The FCA has published the findings of its forward looking thematic review into complaint handling across 15 major retail financial firms including three general insurers and three life insurers. The FCA also invited five trade bodies to take part in the review and sought input from the Financial Services Ombudsman and consumer bodies.

Rather than examining firms’ compliance with FCA rules and uncovering poor practice, this thematic review sought to identify changes that can be made to ensure that the interests of consumers are at the heart of firms’ complaint-handling processes in the future. The aim of the review was to identify common themes and barriers to prevent effective complaint handling in the five key stages of firms’ complaint handling:

  1. Identifying a complaint
  2. Recording a complaint
  3. Internal reporting of a complaint
  4. Provision of redress
  5. Carrying out root cause analysis.

The FCA found that firms have taken steps to improve their complaint handling and found examples of firms involving senior managers more in the complaint handling process and encouraging staff to make the right judgements. Weaknesses were identified in each of the five stages, however, and firms can do more to deliver fair complaint handling and consistent outcomes for consumers. The FCA’s observations together with firms’ self-assessments and working groups led to the conclusion that there are four main barrier themes: application of FCA rules; cultural; operational; and specific barriers in relation to management information (MI) and root cause analysis.

Next steps

The FCA notes that both actions from all regulated firms as well as regulatory actions may be required to address the barriers identified in the review. All firms should consider how the FCA’s findings relate to their own complaint-handling operating models, policies and practices. Firms may like to consider:

  • Whether complaint handling policies and processes have the interests of consumers at their heart; avoiding a tick-box approach to compliance with Dispute Resolution: Complaints (DISP) rules.
  • Reviewing their definition of ‘complaint’ and training staff accordingly.
  • Whether systems and processes could inhibit accurate recording of complaints.
  • Observations made about consistency of redress and distress and inconvenience payments.
  • Their approach to root cause analysis focusing on the observations in the thematic review.
  • Whether any improvements to MI can be made.

In addition to action for firms, the working group recommended changes to DISP rules which will potentially enable the industry to provide better complaints experiences and outcomes to consumers. The working group proposals also include reconsidering firms’ biannual reporting of complaints data to the FCA. The regulator is conducting further research in light of these recommendations with a view to developing policy proposals which will be consulted on in due course.

For further information:

TR14/18 Complaint handling, November 2014