No Political Spin Here – Just A Warning to Get Ready

Just over a week after the General Election, have you had a chance to calm down after all the political spin, statistics and manifestos?

If you have, then good, because now we can get back to just plain facts.

And they don’t come any plainer than the FCA’s complaints data publications, which take place every six months. The latest figures (for the second half of 2014) were released at the end of March. They appear straightforward at first, but you do have to dig a little behind the headlines to see what’s really going on.

Read all about it

The headline focused on two major findings from the second half of 2014. Firstly, overall complaints were down 7% on the first half of the year, but banking complaints were up.

In fact, if you look into this further, you’ll see that overall, excluding PPI complaints, the numbers across firms and sectors were up 1% on the previous half year, and 2% on the same period for 2013.

But this wasn’t caused by everyone. It looks like the primary cause of this increase was complaints about banking and credit card products.

In fact, if you look at the overall number of complaints received by product type, there is a marked difference between the numbers received for banking, lending and “transactional” insurance products against longer term business such as life, pensions and investments.

Hardly surprising really, given that the volumes of customers who have bank accounts, need loans and mortgages, as well as home and car insurance, are always likely to be greater than those investing money for the longer term. But that doesn’t mean that complaint numbers need to be heading north just because of large volumes of transactions.

Presumably that’s what the FCA feels too, because this small increase is causing concern. Christopher Woolard, the FCA’s Director for Strategy and Competition, sets it out clearly “…while the overall decreases we have seen should be welcomed there is still more for financial services firms to do” he said. “The FCA’s challenge to those firms is to put the necessary measures in place to ensure we see a consistent fall across all sectors."

Here’s the takeaway

Read this carefully and you’ll see the key message.

Even though the upward trend in this instance is clearly attributable to certain sectors and product types, regulatory tools will be applied consistently across all sectors.  Which means that all regulated firms will have to brace themselves for change in the complaint handling regime. And change is on the way for everyone – the evidence is clear.

From thematic review to rules

Back in November, I wrote about the FCA’s latest thematic review on complaint handling. The key findings from this were that firms were still too concerned with complying with the rules rather than generating the right customer outcomes.

Things have now of course, moved on, with the FCA’s Consultation Paper last year on complaint handling. Aside from the issue of how much customers should pay in call charges when contacting firms, the changes proposed in this consultation were designed so that:

  • Firms can be as efficient as possible when handling customer complaints,
  • The complaints data produced is more granular and is linked to certain key business metrics; and
  • Customers have the right level of access to an ombudsman service if their complaint cannot be resolved.

On reading this, it became clear that firms had work to do. Not just in terms of producing new complaint reports, but they had been given the opportunity to resolve more complaints on an informal basis.

Moving on to the next step

The FCA has moved things on and has started to respond to this consultation, setting out how it intends to make rules in certain areas. However, this is not in the form of a policy statement, as you might expect, but in a section of a Handbook Notice. This is a document normally reserved for setting out how changes to the Handbook will look, often those that have been decided previously. But time is of the essence with the introduction of the Alternative Dispute Resolution Directive due very soon.

Anyway, what will now come through in the rules from July is that now customers in certain circumstances can access the Financial Ombudsman Service (FOS) before a firm responds to a complaint. Customers may also in some circumstances approach the FOS even if their complaint arose after the statutory time limits have passed. Both of these circumstances require the consent of the firm, however.

The point  

The point to all of this is that change is on the way very soon, and in the above instance, it has already started. Firms can now expect the rest of the details quite soon from the FCA on how its rules are going to look, with the new regime expected to take effect in 2016.

So what’s changing? Apart from what I’ve already mentioned the two big areas are:

  • An extension of the time limit within which complaints can be resolved on an informal basis, from the end of the next business day to the end of the next three business days. (But this time, written communications need to be sent to customers whose complaints are resolved this way); and
  • More detail to be provided in complaints reporting to the FCA, including the publication of figures relating to all complaints resolved informally, as well as new categories of complaint reporting.

Knowledge and understanding are key

What all of this will do is put pressure on firms to make sure that those who deal with complaints, and those who are setting the controls around complaints are adequately trained to understand and implement the new requirements. This will go deep into the training and competency frameworks as well as the overriding requirements to implement system changes correctly. None of this will work properly without everyone concerned having a thorough understanding of what the rules require.

Industry Events Online should therefore be the first port of call when looking for support with training needs.

Because unlike politics, where many things are clouded by spin, there is no doubt about what is changing in the area of complaints in future!   

Martyn Oughton    

By Martyn Oughton a Professional Member of the International Compliance Association (ICA).  Martyn now writes a regular blog for Industry Events Online focusing on the importance of training in all aspects of compliance. Read Martyn's other publications at Martyn's Writers' Residence website.

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