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Guidance to Cyprus Investment Firms regarding complaints handling procedures

In November 2015 the Cyprus Securities and Exchange Commission (“CySEC”) issued an updated version of its Directive DΙ144-2007-01 of 2012 regarding authorisation and operations of Cyprus Investment Firms (“CIFs”), which explains and supplements the provisions of articles 18(2) and 29 of the Investment Services and Activities and Regulated Markets Law of 2007.

CySEC has now issued a circular reminding CIFs of their obligations under paragraph 13 of the Directive, which deals with the handling of complaints. CIFs are required to establish, implement and maintain effective and transparent procedures for the appropriate and timely handling of complaints or grievances received from clients, and to keep a record of each complaint or grievance and the measures taken for the complaint’s resolution.

Paragraph 13(5) of the Directive requires CIFs to register any complaints they receive without delay in an internal register allowing for easy reference to and retrieval of relevant information. On entry into the register each complaint must be given a unique 10-digit reference number containing the CIF’s individual reporting code for CySEC, the year and the sequential number of the complaint.

Within five days of receiving the complaint the CIF must send the complainant an acknowledgement of receipt, inform the complainant regarding its procedure for dealing with complaints, notify the complainant of the unique complaint reference number, and inform the complainant that the same reference number should be used in all future contact with the CIF, the Financial Ombudsman or CySEC regarding the specific complaint.

The CIF is required to investigate the complaint and inform the complainant of the outcome within two months of receiving the complaint. If the period of two months is inadequate the CIF must inform the complainant of the reasons for the delay and inform the complainant of the time required to complete its investigations. In no circumstances may the overall period between receipt and determination of the complaint exceed three months.

CIFs are required to report all open complaints to CySEC via the CySEC Transaction Reporting System within five days after each month end.