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FCA says banks’ complaint handling ‘isn’t working’

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FCA director of mortgages and consumer lending Linda Woodall

The Financial Conduct Authority plans to carry out a thematic review of complaint handling in banks, building societies and insurers, placing greater onus on the role of senior management.

In a speech at a Building Societies Association event this morning, FCA director of mortgages and consumer lending Linda Woodall said “something isn’t working” in the way firms manage and investigate customers’ complaints.

She said the regulator will undertake a review of complaint handling and management in major financial institutions.

Woodall said: “The amount of complaints that go to the ombudsman suggests that something isn’t working in the way in which firms manage and investigate customers’ complaints.

“So…we are going to undertake a thematic review of complaint handling and management in major firms, including building societies.

“The thematic review will identify why complaint handling is not working well for some consumers and address any poor practice within firms. 

“We will use our new assessment approach to place greater onus on ‘senior persons’ to understand how effective their firm’s complaints handling process is, and how they use the complaints experience to identify and correct the systemic causes behind customers’ complaints.”

Woodall said the thematic review will be conducted in two phases.

The first phase will consider how firms identify, record and report complaints, and will be completed by the end of 2013.

The second phase, which is due to begin in early 2014, will consider firms’ approach to redress and analysis of the “root cause” of complaints.

The regulator expects to publish recommendations on the back of the review in Q2 2014.

Woodall added: “It is 100 per cent in the industry’s interest to ensure that when customers do complain, they have confidence their complaint will be recognised, that it will be investigated fairly in a timely manner and that redress will be paid where it is due.

“We are hopeful that this will lead to a reduction in the number of customers requiring the services of the ombudsman to obtain the appropriate redress.”

This morning, the Financial Ombudsman Service published the latest data about the businesses it received the most complaints about in the first half of the year.

Lloyds Banking Group once again topped the list, receiving 129,293 complaints between January and June this year.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. as far as the banks are concerned their complaints process works perfectly.

    Client complains – the bank reject. Bank win.
    Some customers will go to FOS some wont – Bank win.
    FOS will reject some complaints at initial stage, some customers wont appeal – bank win.

    It’s a lottery and the more obstacles the banks put in the way the more chance there is that fewer and fewer people will carry on.

  2. It’s becoming clear that nothing works properly within our increasingly ridiculous regulatory system.

    Maybe its time for a re-think before everyone closes bar the FCA?

  3. @ Soren

    Nail, squarely, hit & head comes to mind !!!

    We have an impossible regulatory system, totally un-workable and a regulator who has no understanding of the industry it regulates and is expensive beyond belief.

    End of !!!

  4. Simple economics. It is cheaper for the banks to conduct business the way they do. Until it is made more cost effective to implement a fair and robust complaints process, they’ll continue as they are and accept the costs associated with product reviews and regulatory fines.

  5. The complaint system itself and how it works needs to be looked at.

    I recently went into my bank with what I thought was a query. They couldn’t help and I forgot about it, no big deal. Few days later I get a letter acknowledging my ‘complaint’. Total nonsense and certainly didn’t come under the definition of a complaint in the Handbook but no doubt reported as such.

    Have a look at behavioural dynamics. If there is a complaints system, how are the various parties likely to interact with it and is it efficient, effective and value for money?

    Answers on a postcard…

  6. If you look at the FOS data, Principaility BS, Bradford & Bingley, Cumberland BS, Nottingham BS, Vanquis Bank, Yorkshire BS, Coventry BS, Nationwide BS, Virgin Money, Leeds BS, Newcastle BS, The Mortgage Works, Skipton BS, Capital One, Northern Bank, Sainsburys Bank, The Governor and Company of the Bank of Ireland, Kensington Mortgage Co, The Mortgage Business, GE Money Home Lending, Mortgage Express, Bank of Ireland (UK), Co-operative Bank, Loans.co.uk, Royal Bank of Scotland, GE Money Consumer Lending, AIB UK, Santander Consumer (UK), Tesco Personal Finance, American Express, HSBC, Santander UK, NatWest, Santander Cards UK, First Plus, Southern Pacific Mortgages, Hitachi Capital (UK), Banque PSA Finance, Secure Trust Bank and First Rand Bank all won more cases at FOS than they lost.

    Marks & Spencer Finanical Services, Citibank, Canada Square Operations, Sygma Banque, Ulster Bank, Barclays Bank, MBNA, Citi Financial (Europe), The Funding Corporation, HFC, Bank of Scotland, Lloyds TSB, CT Capital, Black Horse and Welcome Loans lost more than they won.

    That means 39 out of out of 54 seem to be getting it right.

    Of those that aren’t, we do not know how many have ended up referred to FOS simply because their in house teams were swamped.

    If that is the case then presumably there will be cases which would have been upheld in house and never gone to FOS anyway.

    So the evidence suggests that for the majority of banks and “pseudobanks”, their complaint handling IS working.

    For some it may not be but that may simply be that they are unable to get it done in the prescribed timescale – but with FOS itself taking over a year to deal with cases, that is hardly surprising.

  7. You beat me to it, Soren. More rules, more regulations, more processes, more levies, more red tape, more bureacracy, more reporting and what’s the result? More complaints, presumably arising from more bad advice and more unsuitable sales (from certain sectors) and an industry crippled by regulation. And that’s progress?

    Who actually benefits apart from the regulators? The more crap the regulator dishes out, the worse it all seems to be getting. There were never this many complaints as little as 10 years ago, were there? Or is my memory playing tricks on me?

    The regulator wants Rome to be rebuilt in a day but it simply can’t be done. And the FSA won’t listen ~ it just barges madly ever onwards with more rules, regulations and all the rest of it, at ever greater expense, without for a moment pausing to ask: Is this actually working? Plainly, it isn’t.

  8. I would like to suggest an alternative FOS system to the current one, based on the jury system.

    A choice of proceed directly to court OR

    Both parties can ask the other for information to so support their case

    Both parties provide their evidence to the FOS whjo collate it and send it to 5 advisers on the FCA register and 5 consumers whom have used an adviser.

    All have to read and pass judgement yeah or neat for uphold of complaint.

    Simple majority I.e 6 to one and upheld or dismissed.

    FOS suggest figure for redress and same parties cote accept or reject.

    neither the advised nor consumer is paid for their time.

    both parries can reject a decision and proceed to court, but if they reject and loose they pay a penalty.

  9. @ Peter Turner. 39 out of 52 suggests that the complaint system IS working and working well Thats 75% of cases are rejected by FOS. So in 3/4 of cases the BS was correct to reject the initial complaint. Of course the customers are going to send their complaint off to the FOS if they dont get the answer they want from the BS and this will continue as long as these people keep talkingto their mates at the pub and he/she says “I had a similar problema dn went to FOS who told me I was wrong not to be compensated and tghe bank coughed up. You shuld give it a go and see what you can srew out of them.”. It costs them nothing and they have nothing to lose but everything to gain. It is not like me to side with the banks in any way but on this occasion I have to. It appears that the FCA are looking for a BS to simply accept all complaints and pay redress regardless of circumstances.

  10. I am pleased to see that one of the banks I spent much time and effort upon turning around their failing (and it was massively failing) complaints operation, is one of the “good guys”.

    I am equally disappointed to see that one of the banks, which made an enormous hullabaloo about having a proper process right back in 2001, when the regulated complaints process was introduced is deemed failing.

    The key question is what do the banks do to use this data to improve their services. If the answer is nothing then it should come as no surprise that these operations are failing and will continue to fail.

    It is not the process which is wrong but the attitudes and conceit of the senior bank managers who are so inept and overwhelmed by their self-inflicted crises that they cannot use this data to improve their performance.

    I agree that there will always be individuals who will try it on, to see if they can get some free cash for persisting with a complaint.

    But a financial service provider who can demonstrate that they have properly handled the complaint, assessed it and come to the fair conclusion will not lose their cases at the FOS, as is demonstrated by the evidence!

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