When your CSP goes ‘Pete Tong’
Sometimes regrettably, the relationship with your CSP doesn’t go to plan. If you have a good CSP – lucky you – there is probably no need for you to read on but if your CSP is incompetent, non responsive or charging too much then this article might be useful.
There are good CSPs and there are bad CSPs. If you are unsure about how to deal with a bad CSP read on.
Your first instinct – sensibly – might be to contact the Regulator – the Isle of Man Financial Services Authority. They do have a web-page dedicated to this – see here – but as you will see – you will be faced with what amounts to a disclaimer saying “the Authority’s role is not to investigate individual complaints” so don’t expect any assistance from them.
If you contact us – we will help you and we can also introduce you to a better CSP – otherwise you are on your own so here are some suggested steps:-
Information gathering.
Get as much information as you can – before you make any complaint or really sour the relationship. In particular, you should make sure you have all the relevant information about your company and trust as you can. For a company this will include:-
- Current Memorandum and Articles of Association.
- Registers of Members, Directors and Secretaries
- Nominee agreements (if relevant)
- Terms of business with the CSP (very important).
- Minutes books, Financial Statements, Financial information & key legal agreements.
For a trust:-
- Trust deed.
- Any subsequent deeds – eg of exclusion / addition – making distributions, changing trustees etc.
- Letters of wishes
- Terms of business with the CSP (very important).
- Minutes books, Financial Statements, Financial information & key legal agreements.
This information will help you if you want to engage another CSP, or if you want a legal professional to assist you as well as helping you to formulate your complaint.
It’s quite common for people not to have this information to hand and it can be very difficult to get it later on if the CSP is refusing to correspond with you.
What to do with unreasonable fee charges.
Sometimes CSPs can get a little bit overzealous with their charges – particularly their time charges. If you have time based invoices that you think are unfair then ask the CSP to provide a copy of the relevant time records to the lowest level of detail so that you can review them. This should include – date, time spent, name of the person doing the work, a description of the work done, charge out rate and the total charged for the activity.
It is important to ask them to confirm that the detailed schedule will be provided without an additional charge.
Sometimes – upon review you may consider the charges reasonable. If not – then ask for the required adjustments with detailed reasons and if unsuccessful then proceed to asking for a copy of the ‘Complaints Procedure’.
Ask for a copy of the CSPs Complaints Procedure.
If you cannot get any sense or response from your CSP over a particular issue then the complaints procedure is the next step.
All Isle of Man Financial Service licence holders have to follow the rules set out in the Financial Services Rule Book.
Rule 8.32 deals with complaints and it sets out detailed obligations for the licence holder.
Rule 8.32(2)(b) requires the licence holder to make a copy of those procedures to their customers on request so ask for it.
You can read the rules for yourself but in summary – any complaint must be recorded in a complaints register, it must be acknowledged within 7 days and then it needs to be investigated promptly and thoroughly by a suitably qualified ‘non conflicted’ employee. The licence holder has 8 weeks to respond.
The main point here is that – Licenceholders do not like formal complaints as they are visible to the Regulator and consequently asking for their complaints procedure is often enough to sort out any problems that you may have.
Junior and middle staff will at the very least have to escalate your problem and this may be uncomfortable for them – hopefully prompting a quick solution.
Nothing has worked – I still have my problem and the CSP has gone to the ‘dark side’.
OK – at this point – the options are somewhat dependent on the circumstances of your problems but here are some thoughts.
You will probably want to change your CSP – so see our article on how to change your CSP.
Also – if you think you have been financially ‘wronged’ – you could consider legal action, either via the small claims court (for claims up to £10,000 and you can represent yourself) or via an Advocate in the High Court. Informing the CSP that you are considering this may itself solve your problem as they probably won’t want the hassle.
Bear in mind that often the client Company itself will have the claim rather than you personally (as shareholders) – particularly if the CSP manages the company via its professional directors then you may not be in a position to lodge the claim so this can substantially complicate matters.
In more serious cases, if you think that the CSP has been acting fraudulently – then you should consider making an appropriate complaint to the Isle of Man Economic Crime Unit which is a division of the Manx Police.
Probably the best way to approach this is to take advice from a local Advocate in the Isle of Man – who will advise you of the available channels.
Photo by Yogendra Singh on Unsplash
