5 ways to get fined bythe FCA for complaintshandlingwww.usefulfeedback.com | A UsefulFeedback PublicationRegulated firms and preparing for thenew complaint handling rules in 2016www.usefulfeedback.com | A UsefulFeedback Publication Page 2IntroductionsNext year sees the introduction of new complaints handling rules by the Financial Conduct Authority(FCA). These changes are the result of identifying areas that need improvement so that consumers get abetter experience.It is widely accepted there is a need improve the image – or perhaps rehabilitate – the finance sector, torestore its reputation and trust. It follows there is a need for all consumers to have a positive experiencewith firms in the financial services industry. However, it’s important to be prepared for times whenconsumer perceptions are of negative experience. An exemplary approach to complaints handlingprovides a compliant process and helps to demonstrate the cultural change which many believe thefinance sector needs.The new rules result from a thematic review that adopted a new approach to previous ones.Rather than a ‘forensic’ examination of compliance and what has happened historically, this time, acollaborative approach was adopted. 15 major retail firms and five trade bodies worked with the FCAto identify common themes and barriers to effective complaint handling, as well as to explore possiblesolutions. Input was also sought from the Financial Ombudsman Service and consumer bodies.One of the primary outputs of the review is the requirement to report every complaint to the FCA, notjust those unresolved after the next business day, which is the current requirement. Although this periodwhere firms can handle complaints less formally, without sending a final response letter, is increasingto three business days, there is a compelling need for the formalised complaint management process tostart at the frontline, not when a complaint is referred to the dedicated complaints handling team.Quite simply, a complaints management systems that is fit for purpose has to be deployed on thefrontline.Failing to have the correct systems in place on the frontline doesn’t just impact the ability to meet therequirement to report all complaints. It also impacts other areas of the complaints management process,limiting the ability to meet other rules or follow guidance.In this guide we discuss five failures that have historically been the chief source of FSA/FCA enforcementaction and the likely impact of the new rules if firms fail to put in place appropriate complaints handlingsystems and processes.The need for an appropriate complaintsmanagement solutionDuring the thematic review the FCA clearly identified the importance of universal access to appropriatesystems or tools to help manage complaints.www.usefulfeedback.com | A UsefulFeedback Publication Page 31. Failure to record initial complaintsAt the current time many firms do not deploy complaints management systems to frontline users. On theface of it, this is not a problem when the complaint is resolved by close of the next business day, as thereis no need to report it within the same data set as reportable complaints.However, it does create potential non-compliance with the existing rule to carry out Root Cause Analysis(RCA) of all complaints – not just those that are reportable to the FCA. From the point of view of thefirm, failing to record sufficient detail related to the initial complaint is a lost opportunity to extractManagement Information (MI) from the data.Under the new rules for 2016, where it is mandatory to report all complaints whenever there is a materialimpact on a consumer, the initial capture of complaint information needs to be thorough, to enableaccurate reporting of complaint numbers. Deploying an appropriate system prevents gaps in RCA andenables better MI.2. Failure to conduct effectiveroot cause analysis of complaintsRoot Cause Analysis (RCA) is a fundamental part of the complaints management process.Effective RCA helps to identify problematical products or related issues such as poor salesor contractual documentation, or inadequate sales training.Learning opportunityWe observed that firms employ a wide variety of systems and tools to record complaints.However, not all staff have access to relevant systems which had a noticeable impact on affectedfront line staff. For example, at one firm front line staff had to capture the key points of thecomplaint and forward to a centralised escalated complaints team to log on the system. This increasesthe possibility of incorrectly capturing the consumers concerns and may lead to inaccurate recording.Also, this process may require the centralised team to further communicate with the consumerresulting in frustration for the consumer especially if the issue was incorrectly captured at the outset.Although we appreciate that firms want to keep processes simple and easy to use – especially for theirfront line staff who are not dealing with complaints full-time – they must also consider the impacton the consumer of their processes. Duplicative processes resulting in repetitive conversations areundesirable for both consumers and firms.Financial Conduct AuthorityThematic Review TR14/18Complaint handlingNovember 2014www.usefulfeedback.com | A UsefulFeedback Publication Page 4Inadequate recording of complaints, including an inability to capture key data points is a barrier toeffective RCA. The review identified firms have more work to do around RCA. There is a need to furtherdevelop root cause analysis capabilities to:• Address the underlying reason behind the customer’s complaint• Informing the process of improving products and servicesUnder the new rules for 2016, there is a clear need to record all the necessary data required for effectiveRCA at the initial point of frontline contact through the use of a purpose-built and appropriate complaintmanagement tool.3. Failure to deliver fair outcomeswhen responding to complaintsUnder the current rules, simply rejecting a complaint without a full consideration of the individualcircumstances of the case is a clear point of non-compliance.The desire for fair treatment of customers is considerable and it doesn’t just apply to complaints – thereare six consumer outcomes that firms should strive to achieve to ensure fair treatment of customers.These remain central to what the FCA expects of firms and cover a range of issues including a firm’sculture, its products and the information it provides. The review found firms have taken steps to improvetheir complaints handling, but they should do more to deliver fair complaint handling and consistentoutcomes for all consumers.From 2016 the FCA continues to expect firms to identify and categorise complaints appropriately,ensuring that frontline staff or specialist complaints staff are engaged at the right stage. To achievethis in an efficient and effective manner, there is a clear need to deploy the right systems to collect theappropriate data points and ensure precision when a case is escalated from the frontline to a specialistcomplaints handling team.4. Failure to provide informationabout escalation of complaintsAn internal process within any firm delivers a ‘hierarchy’ by which the concerns or issues raisedby a complainant are addressed:• Frontline staff such as relationship managers or a client services team• Complaints teams (or in smaller firms, staff responsible for general compliance)Currently, for cases escalated to the complaints team for settlement, the firm’s final response letter,which needs to be delivered within 8 weeks, needs to tell the consumer they have the right to referthe complaint to the ombudsman service within six months. Firm’s must also provide contact details(including website address), and a copy of the consumer leaflet for the Financial Ombudsman Service.www.usefulfeedback.com | A UsefulFeedback Publication Page 5Under the new rules for 2016, all complaints settled within three business days, will have to result in afirm sending a written ‘summary resolution communication’ to inform the customer that they are able totake their complaint to the ombudsman service if they are dissatisfied with the resolution. Once again,an appropriate complaint handling system is an essential tool for supporting the handling of complaintswithin the rules and that follows guidelines.5. Failure to demonstrate Quality Assuranceof complaintsThe current requirement is to check on the quality of complaint handling and take action where failingsare identified. The thematic review revealed inconsistencies in some areas. The qualitative analysis ofremediation has been called into question.It was found some firms measure the quality of customer outcomes in financial terms, even thoughthis may not necessarily be the best way of determining the quality of customer experience. To helpensure that Quality Assurance (QA) is meaningful and effective, there is a need for standardisation ofterminology, checks and balances.One area being tightened through QA in the new 2016 rules is the distinction between redresscompensation for financial loss, and redress for material distress and material inconvenience.Inconsistency was noted both within firms and across the industry in the levels of compensatoryamounts offered. A centralised complaints management system will certainly help a firm by:• Ensuring a Quality Assurance framework is in place• Providing a more consistent approach• Allowing alignment across all business areasWhy is UsefulFeedback a preferredcomplaints handling partner to thefinancial sector?Customers choose UsefulFeedback because our fundamental belief is that properly executed complaintmanagement is a strategic function. This makes a significant contribution to the quality managementof products and services.UsefulFeedback also helps financial sector organisations to demonstrate a commitment to customersatisfaction that helps rebuild trust, perpetuate the good name of a firm and supports the reputationof the industry as a whole.UsefulFeedback is a turnkey solution that enables FCA compliance at every stage of the complaintshandling process.www.usefulfeedback.com | A UsefulFeedback Publication Page 6• Thematic Review Compliant – FCA 2016 rule change-ready• A dedicated zero-training complaint resolution interface for frontline staff• Summary resolution communication by SMS, email or automated postal delivery• Easy to use case management, collaboration and root cause analysis tools• Embedded BI platform automatically generates of FCA returns and delivery of reports via email• Supports multiple brands, different legal entities and varied product groups in a single platform• Extensive integration including single sign on, REST API, email and social media integration• Responsive, intuitive user interface works equally well on desktops, tablets and smartphones• Resilient cloud infrastructure proven to deliver near 100% uptime over the past 6 years• Used by enterprises handling in excess of 1 million complaints per year• ISO32001 and CESG accredited information security trusted by major UK and US finance firmsAbout UsefulFeedbackUsefulFeedback is owned and managed by a team that have made a professional habit out of helpingorganisations of all types to better manage complaints and feedback. Our business is the comingtogether of two key areas of expertise – software design and cloud architecture coupled with a deepunderstanding of complaint management, as both a process and the practice of consumer redress.Our experience of system design and project management of enterprise level complaint, feedbackand case management solutions in highly secure and regulated environments such as finance, localgovernment, health and social care, central government departments and regulatory bodies stretchesback over 25 years.Our professional experience of complaint management goes back equally as long. Whether turningaround customer service operations of public bodies by helping repair relationships with citizens,improve perceptions and re-build reputations; or providing the complaint management expertise to helpfinance operations in the UK, US and Australia meet the demands of local and international regulatoryframeworks.Few understand how to apply technology to meet the complaint management objectives of today’sregulated environments as well as us. Critical to this is uncovering the trends within complaint dataand applying it for the purpose of Quality Management and Continual Improvement. Quite simply,we’re better at Complaint Management because we love turning negatives into positives.
