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 firstname.lastname@example.org