Complaints handling

The FCA has published its thematic review report on complaints handling. This review was undertaken by the FCA with the collaboration of financial services firms. The aim was to uncover the barriers to effective complaint handling and the review did note that senior managers are becoming more engaged with complaint handling but overall the FCA was disappointed in the findings.

The five key stages of firms’ complaint handling:

1. Identifying a complaint.

2. Recording a complaint.

3. Internal reporting of a complaint.

4. Provision of redress.

5. Carrying out root cause analysis.

Weaknesses of failures at any stage may result in poor customer experiences and outcomes as well as affect the firm’s ability to provide effective remedial action.

The main findings from the review included:
  • firms do not always consider the impact on consumers when designing and implementing processes and procedures;
  • there are inconsistencies in the amounts or redress offered, particularly for distress and inconvenience;
  • firms take a narrow approach to root cause analysis of why complaints arise which may affect their awareness of wider issues;
  • poor management information in terms of the consumer experience on the outcome of complaints rather than the firm’s, assessing the quality of the complaint handling process and the underlying causes of complaints.

Following discussions, the working group has proposed a number of recommended changes to the way complaints are dealt with, such as:
  • ensure that dedicated complaint phone lines do not cost more than the basic rate;
  • extend the next business day rule to enable firms to get consumer acceptance that the complaint has been resolved;
  • in future all complaints are reported to the FCA;
  • review the bi-annual Complaints Return to include more consumer centric measure;
  • revise the FCA publication of firm’s complaints.
It is intended that the FCA will be consulting on possible policy changes.

If you would like more information, please get in touch.

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