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FCA reinforces complaint handling requirements to prevent mis-selling

The Financial Conduct Authority (FCA) has sent out a warning shot to all regulated firms with regard as to how they handle complaints and how they identify and correct the root causes of reoccurring issues. The warning shot came by way of a fine and decision notice against Policy Services Administration Limited (PAS). PAS is an insurance intermediary which administers mobile phone insurance policies sold by Phones 4u Limited (Phones 4u). It is responsible for customer relations, claims and complaints linked to such sales and the fine was for the sum of £2,834,700. PAS settled at an early stage of the investigation and, therefore qualified for a 30% discount; had PAS not qualified for such a discount the fine would have been £4,049,637!

How should firms treat customers?

If regulated firms were ever in any doubt about how they should treat customers they should be clear now. Regulated firms should ensure that:

  • Complaints are fully investigated and resolved appropriately and consistently
  • Complaints should be fully recorded so that management information and regulatory reporting is accurate.
  • Complaints about mis-selling should not be rejected for inappropriate reasons
  • The root-cause of complaints about the sale of insurance policies, such as mis-selling, should be fully investigated and addressed.
  • Management should regularly review complaint trends to ensure that customers are treated fairly.

What is the view of the FCA?

The FCA message cannot be any clearer as Tracey McDermott, the FCA’s director of enforcement and financial crime, said:

“In any business things can go wrong. Where it does it is in the interests of both consumers and firms to put it right. Proper complaints handling is essential to ensure customers are treated fairly. It is also a key tool to help firms identify where things are not working as they should and allow them to take steps to put problems right themselves. Where this is done effectively it not only means a better relationship between firms and their customers but also avoids the cost and reputational damage of regulatory action.”

Call for action, ‘treat customers fairly’

Only last week the FCA issued a review into mobile phone insurance – Download the PDF Here. That report highlighted common themes relating to treating customers fairly. That report and this decision notice (PDF download) should be reviewed by all regulated firms (not just firms operating in the mobile phone insurance market) to ensure that their complaints procedures treat customers fairly and are fit for purpose.

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