The Financial Conduct Authority (FCA) has published the results of a complaints handling review. Although the review looked specifically at how Non-deposit Taking Mortgage Lenders and Mortgage Third-Party Administrators were handling complaints, there is plenty in the review report that firms in other sectors would do well to take note of.

The three main aims of the review were:

  • To assess whether firms were treating their customers fairly
  • To gauge whether firms’ complaint handling arrangements were giving rise to potential consumer harm
  • To identify what firms could do to improve their complaints handling

The review report asks firms to consider customer outcomes at all times, and not just to “follow our rules with a tick-box compliance approach”. The example the regulator gives is of a firm who asked a vulnerable customer to contact their own bank to recall a direct debit, without considering whether it was appropriate to ask a vulnerable customer to resolve this type of problem themselves.

Issues were also identified with whether firms were recording complaints correctly, and consequently whether accurate information was being provided on complaints returns to the FCA. All staff at all levels in every authorised firm need to know:

  • The FCA definition of a complaint, and how to identify a complaint should they receive one during their day-to-day work
  • How to respond to the complaint
  • How to escalate the complaint within their firm

Firms were also urged to review decisions made at the Financial Ombudsman Service (FOS) regarding their complaints and to use the rationale for these FOS decisions to consider whether changes are required to policies and procedures.

There was also considerable criticism of firms failing to carry out root cause analysis of complaints received, and it was also said that firms are failing to make adequate use of management information to help them in this respect.

Root cause analysis essentially involves identifying why complaints have occurred and seeking to prevent future complaints of a similar nature. When a complaint is received, firms need to consider whether they may be able to reduce the likelihood of a similar complaint at a later date. Examples of steps that may be appropriate to take in these circumstances include:

  • Giving additional training to one or more staff members, making it clear what they should have done when servicing the customer who complained
  • Amending policies and procedures
  • Amending IT systems
  • Carrying out additional compliance monitoring in certain areas

Senior management should be involved in considering the results of the root cause analysis a firm carries out.

The review concludes by suggesting that firms should read the root cause analysis case study that is available on the FCA website.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article