FCA data and complaint handling review; a new approach required


Although over 3,000 firms are required to submit complaints data to the FCA the number of complaints financial service firms receive is still staggering and increasing. The total number of complaints reported by firms in each six month period is in excess of 3.5 million and the last reported quarter showed a 13% increase on the previous six month period (not all of that increase can be blamed on a PPI rush before the deadline). Against this back story it is not surprising that complaints are receiving an increasing focus within FCA thinking.

The FCA has recently published the findings in respect of a review of complaint handling by Non-deposit Taking Mortgage Lenders [‘NDTMLs’] and Mortgage Third Party Administrators [‘MTPAs’] and these re-confirm that more work needs to be done in managing complaints. All financial firms should review the FCA findings as the results relate not just to the sectors initially investigated, but to all regulated firms. The far reaching recommendations go beyond the headline demand to stop treating complaints as a ‘tick box’ exercise and require a change in how complaints are managed by regulated firms.

Successful complaint handling processes really embrace ‘root cause’ analysis to fully understand the issues that generate customer dissatisfaction

When looking at complaint handling processes, the missing link is often the connection between the collected data and the various implicated departments. It is rare to find an issue that causes complaints from customers that doesn’t cross many departments and business functions. Successful complaint handling processes really embrace ‘root cause’ analysis to fully understand the issues that generate customer dissatisfaction. One could pick dozens of quotes from the leaders of successful businesses explaining the unhappy customer should be a businesses greatest source of learning. To really get to the ‘root cause’ of the issue firms need to embrace this thinking and break down the silo mentality that often exists between departments within the same firm. Firms who are able to engage the whole business in improving the customer journey benefit from positive customer outcomes, whereas the firms who treat complaint handling as a regulatory burden rarely benefit from the resource expenditure as well as risking regulator fines. Achieving such engagement requires positive leadership from the senior management and boards and it’s only when positive complaint handling becomes part of the culture of the firm that the benefits are seen to have a positive effect on the business ‘bottom line’.

Despite broadly positive results there are areas where the FCA findings require firms to re-focus.

The remedial areas, where immediate improvement is required, include;

  1. a re-appraisal of complaint procedures and processes
  2. making more effective use of management information and root cause analysis (rather than producing MI for MI sake),
  3. ending ‘tick box’ and inflexible complaint handling processes (which the FCA describes as often leading to poor consumer outcomes)
  4. learning from determinations by the Financial Ombudsman Service

The ongoing success of complaints handling processes requires the full embracement to two key FCA themes ‘Treating customers fairly’ to make sure complaints are assessed fairly, consistently and promptly and good quality systems and controls to allow staff to identify and record complaints correctly and accurately.


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Partner - Baxters Business Consultants - a business consultancy undertaking marketing, training, freelance journalism and expert witness services to the residential mortgage lending, building society and financial service industry (April 1993 to date) - www.baxtersbc.co.uk.

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