The Financial Conduct Authority and industry agree to improve the way consumer complaints are dealt with

Published: 17/11/2014     Last Modified: 17/11/2014

Financial firms have collaborated with the Financial Conduct Authority (FCA) on a thematic review and, as a result, have agreed to make improvements to the way they deal with consumer complaints. The FCA will be consulting on possible changes to its dispute resolution rules later this year.  

Clive Adamson, director of supervision at the FCA, said:

“Straightforward and effective complaints handling is an important aspect of how firms treat their customers. Correctly handled, they can help firms quickly deal with problems and keep their customers happy. Moreover, understanding the underlying reasons for complaints can help head off future problems.

“It’s in everyone’s interest to consider how to make complaints handling more effective; that’s why it was important to us to work collaboratively with industry on this project and I would like to thank the firms for participating. Together we have identified improvements that should be made and firms will act on these findings. I hope those firms who weren’t part of the review will consider the recommendations and take appropriate steps to deliver consistent outcomes for consumers.”    

The review aimed to uncover barriers to effective complaint handling in firms and, where found, to work with industry to propose solutions. The complaints processes at 15 major retail financial firms were assessed, and the overall results were discussed and considered at an FCA-chaired working group made up of the participant firms and five trade bodies. The FCA also sought the views of the Financial Ombudsman Service and consumer groups.

The review did not deal with PPI complaints, which have been addressed separately.

The FCA found that some improvements and innovations have already been made. For example, senior management is more engaged with complaint handling, and firms have also told us they are empowering their staff to make the right judgements and to demonstrate empathy.

However, the review also identified areas requiring further improvement. For example:

  • Firms do not always consider the impact on consumers when designing and implementing processes and procedures.
  • There are inconsistencies in the amount of redress offered, particularly for distress and inconvenience.
  • Firms take a narrow approach to root cause analysis (which should enable them to determine, and fix, the underlying reason for a complaint), which may affect their awareness of wider issues.
  • There are weaknesses in some firms’ management information.

The firms involved have agreed to make changes and the FCA is asking all financial firms, not just those that took part in the review, to consider the findings and take steps to ensure that their complaints procedures have the interests of consumers at their heart. This should result in better outcomes for consumers.

The working group also made a number of recommendations on how complaints processes could be improved, including changes to FCA rules. These were:

  • Ensuring that calls to dedicated complaints telephone lines cost no more than the basic rate.
  • Extending the next business day rule so that firms have longer to get consumer acceptance that the complaint has been resolved.
  • Removing the non-reportable complaints rule so that all complaints have to be reported to the FCA (DISP 1.5 exempts firms from reporting complaints that are resolved by close of business on the working day after they are received).
  • Reviewing the bi-annual Complaints Return to include more consumer-centric measures.
  • Revising the FCA publication of firms’ complaints (e.g. including more contextualised data).

The FCA is now considering these recommendations and will be consulting on possible policy changes. Firms and consumer bodies will then be encouraged to provide their views and contribute to this process.

Notes to editors

  1. Thematic review: complaints handling.
  2. One minute guide: complaints handling.
  3. Being regulated: dealing with complaints.
  4. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  5. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  6. Find out more information about the FCA.

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