The FCA set off to identify any barriers within firms that could prevent effective complaint handling in the future
We have all been there. The dreaded day when something goes wrong and you need to make a complaint against a company. I believe a company should be judged by the way it handles complaints just as much as we judge their products or services. Complaints are part of daily life, after all nobody is perfect and mistakes do happen.
Dissatisfied consumers should not find it difficult to complain nor should the procedure be anything other than straightforward. Companies should deal with complaints fairly and promptly (using competent staff) and, where appropriate, redress should be provided in a perfect world. Sadly we don’t live in a perfect world. Some companies seem to take the numbers approach, hoping that if they fob you off you will drop the complaint.
But when done correctly complaints can be used to provide valuable feedback to firms, helping them to improve the products and services they offer, as well as enabling them to build and enhance their relationships with consumers.
The FCA carried out a review focused on whether there were any barriers for firms in handling complaints effectively at any of the five key stages of firms’ complaint handling. Weaknesses, or failures, at any of those stages may result in poor consumer experiences and outcomes, as well as affect firms’ ability to remedy complaints effectively.
Inconsistences in redress offered, and a narrow approach to identifying the underlying reasons for complaints
The FCA announced today that following their review that they are now considering implementing various recommendations, including changes to their DISP rules.
The 15 firms in the FCA review have identified improvements they can make in each of the five key stages of firm complaint handling. All firms should consider how the FCA findings relate to their own complaint-handling operating models, policies and practices. In particular, firms may like to focus on:
- Whether their complaint-handling policies and processes fully consider whether their approach to complaints have the interests of consumers at their heart, avoiding a tick-box approach to compliance with our DISP rules.
- Reviewing their definition of ‘complaint’ and training their staff where the definition is not properly understood.
- Whether their systems and processes could inhibit accurate recording of complaints (and further consider how this impacts on their ability to conduct root cause analysis).
- The observations made about consistency of redress and distress and inconvenience payments.
- Considering their approach to root cause analysis – focusing on the observations made here.
- Whether they can make any improvements to their MI (messaging, interpretation, quality metrics and use of targets).
The FCA found that:
- Firms have taken steps to improve their complaint handling – both as a result of previous regulatory work and as a result of firms’ own initiative. For example, senior managers are more involved and engaged in complaint handling. Firms have also told us they are empowering their staff to make the right judgements and to demonstrate empathy.
- However, it is clear that firms could – and should – do more to deliver fair complaint handling and consistent outcomes for all consumers. We found weaknesses in each of the five key stages of firms’ complaint handling, which may affect consumers’ experiences and outcomes.
- Barriers exist that affect how effective firms are at complaint handling. Our observations together with the firm self-assessments and working group discussions led to the conclusion that there are four main barrier themes: application of our rules, cultural, operational; and specific barriers in relation to MI and root cause analysis
Clive Adamson, director of supervision at the FCA, said: “Straightforward and effective complaints handling is an important aspect of how firms treat their customers. Correctly handled, they can help firms quickly deal with problems and keep their customers happy. Moreover, understanding the underlying reasons for complaints can help head off future problems.
“It’s in everyone’s interest to consider how to make complaints handling more effective; that’s why it was important to us to work collaboratively with industry on this project and I would like to thank the firms for participating. Together we have identified improvements that should be made and firms will act on these findings. I hope those firms who weren’t part of the review will consider the recommendations and take appropriate steps to deliver consistent outcomes for consumers.”
Recommendations were also made on how complaints processes could be improved with proposals to change the current FCA rules:
- The non-reportable complaints rule will be removed so that all have to be reported to the FCA
- The next business day rule will be extended so companies have more time to get consumers to accept their complaint has been resolved
- The bi-annual Complaints Return will be reviewed to include more consumer-centric measures
- Calls to dedicated complaints telephone lines will be charged at no more cost than the additional rate.
Following the publication of the FCA’s thematic review they now intend to carry out further research in light of the recommendations, with a view to developing policy proposals, which they expect to consult on soon.