FSA takes action against five banks
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The FSA says it is taking “tough action” after finding poor standards of complaint handling at five banks.
The regulator says five banks are undertaking major changes to the way they deal with complaints and two of the five banks have been referred to its enforcement division for further investigation.
The FSA says its review looked at several banking groups responsible for over 70 per cent of the complaints firms receive and report to the regulator and over 60 per cent of those resolved by the Financial Ombudsman Service.
The FSA says it found poor standards of complaint handling within most of the banks assessed including a lack of senior management engagement and accountability for complaint handling, poorly designed staff incentive schemes that made branch staff reluctant to pay redress to customers and poor quality complaint handling by staff.
The regulator found “complaint handling procedures that led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank”.
The FSA says the banks failed to learn from previous complaints and to make changes to prevent similar complaints arising in the future.
The regulator says it did find examples of good and compliant practices in parts of some of the groups assessed.
The latest FOS complaints figures, published in February, showed a big increase in the number of new complaints received against the large banking groups. Lloyds received 20,190 complaints across all its brands while Barclays received 10,892 and RBS received 7098 complaints. Seven hundred new Barclays Bank complaints related to investments, the highest number of investment complaints received by any institution.
As a result of the FSA review, five banks have either put in place or extended the scope of major changes to their complaint handling processes.The regulator will be doing follow up work later this year to see if standards have improved and may change elements of its DISP sourcebook, which will be consulted on later this year.
FSA director of conduct risk Dan Waters (pictured) says: “A culture of fair complaint handling is an important indicator of whether a firm is committed to treating its customers fairly. It is vital that customers know that if something goes wrong, their complaint will be deal with in a reasonable way and that they will get a fair outcome.
“While we found some good practice, there is clearly evidence of unacceptable standards of complaints handling in banks. Delivering change in this area is a major priority and we are determined to use all the tools available to us to ensure that banks comply with our rules.”
Which? chief executive Peter Vicary-Smith says: “This is another damning indictment of the banking industry, many of whose members consistently put sales before customer service and reflects the evidence consumers presented to the Future of Banking Commission.
“Bonuses should be linked to treating customers fairly and the resolution of complaints, not to sales. What’s more, consumers have the right to know which banks the FSA is referring to its enforcement division. If the UK’s banks want to win back the public’s trust, then they must fundamentally change they way they treat their customers.”
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Readers' comments (24)
Alan Lakey | 28 Apr 2010 9:01 am
For once I am able to congatulate the FSA and say something positive.
The way in which banks market products, motivate their staff, engage with the outside world and deal with complaints has long been a disgrace.
Let's hope that this si the start of a proper investigation into the techniques and dubious procedures used by the banks.
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Graham Carver | 28 Apr 2010 9:18 am
One of the few procedures the FSA got right was a common way in which complaints should be handled, so what did the FSA do? it scrapped a common approach in handling complaints to one where each institution has their own. Result total confusion. The FSA must take some blame and of course I do hope the FSA take enforcement action against the Banks & Building Societies.
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How funny!! | 28 Apr 2010 9:18 am
... or (forgive the cynic in me, here) is it just political manoeuvring prior to May 6 ... which will be blown under carpet post election - with the focus being back on IFAs, etc??
If the FSA are actually listening to the industry then (for once) I congratulate them for doing something right for a change ...
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Philip Keeton | 28 Apr 2010 9:20 am
Fine but which Banks are they?
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Tony N | 28 Apr 2010 9:25 am
It was no suprise to Lloyds customers such as myself that they topped the list in February and no-one would be suprised if these was a relationship between the hierarchy of that list and the five unamed banks refered to here.
I am outraged that there is any link between staff performance and witholding redress. Where is the TCF in that if your complaint is processed at the end of the month and the Complaint handler has used up their redress budget?
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Anonymous | 28 Apr 2010 9:29 am
Will this be a genuine investigation or are they just going through the motions! Let's face it, if they fine them, all the banks will do is pass it on to their customers!
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Anonymous | 28 Apr 2010 9:37 am
After all the criticism the banks have received re poor advice etc over the years the FSA decides just as it is about to be scrapped to take action . I trust if the Tories get in they will see this as a plot by the FSA to keep the status quo.
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James Lang | 28 Apr 2010 9:41 am
OK, so the FSA are addressing the Banks' complaint handling procedures - what about the fact that again, there is a big increase in the NUMBER of new complaints against Banks?
That is the real issue, not just how they handle the complaints.....
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Paul Dummett | 28 Apr 2010 9:51 am
If it was a small firm of IFA's the headline would read 'firm closed for failings in complaints handling' of 'Firm fined for lack of procedures & controls'
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Paul Evans | 28 Apr 2010 9:56 am
The cost of fines get passed onto customers and ultmately the banks are certainly confident that the volume of dodgy sales income is worth far more even a large fine.
Maybe suspension of advice permission for the worst offenders or censure of the directors responsible for the offending business areas would make the banks think twice about encouraging poor practice.
Not that I think such draconian measures would ever be used against the banks!
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