The review looked at several banking groups responsible for over 70% of the complaints firms receive and report to the FSA and over 60% of those resolved by the Financial Ombudsman Service.
It found poor standards of complaint handling within most of the banks assessed, including:
- A lack of senior management engagement and accountability for the delivery of fair complaint handling;
- Poorly designed staff incentive schemes that made branch staff reluctant to pay redress to customers, even in situations where the bank was at fault;
- Poor quality complaint handling by staff in branches and general call-centres leading to inadequate investigations, poor decision making as to the outcome of the complaint and unsatisfactory correspondence with customers;
- Complaint handling procedures that led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank;
- The failure of banks to learn from previous complaints and to make changes to prevent similar complaints arising in the future.
Importantly, the FSA did find examples of good and compliant practices in parts of some of the banking groups assessed. This demonstrates it is possible for banks to handle high volumes of complaints and deliver fair outcomes for consumers.
Dan Waters, the FSA’s director of conduct risk, says: “A culture of fair complaint handling is an important indicator of whether a firm is committed to treating its customers fairly. It is vital that customers know that if something goes wrong, their complaint will be dealt with in a reasonable way and that they will get a fair outcome.
“While we found some good practice, there is clearly evidence of unacceptable standards of complaints handling in banks. Delivering change in this area is a major priority and we are determined to use all the tools available to us to ensure that banks comply with our rules.”
To assist all firms in meeting its requirements, the FSA has published a complaints handling file review template, which firms may wish to use to help them assess if their complaint handling is achieving fair outcomes for customers.
The FSA is also reviewing whether it needs to make changes to its existing rules on complaint handling and will be publishing its proposals in the third quarter of this year.