This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.

Cicutti: FSA must get tougher on complaints handling

  • Print
  • Comments (20)

Early one Sunday morning a few months ago, a good friend of mine and his partner were raided by police and social security officials.

Up to 10 coppers wearing padded riot clothing stomped into the house, cuffed him and his girlfriend - who each weigh about six stones fully clothed - and dragged them down the local nick. This was in full public view of all other occupants of the block of flats they live in.

My mate and his partner’s alleged crime was benefit fraud. She has a severe permanent illness and is unable to work. He lives with her in her housing association flat.

Although he does not claim any benefits himself, the allegation was that she had been claiming rent on the property, to which she is not entitled.

After almost three months of investigation and endless interviews, the case was dropped. Although the woman may have unwittingly committed an offence when her boyfriend moved in with her two years ago, she was, in fact, not claiming for a vast range of other benefits for which she was eligible. Ironically, she is now financially better off as a result of the raid.

I thought of my mate and his missus the other day as I was driving to work and heard on the radio that the FSA has fined Bank of Scotland £3.5m for rejecting almost half of the complaints it received in relation to the misselling of financial products.

Tracey McDermott, the FSA’s acting director of enforcement and financial crime, was quoted as saying: “The firm’s failure to ensure it had a robust complaint-handling process in place led to a significant number of complaints being rejected when they should have been upheld.”

My argument is that a fine - even one of £3.5m - is simply an occupational hazard, not a serious deterrent. There is no longer a reputational risk involved in being spanked by the regulator.

According to Peter Vicary-Smith, chief executive of Which?, there is a need for a fundamental overhaul of the way the banking industry deals with complaints.

Which? wants all firms receiving more than 100 complaints every six months to be made to publish their complaints prominently on their customer website.

Similarly, the FSA would make all complaint statistics available on its own website in a searchable database.

Firms receiving more than 100 complaints every six months should be required to publish a written digest which would identify the main types of complaints received, how they had been dealt with by the firm and what action the firm had taken to address the root causes of the main type of complaints received.

Which? is calling for “significant” fines on anyone breaching rules failing to treat complainants fairly. They should “relate to the significant financial benefit which firms had gained from failing to deal properly with complaints.”

That’s spot on. If instead of £3.5m, BoS had been fined £70m as a deterrent - and every other institution were to be hit likewise, we would soon see whether they still have a taste for rejecting complaints unnecessarily.

Vicary-Smith is also calling for enforcement action, including fines and bans on working in the industry, against individuals heading the complaint department and board members too.

Perhaps anyone accused of such activities should face a team of rozzers smashing their way into their houses and making them do a UK version of the “perp walk”. If it’s good enough for my mate and his missus, it’s good enough for the banking industry’s finest.

Nic Cicutti can be contacted at

  • Print
  • Comments (20)

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

Money Marketing Awards 2015
Put your firm forward as the leading practitioner in your field. Adviser and Advertising categories are open to entries - Enter Now.

Readers' comments (20)

  • Nic - your article goes straight to the heart of what is wrong with how banks treat complaints - the penalties for misselling, mishandling complaints and generally waving two fingers in the direction of TCF principles are simply treated by the banks as a cost of doing business. If the penalties were to be made proportionate to the profits they had made out of their misdeeds then you would see a radical change to their attitudes.

    Unsuitable or offensive? Report this comment

  • Seems totally illogical!

    Clearly, HSBC or Barclays is going to receive far more complaints than say 1 man IFA firm - so why 'penalise' a firm for being larger?

    If it said 'receive complaints from more than 0.1% of it's client'/customer base' that may well have meirt and is fairer.

    What I think would help the industry though, would be that strong action taken agaiinst those that don't investigate complaints fairly - but equally Fraud cases should be commenced againist individuals who commit (attempted) fraud with their complaint.

    Alas, there is zero risk to complainants 'lying through their teeth' - which makes it harder for those individuals who do have a grounds to complain, to make their voice heard.

    Unsuitable or offensive? Report this comment

  • These huge fines the FSA impose, who benefits from them? Do they go back as compensation to claimants or do the FSA use them for other purposes.

    Unsuitable or offensive? Report this comment

  • Reputational risks don't pay for the FSA Christmas party though!

    Anyway, you think the way the state may have reacted to your friend was draconian, you obviously haven't met my compliance department!

    Unsuitable or offensive? Report this comment

  • Just so we are clear on this, Is Nic Cicutti suggesting that each individual IFA who is slightly slow in investigating the umpteenth fraudulent complaint (i.e. fraudulent by the complainer, not the IFA) be subject to this level of intimidation by the authorities?
    Since it appears to be the case, does he still fail to see the link why the number of firms promoting responsible savings has fallen and won't recover?
    Tell us Nic, did you actually write the handbook on irresponsible journalism?

    Unsuitable or offensive? Report this comment

  • Johm L and anonymous miss the point completely and have used this space for yet more pointless and boring regulator bashing.

    I agree with Nic's sentiments and Paul H makes a good point about a proportion of client base rather than a fixed number of complaints. There is also an arguement that the larger the fine the greater the reputational damage although we as customers ultimately pay.

    I have seen a complaint to the same institution upheld for one client and an identical complaint rejected for the spouse which is now with FOS.

    If a client 'lies through their teeth' documentary evidence should if complete and accurate defend the complaint and prove that the client has (let's say politely) selective memory.

    Unsuitable or offensive? Report this comment

  • Notice the common factop in the police actions against Nic's mates and the FSA and the Bank?

    Yep, all nationalised organs of the state.

    It's not better 'complaints' handling that is needed. It si the rolling back of the State. Denationalise the banks and scrap regulation that increases barriers to entry and reform the banking charter as recomened by Douglas Carswell will sort the banks. Scrap the FSA/FOS/FSCS structure which has zero external accountability. In re the police and the benefit system. The police bring in locxally elected police commissioners which will make the police accounatble to the people they serve. Scrap the benefots system as currently constituted and replace with a universal citzens pension based on land value tax.

    Do all that and all the ludicrous bureaucracy can be shut own.

    As usual NC nails the sympton and compleetly ignores the disease.

    Unsuitable or offensive? Report this comment

  • On the fraudulent claims issue. Fraud is basically "misrepresentation". It feels as if there are individuals, ifas,providers and regulators all involved in misrepresentation !

    Unsuitable or offensive? Report this comment

  • Thanks Voice of Reason.

    Much better wording '"Selective memory" - but what happens (as I have seen) FOS accepts "Selective Memory" as being the truth over documented evidence?

    Unsuitable or offensive? Report this comment

  • Thanks for your input VOR. I was only asking a question and not regulator bashing as you claim . I suggest that you could invest in a dictionary. It might help your spelling!

    Unsuitable or offensive? Report this comment

View results 10 per page | 20 per page

Have your sayEdit my profile/screen name

You must sign in to make a comment

Fund Data

Editor's Pick


Do you see the value in adviser trade bodies?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments