Posted: 2nd October 2013

Increasing complaints figures. It is tempting for firms to dismiss media headlines as just “more PPI”, but customers do not. The increase further dents the reputation of the financial services industry and the brand value of individual firms.

Linda Woodall told us “something isn’t working” in customers complaints and Martin Wheatley called banks’ complaint handling “outrageous” and “absurd”. The Financial Ombudsman Service’s announcement that they handled a record breaking 327,000 complaints in the first half of 2013 is the perfect scene setter for the announcement of a thematic review of complaint handling.

The thematic Firms may think they have ticked all the boxes. But the regulator intends to “step beyond the old reliance on technical rules and processes, to take a broader position on morals and outcomes”; so meticulous records will not be enough. Regulatory expectation, and the expectation of customers, is far higher. It wants fair outcomes to be consistently delivered. That means firms must understand the quality of outcome they are delivering.

Phase one Getting fair customer outcomes right means they must be delivered throughout the entire “complaints journey”. Phase one of the review, kicking off in October, will address how firms recognise, identify and capture a complaint when it first arrives. Without taking account of the whole complaints journey, from the moment the complaint enters the firms, understanding where your complaints handling is going wrong is simply not possible.

Phase two Key to preparation for phase two is improvement in complaints quality assurance monitoring. This part of the review takes place in early 2014 focussing on redress and root cause analysis. This is not just traditional monitoring against complaints processes using a random case sample. Appropriate quality assurance measure quality of customer outcome delivered at every step of the complaints process. This is supported by a case sampling approach based on the highest risks to customers: that could be a new product, a change in approach to advice, poor staff T&C assessments or an external risk such as an increase in FOS complaints on a particular policy term and condition.

Next steps When firms strive to get perspective on complaint handling operations, we can support them to undertake a self-assessment of complaint handling against best practice and regulatory expectation. This is also good practice for those firms participating in the thematic review.  Effective customer outcomes frameworks – whether in complaints, root cause analysis or quality assurance – are a powerful reassurance for firms’ boards, the regulator as well as supporting cultural change, thinking and behaviours across the firm.

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