Customer complaints: the lost opportunity for financial services providers

Customers view the manner in which firms respond to complaints or queries as a key moment of truth in how they are valued by their financial services provider. However, complaints handling can still be seen merely as a necessary cost of doing business. As such, over-time, the process of complaint handling can lose its focus on the customer, with emphasis instead placed on the needs of the business.

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What if both 'sides' could win?

The state of the industry when it comes to complaints is, on the whole, not great - from 2008 to date, there has been no demonstrable improvement in complaint handling trends across the industry.

The Financial Ombudsman Service’ (FOS) statistics on complaint handling trends are a key barometer of change across the financial services industry. However, since the financial crisis of 2008, FOS statistics visibly demonstrate that there has been no sustained improvement in banks’ and insurers’ customer service, despite major industry-wide efforts to rebuild consumer trust since the crisis.

Our research indicates that the average uphold rate – where the FOS rules in favour of a customer – remains above 50%. Or, to put it another way, more than half of all customer complaints against a bank or insurer, referred to the Ombudsman, are upheld in favour of the customer. Quite simply, organisations are too often making the wrong call more than they're making the right one. To add insult to injury, these decisions are also taking far too long for the modern consumer, who has come to expect rapid resolution.

Complaint handling and customer trust & advocacy

The need to ensure that firms treat customers fairly, and are seen to be treating customers fairly, is now at the heart of most financial service provider’s publicly-stated strategies. But this is at odds with the statistics we see from the FOS.

The primary emphasis should be on provision of an excellent customer experience and eliminating the root cause of complaints. However, when something does go wrong the quality of a firm’s complaint handling capability is a crucial aspect of the customer experience. A well handled complaint can rebuild an organisation’s relationship with it’s customer. Feedback from the complaints process can also provide invaluable insight into product design and core customer facing processes in a way that can benefit the wider customer-base. In-fact, a well-handled complaint can strengthen a customer relationship to the point where it is actually stronger than before the incident.

By the time a customer files a complaint with the Ombudsman their financial services provider must have already either rejected a customer’s complaint, or failed to respond to it. This level of service is unacceptable and is significant missed opportunity. A great customer experience requires the customer’s grievance to be dealt with at the first point of contact. Should the Ombudsman then uphold a customer’s complaint – which they consistently do over 50% of the time – then it means the provider got it wrong. Understandably, these perennial customer issues, and the manner in which they are dealt (or not), will continue to hamper financial services’ efforts to rebuild and restore widespread customer trust and advocacy.

A bad complaints process can do significant reputational damage to a financial services provider. Never before has there been so much transparency and media interest around customer service - ‘Which?’ reports, FOS statistics and of course social media. If you fail to listen to customer complaints, then customers will find someone who will listen - and increasingly this isn’t just a customer’s close family, friends and colleagues. Their entire extended online social network gets to hear about it too.

What if you could resolve complaints quickly and to the satisfaction (or dare I say, delight?) of the customer and in a way that lowers the overall cost to the business?

We know, from working with our partners, that financial services providers can improve the complaints handling process in a way that delivers a significantly improved customer experience whilst creating capacity and lowering cost. Through our partnerships we have seen significant outcomes, such as; reduced inventory of complaints, much-improved resolution time and a dramatic improvement in the percentage of complaints resolved at the first point of contact. Crucially we have also helped organisations improve the number of complaints that are being upheld by the FOS, in the customer's favour, to the point where one of our partners is now market-leading in this area.
Find out more about our most recent financial services complaints case study and watch the video to see the engaged staff at NewDay who are unlocking the potential of customer complaints.

Sean Campbell

Posted by Sean Campbell

Head of Financial Services at Unipart Expert Practices

The Unipart Way: performance improvement that sustains.

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