When resolving a complaint, firms often focus on agreeing compensation or redress but may overlook the importance of clearly documenting the settlement itself. Having appropriate wording confirming that a payment is accepted in full and final settlement can help reduce the risk of further claims being raised in relation to the same matter at a later date.
This can be particularly important where a complaint has been escalated to the Financial Ombudsman Service or where the circumstances are more complex or higher risk. A clearly documented settlement helps evidence the agreement reached between both parties and provides greater clarity regarding the resolution of the complaint.
It is also important to remember that settlement wording does not necessarily mean a firm is admitting liability. In many cases, settlements are agreed on a “without prejudice” basis and without any admission of liability, allowing firms to resolve complaints pragmatically whilst continuing to treat customers fairly.
Firms should, however, always discuss settlement wording and related correspondence with their own Professional Indemnity Insurers, as insurers may have preferred wording or specific requirements depending on the nature of the complaint.
