The International Financial Services Centres Authority (IFSCA) recently issued a circular dated December 2, 2024, outlining a comprehensive framework for complaint handling and grievance redressal that all regulated entities in the IFSCA must adhere to. This circular is a significant step towards strengthening consumer protection and fostering a fair and transparent financial ecosystem within the IFSCA. As legal professionals with a keen interest in the IFSCA's regulatory landscape, we aim to provide a clear and concise analysis of this circular, focusing on its key implications for Venture Funds operating within the IFSCA.
Applicability and Effective Date:
● The circular applies to all entities regulated by IFSCA that deal with consumers outside their own Group Entities.
● Certain entities are exempt, including Foreign Universities, Foreign Educational Institutions, Ancillary Service Providers, BATF Service Providers, and Finance Companies/Units involved in aircraft or ship leasing and global/regional corporate treasury centers.
● The circular comes into effect on January 15, 2025, giving regulated entities time to align their existing complaint handling procedures with the new requirements.
Policy Framework:
●Mandatory Policy: All regulated entities must establish a formal policy on complaint handling and grievance redressal, approved by their governing body or Board of Directors.
●Policy Scope: The policy must encompass mechanisms for receiving, handling, and redressing complaints in a fair, transparent, and timely manner.
● Policy Tailoring: The policy should be tailored to the nature, scale, and complexity of the regulated entity's business, size, and organizational structure.
Complaint Handling Procedure (for Retail Consumers):
Record Keeping and Reporting:
●Detailed Records: Regulated entities must maintain comprehensive records of all complaints, including correspondence, documentation, outcomes, reasons for rejection, and processing timelines.
●Record Retention: Records must be kept in electronic retrieval form for the period mandated by IFSCA or, if not specified, for at least six years from the date of complaint disposal. Records related to pending litigation must be retained until the proceedings conclude.
● Reporting Requirements: Regulated entities must submit reports on complaint handling as specified by IFSCA and include a dedicated "Complaint Handling and Grievance Redressal" section in their Annual Reports, or on their website if they are not required to file annual reports.
Online System and Role of Compliance Officer:
●Online System Option: Regulated entities may choose to develop an online system for complaint handling, tailored to their business needs and structure.
● Compliance Officer Oversight: The Compliance Officer is responsible for ensuring that the Regulated Entity's complaint handling processes comply with IFSCA's regulatory requirements.
Key Takeaways for FMEs:
● FMEs operating within the IFSCA must proactively prepare for the implementation of this circular.
●A thorough review of existing complaint handling mechanisms is necessary to ensure alignment with the new requirements.
● Clear roles and responsibilities for the CRO and CRAO must be established.
● Training programs should be conducted to familiarize staff with the new procedures and timelines.
● Robust record-keeping systems should be put in place to meet the documentation and reporting requirements.
By understanding and implementing the requirements outlined in this circular, FMEs can demonstrate their commitment to investor protection and contribute to a more robust and trustworthy financial services environment in the IFSCA.
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