View more on these topics

FSA takes action against five banks

The FSA says it is taking “tough action” after finding poor standards of complaint handling at five banks.

The regulator says five banks are undertaking major changes to the way they deal with complaints and two of the five banks have been referred to its enforcement division for further investigation.

The FSA says its review looked at several banking groups responsible for over 70 per cent of the complaints firms receive and report to the regulator and over 60 per cent of those resolved by the Financial Ombudsman Service.

The FSA says it found poor standards of complaint handling within most of the banks assessed including a lack of senior management engagement and accountability for complaint handling, poorly designed staff incentive schemes that made branch staff reluctant to pay redress to customers and poor quality complaint handling by staff.

The regulator found “complaint handling procedures that led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank”.

The FSA says the banks failed to learn from previous complaints and to make changes to prevent similar complaints arising in the future.

The regulator says it did find examples of good and compliant practices in parts of some of the groups assessed.

The latest FOS complaints figures, published in February, showed a big increase in the number of new complaints received against the large banking groups.  Lloyds received 20,190 complaints across all its brands while Barclays received 10,892 and RBS received 7098 complaints. Seven hundred new Barclays Bank complaints related to investments, the highest number of investment complaints received by any institution.

As a result of the FSA review, five banks have either put in place or extended the scope of major changes to their complaint handling processes.The regulator will be doing follow up work later this year to see if standards have improved and may change elements of its DISP sourcebook, which will be consulted on later this year.

FSA director of conduct risk Dan Waters (pictured) says: “A culture of fair complaint handling is an important indicator of whether a firm is committed to treating its customers fairly.  It is vital that customers know that if something goes wrong, their complaint will be deal with in a reasonable way and that they will get a fair outcome.

“While we found some good practice, there is clearly evidence of unacceptable standards of complaints handling in banks.  Delivering change in this area is a major priority and we are determined to use all the tools available to us to ensure that banks comply with our rules.”

Which? chief executive Peter Vicary-Smith says: “This is another damning indictment of the banking industry, many of whose members consistently put sales before customer service and reflects the evidence consumers presented to the Future of Banking Commission.

“Bonuses should be linked to treating customers fairly and the resolution of complaints, not to sales. What’s more, consumers have the right to know which banks the FSA is referring to its enforcement division. If the UK’s banks want to win back the public’s trust, then they must fundamentally change they way they treat their customers.”


News and expert analysis straight to your inbox

Sign up


There are 25 comments at the moment, we would love to hear your opinion too.

  1. For once I am able to congatulate the FSA and say something positive.

    The way in which banks market products, motivate their staff, engage with the outside world and deal with complaints has long been a disgrace.

    Let’s hope that this si the start of a proper investigation into the techniques and dubious procedures used by the banks.

  2. One of the few procedures the FSA got right was a common way in which complaints should be handled, so what did the FSA do? it scrapped a common approach in handling complaints to one where each institution has their own. Result total confusion. The FSA must take some blame and of course I do hope the FSA take enforcement action against the Banks & Building Societies.

  3. … or (forgive the cynic in me, here) is it just political manoeuvring prior to May 6 … which will be blown under carpet post election – with the focus being back on IFAs, etc??

    If the FSA are actually listening to the industry then (for once) I congratulate them for doing something right for a change …

  4. Fine but which Banks are they?

  5. It was no suprise to Lloyds customers such as myself that they topped the list in February and no-one would be suprised if these was a relationship between the hierarchy of that list and the five unamed banks refered to here.

    I am outraged that there is any link between staff performance and witholding redress. Where is the TCF in that if your complaint is processed at the end of the month and the Complaint handler has used up their redress budget?

  6. Will this be a genuine investigation or are they just going through the motions! Let’s face it, if they fine them, all the banks will do is pass it on to their customers!

  7. After all the criticism the banks have received re poor advice etc over the years the FSA decides just as it is about to be scrapped to take action . I trust if the Tories get in they will see this as a plot by the FSA to keep the status quo.

  8. OK, so the FSA are addressing the Banks’ complaint handling procedures – what about the fact that again, there is a big increase in the NUMBER of new complaints against Banks?

    That is the real issue, not just how they handle the complaints…..

  9. If it was a small firm of IFA’s the headline would read ‘firm closed for failings in complaints handling’ of ‘Firm fined for lack of procedures & controls’

  10. The cost of fines get passed onto customers and ultmately the banks are certainly confident that the volume of dodgy sales income is worth far more even a large fine.

    Maybe suspension of advice permission for the worst offenders or censure of the directors responsible for the offending business areas would make the banks think twice about encouraging poor practice.

    Not that I think such draconian measures would ever be used against the banks!

  11. i have just stopped working for one of these high street institutions, and what i was aware of in house is a blatant disregard for TCF, just top line & high up front commission, with malpractise on paperwork given to justify a sales, just link one benefit to a client then thats enough, next appointment please.

    I am coming back to the sense of the IFA marketplace, was i sold a pup, yeah..

  12. Why are we not naming and shaming these banks? The FSA are quick enough to name and shame brokers why not the banks? I could name a few banks who have shocking complaints and they should be dragged over the coals for it. The worst one being ROYAL BANK OF SCOTLAND !!

  13. Why are the 5 banks not named?

    When the FSA take enforcement action against an IFA they give chapter and verse!

    Dual standards? or less than effective systems and controls to ensure consistent fair treatment of clients / consumers?

  14. Dermot Brannigan 28th April 2010 at 10:13 am

    Well, well, well. What with the actions against Carmody and May yesterday, and now this.

    Well done the FSA

    Mind you, there’s nothing like the threat of losing your job to bounce people into action, is there?

  15. I assume they haven’t named them yet because enforcement is ongoing. Doesn’t seem to be consistent with previous cases, but there you go. I know of people that have contracted in these institutions, looking at their complaints when the need arises. Many have walked out because of what they see as the highly imoral practices being undertaken. I hope they hit the banks big time. Stop them from ripping off the general public, and stop the ‘we must make a sale’ mentality, which is blatantly what is going on. I for one think there should be a large regulatory team to monitor the branch/ sales teams of banks with complaint problems (paid for by the banks, of course!)

  16. Manchester Cynic 28th April 2010 at 10:32 am

    What about all the complainants who were fobbed off by those repeated negative responses and therefore didn’t even show up in the stats? Surely the FSA should force the banks to contact all of them with an apology for not dealing with their complaint in the correct manner and the promise of a full investigation – with the whole process overseen by the FSA. This is the only way to ensure that they get the message about treating their clients fairly.

  17. The levels of complaints could be the tip of the iceberg, with such poor practices exposed it will be interesting to see what fines & punishment will be dealt.
    Will the finger be pointed at the senior excutives, or at advisers & sales managers trying to keep up with ever increasing targets set from the powers above?

    Will any fines put a dent in the pockets of those responsible?

    Will the FSA cut off one of the hands that feeds them?

    As is the case with endowment complaints, maybe time barring could be introduced to allow these banks to put a cap on these potential liabilities to allow them to focus on the real business of making loadsamoney! What a great idea!

    Once this has all been swept under the carpet maybe I will have to go against all my principles & go back to working in the Banks.


  18. While I echo other contributors positive statements on this I feel it is outrageous that the FSA should have taken so long to to get to this position, when they have had plenty of evidence for more than a decade of the banks lamentable performance in this area.

    I understand that banks account for the majority of cases before the FOS but those terrible figures drastically underestimate the real situation. Making a complaint to a bank is a very long winded process that I suggest many customers find intimidating.

    Even when complaints do reach the FOS the banks seem to assign either relatively low level staff, or perhaps staff who cultivate the projection of incompetence to muddy the waters.
    (I am currently assisting with general background information for four individuals with cases at the FOS who came to me because they got nowhere with their complaints to the banks involved. In each case the bank has failed to produce all the information required and one has ‘cut and pasted’ customer name and address on to a document and presented it as the ‘original’. The FOS adjudicators seem not to know the procedures or else they are turning a blind eye and seem to be trying to come to compromise decisions using the lowest common denominator, which means that the banks pay out a relatively small amount but can then carry on as before, thus making it a ‘cost of doing business’.)

    Wouldn’t normally go anon. but with cases pending!!!

  19. You would think the banks would have a great complaints procedure considering ALL the practice they get replying to them.

  20. Given the FSA’s love of hindsight reviews to paper over its own tardiness and regulatory oversights, one might reasonably expect these five banks to have been ordered to revisit all the complaints they have rejected over the past five years which were not subsequently referred to the FOS. That might well reveal many thousands more that should have been accepted and compensation paid.

    We can be pretty confident that in similar circumstances, just such an edict would have been imposed on any IFA firm.

    But then, these are banks and this latest FSA initiative has probably only come about because of a kick in the pants from the Treasury.

  21. Steven Farrall (Adviser Alliance) 28th April 2010 at 12:05 pm

    Risible posturing by the FSA.

    So the FSA has fined the taxpayer – who own lloyds and RBS – to protect the taxpayer? The FSA, a government quango, is ‘fining’ other bits of the government quango state, the banks. It’s utterly mad. What a wast of time and effort.

    Plus you’ll find that a lot of bank complaints’ are just as opportunistic as the ones received by us IFA’s. And I am no friend of banks.

    When oh when will these idiots learn that all this fining just extracts more cash from the poor bloody taxpayer? Listen you idiots, economies just consist of people and things. Governments and companies are just convenient admin fictions by which we better organise our lives.

    And as for Which’s comment, well, they would say that wouldn’t they? Remember Which is a business whose business is to profit from the critism of other businesses. Who made them judges of evrything? I didn’t.

  22. No naming and shaming tut tut tut, nearly there FSA 6/10 for effort.

  23. The fundamental issue here is the lack of FSA supervision of sales practices, no point effectively fining all the bank customers when a tiny fraction of them have actually found the courage to complain.

  24. Surprised the banks have signed off on this? Smokescreen to cover another blitz on IFAs?

  25. Lloyds “adviser”

    Complaint against the bank “whatever for”?

    I saw a client last week who was referred to us by a solictor for investment advice. When I spoke to her three days after she had banked the cheque the bank already had her booked in for an appointment. At that appointment their “adviser” signed her up for an investment bond.

    Their fact finding must have been done through a medium and the research department must work weekends because he signed her up the same day as his first visit to her home.

    Sour Grapes?

    I don’t mind the fact she did an investment with the bank but what I do object to is:

    1. He told her he was Independent
    2. He told the capital was 100% guaranteed
    3. He took £3,500.00 in commission

    To rub salt in the wound he then her that she didn’t pay all the commission as it was covered by the bank.

    Gues swhhich comapny the investment was with… yes Scottish Widows.

    She doesn’t want to “get him in trouble” or “cause a fuss” as her husband has recently died.

    So I try to talk to the FSA are they interested,? don’t be silly because as we know they “don’t investigate individual complaints”

    Chris Neil

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm