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MM leader: FSA takes first step in tackling wayward banks

Not before time, the regulator claims it is getting tough with the big banks over their complaint-handling processes.

Last week’s FSA review of the way some of the major banks deal with grievances uncovered worryingly low standards, from senior management down to branch staff.

Of particular concern is the fact that incentive schemes within some of the organisations are designed to discourage staff from paying redress.

The regulator found banks using long-winded complaint procedures, designed to confuse or wear down the customer in the hope that they would not pursue a complaint.

Equally worrying was the fact some of the banks failed to provide an adequate explanation of the consumer’s right to complain to the financial ombudsman.

We welcome the FSA’s action but it says a great deal about the way these banks have been regulated in the past that they have been able to get away with such practices for so long.

Two of the banks have been referred to enforcement and the FSA warns that severe action will be taken if improvements are not made at other institutions. In the interests of consumer confidence, we hope the regulator keeps to its word.

However, the FSA must go further and start to address the reasons for huge numbers of grievances rather than how they are dealt with.

The problems with incentive schemes within banks are not restricted to the handling of complaints and the sales practices within these organisations can all too often lead to customers being ripped off.

Many advisers have first-hand experience of the harmful effects of bad advice given by some of the high-street banks through cleaning up the mess that has been left behind.

A recent Which? banking commission also exposed many of these sales practices of which the banks would rather the general public remained unaware.

As we have said before, one of the biggest criticisms of the FSA in recent years has been the way it has failed to get to grips with the bad advice offered by the banks while seemingly doing its best to regulate small advisers out of existence.

This move from the FSA is a good start but it is only a start. A more fundamental review of banking advice is needed to protect consumer interests.

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  1. Please note.

    They are unhappy with the way they handle complaints.

    Not unhappy with the reasons for the complaints or the extreme numbers of complaints.

    Certainly not unhappy enough to sort the root of all bank complaints in the RDR.

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