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Blog: FCA’s H2 2016 reporting data – “not comparable to historic data”, but what does it tell us?

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Dear CEO letter on Consumer Credit

The banking world will now be assessing the impact of the complaints reporting data from the second half of 2016, published by the FCA on the 26th April.

The data is the first available under the new PS15 / 19 complaints reporting rules, so firms will need to study the figures while bearing in mind the impact of these new rules. Given this, it may be a challenge to discern their exact performance levels against previous years.

This challenge is further exacerbated by the use of both new and old reporting methods dependent on a firm’s year-end date, with 56% of firms still reporting via the old return.

With all this in mind, how should banks be interpreting the figures?

Different reporting methods and challenges in Decoding the data

Some commentary prior to the release of the data suggested that the inclusion of complaints resolved within one working day would serve to increase the total number of complaints reported.

An uplift in reported complaints wass to be expected due to the change in the reporting rules, however firms will need to be realistic and assess the higher figure in this context, while ensuring they are able to evidence the continuous refinement of their complaints approach for the benefit of their customers. When the reporting requirements have been established over a longer period, banks will be able to better discern their ongoing performance in a way that incorporates all complaints.

However, for the first time, the regulator has been able to establish the number of complaints each firm received per 1,000 accounts. This will enhance firms’ view of their own performance, allowing them to benchmark themselves against their peers and make even more focused improvements.

outlining the trends

Despite there being some difficulty in assessing the data in the purest sense, there are still some indicators that shed light on the complaints environment and banks’ performance over the past year:

  • PPI complaints decreased between H1 and H2 from 927,631 to 895,000, equating to a 3.5% fall in numerical terms. With few PPI complaints likely to have been resolved within three days, it appears the numbers do represent a small decline. Firms will need to keep a close eye on what happens to these levels when the FCA’s PPI awareness campaign begins prior to the 2019 time bar
  • Credit cards received approximately 313,000 complaints in H2 2016, and now make up 10% of overall complaints volumes, as opposed to 129,770 in H1 2016 – this is a very significant increase of 143%. Conversely to PPI, it appears that the extra complaints captured by the new reporting method may have had some impact here, however this will still be a figure that banks will need to examine carefully and react to appropriately
  • 172,240 (6%) of all complaints related to packaged bank accounts (PBA), which were added to the scope of the data for the first time. The figures do seem to be fairly consistent with FOS data showing that last year, PBA accounted for 10% of their raised complaints – scaling up the 44% of firms using the new reporting method would mean that PBA represented approximately 13% of all complaints, which still indicates it is an area for banks to consider

Thinking about Causation and treating the symptoms

Some priorities for firms looking to address these areas should include:

  • Ensuring their outcomes testing and root cause analysis is robust, appropriately-detailed and covers the performance of products across their entire lifecycle
  • Using the insight gained to review the information requirements of consumers, ensuring there is no ambiguity and avoiding the crystallisation of regulatory issues as a result
  • Ensuring that staff training is kept up-to-date and incorporates not only current complaints rules, but takes a wider view of the prevailing regulatory focus – for example, the diagnosis and treatment of vulnerability

Embracing further insight

In line with the current regulatory environment, banks should be thinking about how the greater insight they will gain in the coming years can further enhance their sales processes (for example, their understanding of customers’ information needs and ensuring product suitability) in order to improve the experience of the non-complainant population.

Additionally, despite the challenges that arise from the new data when viewed in isolation, it’s undeniable that in the long-term, all financial services firms will now gain greater insight into their complaints performance on an individual basis, allowing them to further enhance their treatment of customers when they do have cause to complain.

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