Why the Latest from the FCA means Training is Now More Important than Ever


The financial services industry was left to get to grips last week with the latest Policy Statement from the FCA – this time on the subjects of complaint handling and reporting.

Of course, this will not have come as a surprise to the sector – publication of this document has been awaited for some time now, and actually, it was originally expected from the FCA at the end of June.

In which case, what’s the point in talking about it? That’s a good question, as actually it doesn’t contain that many surprises.

One fundamental change

Perhaps the biggest one is that the FCA has decided that telephone numbers beginning in 08 can’t be used to allow customers to call firms to either complain or make enquiries about an existing contract. This will mean a logistical change for firms who still, for example, offer 0845 numbers for this purpose. This was something of a surprise because in the previous consultation paper setting out its draft proposals, the FCA did hint that it would consider allowing firms to offer these numbers amongst others, taking into account the accessibility needs of various members of our society.

Getting to grips

So, putting that issue to one side, the rest of the policy statement largely confirms the FCA’s intentions with regard to the way that complaints are both handled and reported. And perhaps the biggest change is that firms now have an extra two business days after receipt of a customer complaint, to be able to resolve it informally.

A less formal approach

At the moment, if a firm receives a complaint from a customer (either in writing or by telephone) and they are able to resolve it by a telephone call, then provided the customer has expressed that they are satisfied their complaint has been resolved, then that firm can effectively class this complaint as resolved. As a result, it doesn’t have to report it in the figures to the regulator, and it doesn’t have to send out a written response confirming that the complaint has been resolved.

Well, this approach is set largely to continue, except that now, firms will have up to three business days to resolve complaints in this manner.

This might seem like good news at first glance, but there are a couple of factors that mean it may not be as much of a concession as originally thought.

Firstly – with effect from 30 June 2016, all complaints received by firms will need to be reported to the FCA in a revised complaints return, which will have to be submitted twice a year. This will include all complaints resolved informally.

Secondly, when a complaint is resolved this way, firms will be obliged to send out a “summary resolution communication” which is designed primarily to raise awareness of the Financial Ombudsman Service, something which is not currently required for complaints resolved informally.

Bigger than they look

Firms need to think carefully about what these changes mean, as they are not quite as straightforward as they look.

Firstly, there is the impact on the number of complaints that will be declared to the regulator. So far, the FCA has been aware that firms deal with a significant proportion of their complaints through this informal route, and by not including them in the complaints returns, it is not getting the full picture of how many and what type of complaints each firm is actually receiving.

All that is set to change with the new return, So what impact will this have on the complaints landscape for firms going forward? Will those firms who have had reasonably low levels of complaints up until now all of a sudden start showing much larger numbers in comparison to their peers? Also, will the balance in the numbers of complaints broken down by product type and root cause change materially?

If the answers to these questions are yes, then is there a risk that the way in which the FCA treats these firms in future changes from a supervisory perspective?

Perhaps this is the trigger to look at the numbers of informal complaints more closely and in particular, what’s causing them. If the focus in terms of complaint trend and root cause analysis has been around those complaints resolved formally, then it looks like time for a change in approach.

The other issue is how firms deal with the extra time that they have in order to resolve complaints through this informal route. This can be dealt with either by taking longer to resolve the existing number of complaints through this route, or by taking more complaints down this path and increasing the focus on informal resolution.

If the latter is chosen (which I suspect for many firms will be the case), the focus on the technical and practical skills needed to be able to handle complaints in this way will need to be intensified. Also, more people who handle complaints may need to learn how to be able to pick up the phone and resolve a complaint there and then, without having to resort to a formal written response.

Either way, the skills and the training needed to handle this situation cannot be underestimated.  

So, now is the right time to think about whether the training requirements for staff handling complaints are being adequately met, in light of the new FCA requirements. The quickest and easiest way to do this is by searching for training opportunities that may be of interest, and to make sure that you are told about new opportunities when they come along.

That way, hopefully, the new complaints rules can be viewed positively rather than as something to be feared. 

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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