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Regulatory update: the FCA’s 2016 H2 complaints data

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BACKGROUND

The FCA published its latest set of complaints data on the 26th April 2017 for regulated firms. The data includes all complaints received by firms in the second half of 2016, although it is worth noting that it does not contain data from those firms authorised solely to carry out consumer credit activity.

PS15 / 19 came into effect in June 2016 and enacted a change in firms’ reporting obligations; all complaints are now FCA reportable, including those resolved under the new ‘three business day’ rule. Previously, firms did not have to disclose complaints resolved by the end of the next business day.

The 2016 H2 complaints data is the first set to be released by the FCA following implementation of the new rules, which needs to be taken into consideration when analysing trends from previous reports. The FCA themselves has said the “new fuller data set will not be comparable to the historic data”.

Key points from the Data

PPI complaints continue to fall

  • PPI complaints represented 29% of all complaints in the second half of 2016 as opposed to 45% of all complaints in the first half of the year. This equated to 895,110 new PPI complaints in the second half of 2016 compared to 927,631 made in the first half. This is a significant decrease from PPI’s peak in 2012 when there were over 2 million complaints made every six months
  • The fall in PPI complaints needs to be contextualised and considered alongside the new reporting rules; following the rule change, all complaints about PPI must now be reported regardless of when they were resolved – this  means the fall in the number of reportable PPI complaints is even more significant

Banks appear to have been most prepared for the change in rules

  • Banking and credit card providers were able to resolve 64% of complaints within three days. This was ahead of home finance, decumulation and pensions, investments and income and pure protection firms, who were all able to resolve just under half of their complaints within three days

Arrears complaints increase

  • Arrears-related complaints more than doubled, from 28,211 in the first half of 2016 to 58,062 in the second half of 2016. This increase may be partly attributable to the changes in reporting; however this area remains a key focus of the FCA
  • Complaints relating to arrears made up 2% of total complaints in the second half of 2016 as opposed to 1% in the first half

There has been a drop in the cause of ‘advising, selling and arranging’ complaints

  • In the second half of 2016 there were 1.18 million complaints as opposed to 1.21 million in the first half of the year
  • Previously, this area was the cause of 59% of complaints – it now represents 39% of complaints. This drop has taken place even with the changes in reporting

Regulatory NEXT StEPS

The FCA will release its report into complaints data from the first half of 2017 in October 2017. This will give the industry an opportunity to perform a like-for-like comparison of data arising from the new rules for the first time – this will indicate how firms have adapted to the rules over time.

The next release of complaints data from the Financial Ombudsman Service (FOS) is expected in July 2017. This will give further insight into how firms are adapting to the new complaint handling rules.

Considerations for firms

Firms will need to pay close attention to the data to ensure any trends or patterns that apply to their industry or sector can be addressed and mitigated.

Some key questions for firms based on the data include:

  • What data in the report is relevant to the firm and the business performs?
  • Has the change in reporting brought new issues to light that previously went unnoticed or didn’t appear significant?
  • How are firms adapting and tailoring their service and provision of information to customers based on the changing complaints environment?
  • Are firms’ operating models geared appropriately to deal with the trends identified and regulatory focus in some of the areas mentioned?

It is important that firms contextualise the published data in order to understand their current performance, especially when determining whether performance can be improved by augmenting their complaints processes.

Any action in this area should be proportionate, and with greater difficulty interpreting the H2 2016 data due to the mix of reporting methods used, firms will need to carefully consider what ‘proportionate’ looks like in this context.

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