation you should contact the FOS direct to clarify this. Details of the types of complaints the FOS will not consider are given on their website.