It is a fact of life that people make mistakes. Given that it is almost impossible to be infallible, it is perhaps of greater importance and a better measure of a company to consider how it rectifies mistakes and complaints.
Some business “experts” believe companies should welcome complaints as they provide an ideal opportunity to restore and strengthen the relationship with the consumer.
In reality, none of us likes to be confronted with dissatisfaction. I have no doubt that, on occasion, the procedures that this industry is required to follow for customer complaints must sometimes appear to be designed to compound frustrations and annoyance rather than ease them.
The structured procedure for IFAs and product providers to follow when dealing with complaints from consumers recognises that errors will occur and that it is right that redress is provided.
It is also important that in the first instance, the company against whom a complaint is made can investigate the merits of the criticism before seeking to reach amicable settlement or refuting the basis of the complaint.
It is vital, though, that a backstop is in place in the form of the Financial Ombudsman Service for consumers to refer to in the event that they are dissatisfied with the decision made by the company. Without this, the company against whom the complaint is made is afforded the multiple role of judge, jury, appeal court and executioner.
This is in stark contrast to the role that IFAs find themselves in when they feel that a product provider has made errors, provided incorrect information or made any form of decision which the IFA disputes. In effect, the provider does find itself in the position of being able to make a definitive “ruling” unless the IFA is prepared to pursue the matter further through the courts.
This huge imbalance in power on this issue between two parties with a high degree of interdependence has unwelcome effects. A culture of avoiding responsibility and failing to acknowledge errors is not something that we should be proud of. This cuts both ways and I would not want anyone reading this to think that I do not fully appreciate and recognise that providers can also often be frustrated by IFA mistakes.
However, for an IFA, the effect of continually issuing incorrect documentation or information to a client that is subsequently reneged on is obvious. That client will not be a client for very long.
Unfortunately, the IFA is not in such a strong position when on the receiving end of mistakes by providers. Recently, we wrote to a provider pointing out multiple errors it had made on a group scheme. Some three months later, the provider replied that the people who made the errors were inexperienced and most were no longer with the company.
The company said it was confident the errors would not occur again but could not be certain because it did not have the training or access to check that what was being sent out was correct. This is unacceptable but is a fantastic example of a situation whereby that provider should meet the costs that their incompetence has caused rather than either ourselves or our client.
Such incompetence has cost and profit implications for the provider in terms of time spent on original errors, subsequent errors, investigating the errors, correcting the err-ors, the postage and stationery costs incurred and compensation to ourselves.
Surely the aim of the FOS is to reduce the errors made by financial services companies. Should such a system be introduced for disputes between IFAs and providers?
Many providers already seek to ensure that complaints by IFAs are dealt with swiftly in the same manner as complaints from consumers, endeavouring to find a resolution to everyone's satisfaction. It is regrettable that in some circumstances, though, when resolution cannot be found, one has to either accept mistakes without apology or recompense or, alternatively, embark on a legal process with all that entails for both parties.
To my mind, a low-cost, independent adjudicator to turn to for a ruling on disputes would be to the industry's benefit as a whole.
Tom Warwick is a consultant with Warwick Butchart Associates