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Complainants welcome here

The FSA recently surveyed a number of consumers and found that 11 per cent had made a recent complaint to their financial services provider. This figure may be surprisingly low when one considers all the recent upheaval and catastrophes in the life and pensions industry. However, the worry is that this proportion of the survey only represents a third of people who actually had a grievance.

It is staggering that there are so many consumers who cannot be bothered to complain. This apathy might have a number of sources. It might be because consumers cannot be bothered. Perhaps they do not know whether to go to the IFA or provider direct. Or maybe they genuinely do not think they will get a good enough response. Whatever the reason, this level of apathy is not going to help the industry in the long term.

But without addressing this fundamental issue now, the industry will not be able to take the first vital steps towards restoring its image in the minds of the general public. So industry players ought to be encouraging consumers to complain more in order to help raise customer service standards across the industry.

One thing is certain, an unhappy customer tells more people about a bad customer service experience than vice versa. This may be a British phenomenon but even so it is a significant reason to get customer service right when resolving issues.

Not only is it important to resolve such issues effectively but it has exponential benefits too. Customer complaints management should be seen as an added value rather than a nuisance or an extended overhead.

After all, if complaints are handled well, and resolved to everyone&#39s satisfaction, then happy customers are an enormously powerful marketing tool. Such customers will discuss their good experiences with their peers (sometimes very powerfully in the Sunday papers&#39 money pages).

Happy customers are more willing to listen to other investment ideas and are therefore more open to cross-selling opportunities. They can also provide valuable referrals to other friends, family and peers.

An unhappy customer, however, will only head to one place – and that is the door.

So what should the industry do? First, refocus the organisation to take full advantage of the opportunities that can be created by good complaints management. Secondly, eliminate the basic errors. In some cases consumers receive wrong information because of human error or a back office administration mistake. But in most cases it is down to both problems being inextricably linked.

At the root of this are old policy-based legacy IT systems that are often too focused on policy numbers rather than the consumer. Providers and intermediaries need to take a good look at their existing IT systems to evaluate the proportion of mistakes that are being made (and are likely to continue to be made).

Why were they made? Which systems or interfaces were at fault? Are problems based on poor quality customer data, the inadequacy of the back-office systems, poor links to the front office or just poor integration of multiple systems?

This evaluation should be conducted with a view to benchmarking too. Clearly, in the 1 per cent world compa-nies must look to reduce the annual unit cost of policies. What is the true total cost of manufacture and distribution of policies when after sales service costs are added?

When considering a new system (or indeed outsourcing an operation to a specialist provider) companies must clearly assess how much will it cost to have new, intelligent, automated customer complaints handling capabilities. But they must also evaluate how much the new unit policy costs will be within the 1 per cent cap, once after-sales servicing as been accounted for?

Not only will new systems and processes help eliminate basic administrative errors but they can provide better access to customer information too. Customer relationship management details ought to be made available to the advisers so they can deal effectively with any queries and add clear value to the customer relationship. Then advisers can look forward to dealing with the next customer query and adding extra value immediately.

It is unlikely many consumers benefit in this way when they currently ring up to complain.

So eliminating basic administration errors and utilising more sophisticated, accurate customer information will start to turn round the consumers&#39 perception of the life and pensions industry.

Providers and advisers can then start to turn complaints management to their best advantage by handling these issues extremely well and thereby creating more valuable longer term relationships with the current disillusioned consumer.

Maybe some day in the near future consumers might welcome the receipt of regular, value-added correspondence from their own providers and advisers – not just a pile of direct mail from every other financial services provider.

But first things first, let us deal effectively with those complaints and queries when that phone next rings.

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