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FCA rule change: handling customer complaints

This June the Financial Conduct Authority’s new rule changes on customer complaint handling (FCA Policy Statement PS15/19) come into force. As a result of the FCA rule change, Financial Services consumers will no-doubt benefit from increased transparency of complaint data, as well as quicker, easier and fairer resolution to their complaints. So what exactly is changing?

Long lasting change for customer complaints as a result of FCA rule change

Summary of the new FCA rule change for complaint handling

Financial services firms will have longer (3 days) to resolve complaints ‘less formally’. This is intended to allow firms more flexibility in their process and resolve many more complaints to a consumer’s satisfaction first time, rather than try to meet the FCA’s existing one day target. The FCA also expects this change to result in fewer consumers having to take their complaints further (i.e. to the Financial Ombudsman Service), thereby giving firms a greater opportunity to preserve brand reputation and to re-establish the customer’s trust and advocacy.
If a complaint is resolved during this three day period, firms will now be required to send their customers a simpler, templated message which will educate and inform the complainant of their right to take their complaint to the FOS, should they wish.

Consumers will also have access to more data on the complaints made to financial services companies. When the new rules come into force next summer, firms will be required to report all complaints data to the FCA, who will publish the information and provide additional context. This is intended to give consumers a more transparent marketplace to compare firms and promote switching. Currently, firms are only required to report complaints to the FCA that take longer than a day to resolve.

Our research on recent customer complaint handling trends across the financial services industry indicates that the average uphold rate – where the FOS rules in favour of a customer – still remains above 50%. That’s over half of all customer complaints against banks and insurers, that are referred to the Ombudsman, being upheld in favour of the customer. Organisations are making the wrong call more often than they're making the right one. To add insult to injury, these decisions have also taken far too long for the modern sceptic consumer, who has come to expect rapid resolution. So, from a neutral observer's perspective, it is easy to see why the FCA rule change has happened.

What are the top 7 considerations for transforming complaint handling

New rules, new opportunities…

The challenge and opportunity for firms is to ensure they operate a robust and efficient complaints handling process to preserve and build the reputation of their brand. Conducted properly, a robust and efficient complaints handling process will drive continuous improvement programmes across the organisation. Firms are able to use the valuable data produced to identify how, when and where issues arise and as an early warning system for bigger, perhaps systemic, problems.

Between now and 30th June 2016, when the FCA rule change will be enforced, firms have a golden opportunity to revisit their complaints handling processes. The emphasis needs to be on the provision of excellent customer experiences and eliminating the root cause of complaints. In this era of increased transparency, the old attitude of simply provisioning a stipulated function - which is viewed only as a cost - is not a sustainable approach for those organisations wanting to remain competitive.

When something inevitably does go wrong, it is the quality of a firm’s complaint handling capability that forms such a crucial aspect of the customer experience. A well handled complaint can rebuild an organisation’s relationship with it’s customer and, under the new rules, firms now have this greater opportunity to resolve far more complaints to a consumer’s satisfaction first time. Furthermore, feedback loops from the complaints process can be exploited to provide invaluable intelligence and insight into product design and core customer-facing processes in a way that can benefit the wider customer-base.

Read our top 7 considerations when transforming customer complaint resolution or download the complaints handling infographic and read our customer success story at NewDay Ltd.

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