We recognise that firms of different size, scale and complexity have different systems for complaints. It is important for complaints root cause analysis (RCA) to distinguish between a symptom and the root cause of a complaint. This hypothetical case study illustrates what complaints RCA looks like and how you may apply any learning outcomes to your firm.
A firm received a significant increase in the number of complaints received from unsecured loan customers. Most customers were complaining that they had not missed any payments but had received missed payment letters and were charged missed payment fees.
As part of the investigation into the root cause of the increase in complaints the firm identified the following symptoms:
- The firm’s management information (MI) showed a significant increase in inbound calls to the customer service centre about missed payment collections activity.
- There was a sharp and unexpected increase in the number of loan accounts showing as in arrears. This coincided with an update to the firm’s payment management IT system.
- There was also an increase in social media activity from customers unhappy with missed payment collections activity and missed payment charges.
2. Initial complaint investigation
The investigation identified a technical fault in an update to the firm’s payment management IT system used for unsecured loans. This meant that the system was not allocating payments made by standing order to customers’ accounts. This led to the system incorrectly starting collections activity work streams and applying charges.
3. Root cause analysis
Having identified the system update fault, root cause analysis determined that there were weaknesses in the firm’s governance, systems and controls which resulted in insufficient testing and oversight of the update before it went live. There was no clear allocation of responsibility for the update at a Senior Management level. The decision as to the amount of testing before the update went live was left to a mid-level manager when the project was already behind schedule.
4. Preventative and remedial actions
Having identified the root cause, the firm took the following steps to remediate the issue and prevent it from reoccurring:
- The firm reviewed and made changes to the governance of critical systems updates. This included reallocating responsibility for all future critical systems updates from the IT Manager to the Chief Operations Officer. Changes were also made to the firm’s systems and controls, including the firm’s mandatory testing procedures and risk management framework.
- After the firm had rectified the technical fault in the system, it identified and resolved a similar fault in an update due to be applied to its mortgage payment management system.
- The firm adapted its usual monitoring of customer service centre and complaints MI to monitor the impact of the remedial actions. A manual check on a sample of accounts paid by standing order was implemented by the firm in the months following the remedial action to ensure the update had worked. The monitoring showed calls, complaints and social media activity on the issue had dropped consistently month on month following the remedial action.
- The firm identified and reviewed all accounts paid by standing order since the system update. All affected customers were notified in writing of the error and the steps taken to rectify the issue. All customers who were incorrectly charged missed payment fees had the fees refunded and their credit reference agency file amended.