The UK FCA has completed an assessment of the complaints processes at 15 major retail financial firms – seven banks, two building societies, three general insurers and three life insurers – using hypothetical customer complaints. According to the results of the research, the firms chosen accounted for 79% of banking complaints, 60% of home finance complaints, 26% of general insurance complaints (excluding PPI), 42% of life insurance complaints and 42% of investment complaints reported to the FCA’s predecessor the Financial Services Authority between July and December 2012.
The review was conducted by a working group made up of the 15 participant firms and five trade bodies. The FCA also sought the views of the Financial Ombudsman Service and consumer groups.
“We asked firms to carry out self-assessments to better understand how complaints are dealt with in practice, as well as providing their documented policies, processes and management information (MI) for our review. We also established, and chaired, a working group of the participant firms and trade bodies to identify and discuss common complaint-handling issues. Our approach provided valuable insight into how firms manage their complaint functions. This allowed us to observe any barriers to effective complaint handling.”
But while the FCA found some improvements have already been made, such as senior management becoming more engaged with complaint handling and firms empowering staff to make the right judgements and to demonstrate empathy, the review also identified areas requiring further improvement. For example:
- Firms do not always consider the impact on consumers when designing and implementing processes and procedures.
- There are inconsistencies in the amount of redress offered, particularly for distress and inconvenience.
- Firms take a narrow approach to determining and fixing the underlying reason for a complaint, which may affect their awareness of wider issues.
The FCA is asking all financial firms, not just those that took part in the review, to consider the findings and to ensure their complaints procedures “have the interests of consumers at their heart”.
The working group also recommended changes to FCA rules on complaint handling, such as ensuring all complaints are reported to the regulator rather than just those that take longer than one working day to resolve. The FCA is now considering these recommendations and will consult on possible policy changes.
