Several financial firms have agreed to improve the way they deal with customer complaints and it's hoped others will follow suit, following a review by the Financial Conduct Authority (FCA).
The complaints processes at 15 major retail financial firms seven banks, two building societies, three general insurers and three life insurers were assessed by the regulator using hypothetical customer complaints (see our How To Complain guide for your rights).
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.
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.
- 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 firms involved have agreed to make changes to their complaints handling processes and 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".
Get Our Free Money Tips Email!
FCA rule change
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.
Clive Adamson, director of supervision at the FCA, says: "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."