FCA review: Consumer complaints handling review highlights 'opportunities' for improvement - DAC Beachcroft

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FCA review: Consumer complaints handling review highlights 'opportunities' for improvement

Published 11 December 2014

The Financial Conduct Authority ("FCA") has issued its report following a review of complaint handling within 15 major financial firms. Through a self-assessment analysis, the FCA wanted to see whether consumers had been put at the "heart" of firms' businesses by having effective and transparent complaint handling procedures. Its aim was to identify potential barriers to effective complaint handling, and explore forward thinking solutions to ensure complaints are better handled in the future.

Treating customers fairly is at the core of the FCA's consumer projection agenda. If a complaint is made – whether justified or not – about the provision of, or failure to provide, a financial service, the FCA believes it is vital that consumers know their complaint will be dealt with reasonably, promptly and fairly.

The FCA operates a five key stage approach to complaint handling as follows:

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

A weakness or breakdown at any stage could result in a poor consumer experience and prevent the firm from resolving complaints effectively.

The FCA's Findings

The FCA found firms had taken steps to improve complaints handling but could do much more to deliver fair, consistent outcomes for all consumers. It noted that observance of the FCA's rules (the DISP Rules) had resulted in a "tick box" approach, which may prevent the firm from exercising good independent judgement when responding to complaints. It also found that there were weaknesses in recording complaints and inconsistences in the complaints data reported to the FCA.

What Next?

The FCA is recommending all firms review its report, reflect on its own procedures and encourage a flexible approach to complaint handling. It is doing further research and developing policy proposals which it hopes to consult on soon. It has said changes to the DISP Rules may be necessary.

To download a copy of the full FCA report please click here.

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