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Course for complaint

Complaint handling features highly on the FSA’s list of priorities under its treating customers fairly review. The FSA has made it clear it will focus supervisory efforts on identifying firms that have failed to establish appropriate complaint-handling standards.

The key requirements are that complaints should be treated individually and dealt with in a timely manner, there should be controlled handling to ensure consistency in the treatment of complaints and effective quality assurance should be carried out on a regular basis.

The FSA expects senior management to be actively involved and to use information effectively in order to identify trends within complaints. In this way, firms can deal proactively with customers with similar complaints and can make changes to operations as a means of ensuring future customers are not subject to the same issue.

Companies are required to focus on delivering fair outcomes for consumers, with less emphasis on merely fulfilling regulatory rules, and a greater determination to use complaint data proactively as a means of embedding TCF within their organisations.

The two key FSA rules are that a firm which receives a complaint must acknowledge the it promptly and send a final response, generally within eight weeks, that either offers redress or rejects the complaint, giving reasons for doing so and referring to the right to pursue the complaint with the Financial Ombudsman Service.

Between these two “goalposts”, however, is a series of detailed additional requirements not all contained in FSA rules but which represents good practice. This is based on a combination of companies’ recent experience of dealing with the FSA in relation to complaint handling, FSA enforcement action (much of it unpublished) and occasional FSA speeches.

An organisation should have written complaint-handling procedures, approved by management and compliance, which establish consistent standards across the business.

Staff should be trained to recognise all expressions of dissatisfaction and to treat them as complaints when required to do so by its policy.

A complaint should be logged on receipt so its progress can be tracked through all stages of the handling process. It is usually preferable for all grievances to be referred to a central complaint-handling unit to be handled consistently by a dedicated staff independent of the business and so that company-wide management information can be gathered.

There is no one-size-fits-all requirement but a firm’s central complaint-handling function should normally have reporting lines to senior management and be staffed by appropriately qualified professionals. A firm should ensure a complaint is considered promptly and that the customer is kept informed of its progress at regular intervals.

When needed, further information should be obtained from the customer. This can be done through correspondence or by issuing a standard questionnaire but a scripted telephone call is often effective in establishing a full understanding of the customer’s position and concerns.

A record of this call can provide useful evidence if the customer complains to the FOS. Complaint handlers should not interpret the grievance too narrowly or literally, bearing in mind that a complaint about performance may indicate fundamental unsuitability and that few customers are familiar with either the regulatory system or a firm’s rulebook duties.

The company’s response to the customer should be clear and informative. It should be written in clear English and avoid jargon.

Where a mistake or administrative error has occurred, the firm should identify it and apologise to the customer. Where redress is appropriate, the complainant should be provided with fair compensation.

An organisation should be prepared to consider conducting a retrospective review of past business as part of its obligation to TCF where it or the FOS upholds a complaint that is indicative of wider issues.

As the FSA has commented, a high rate of upholding complaints by the FOS could indicate that the firm may well have other customers whose complaints it has not handled properly.

The FOS can consider a complaint relating to most retail financial products and services provided in the UK by FSA-authorised firms. It will typically take between six to nine weeks to resolve a straightforward case, but will take longer in a more complex matter.

A firm that has a properly managed complaint-handling function and which handles grievances in an appropriate manner, will be well placed to resist a customer’s referral of a complaint to the FOS.

The file relating to the customer’s complaint should be complete and include not only paperwork specific to the complainant but also all relevant standard documents and copies of relevant marketing material.

If the file has been properly maintained by the complaint handler as part of the firm’s complaint-handling procedure, this task will be easier and less time-consuming.

Where the complainant would have received computer-generated correspondence, copies of the standard letter in use at the appropriate time should be included, together with the record showing the letter was actually generated. The FOS expects a high standard of record-keeping and an inability to produce relevant documents may count against a company.

Unless the matter is resolved informally, the FOS will proceed to make a preliminary adjudication and at this stage the firm needs to consider how best to respond.

In many cases, it may be appropriate to split the adjudication down into the detailed points made by the adjudicator and address each one in strict order.

In other instances, generally those dealing with more complex products and issues, it may be appropriate to deal with the adjudication in a more holistic manner.

In either case, it is vital that a clear response is given, setting out the detailed grounds on which the basis of the decision is being challenged. Otherwise, when the matter is referred to the FOS for a final determination, the firm’s areas of concern may not have been made clear.

There is no provision for a firm to appeal against an FOS award, although there is the possibility it may be able to challenge the FOS through the process of judicial review, and for this reason the ombudsman’s determination is generally the end of the matter.


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