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FCA Complaints update masks the reality

Those who focus on press release headlines will, no doubt, be relieved that the recent Financial Conduct Authority [FCA] complaint data showed an overall reduction in complaints by 5%. Of course, any reduction is welcome, but the figures show that financial service firms still received over 2.3 million complaints in the 6 month period between January and June 2014. At that rate, the figure for 2014 will still exceed 4.5 million complaints. As the UK adult population is slightly larger than 50 million, the data shows that nearly 1 in 10 adults in the UK will complain to a financial service company in 2014! The fact that financial service companies continue to get it so wrong, is no reason to rejoice.

Some Banks saw reductions

While some financial service firms contributed positively to the reduction (Barclays, National Westminster and Santander all saw double digit percentage reductions over their second half 2013 complaint numbers) others saw increases. For example, Bank of Scotland received a 46% increase in the number of complaints it received over the second half 2013 figure (265,640 complaints). Lloyds, saw a lower percentage increase (3%), but still received 264,115 complaints in the first 6 months of 2014.

The FOS are shown to be out of touch

Payment Protection Insurance [PPI] remains in pole position as the most complained about product recording 1,236,899 complaints in a six month period. This meant that PPI accounted for 52% of all complaints and 78% of complaints about general insurance and pure protection products. Those who have predicted the early end of PPI complaints, including the Financial Ombudsman Service [FOS], are once again shown as being out of touch.

What does the FCA think about complaint handling?

Complaints against banks and building societies accounted for 66% of all complaints. This puts into perspective the background to the FCA announcement (in its 2013/14 business plan) that it would undertake a thematic review of complaint handling in major firms. The recommendations were to be issued in Q2 2014, but they are still awaited. The fact that these results are overdue suggests the FCA may have identified what they suggested might be the case at the outset, ‘that compliant handling might work well for some consumers, but that there would be poor practices which would need to be addressed’. As the FCA have stated on many occasions that their ‘assessment approach’ requires that ‘senior persons’ understand how effective their firms complaint handling is and that they use the complaint handling experience to identify and correct systemic causes behind customers’ complaints. The FCA is right when it states, “it’s in the industry’s interest to ensure that when customers do complain, they have confidence that their complaint will be recognised, that it will be investigated fairly in a timely manner and that redress will be paid where it is due”. However, it looks like the financial service community will not have to wait much longer to learn what the FCA thinks of its complaint handling as I note that in one of the FCA sessions at the forthcoming Building Societies Association [BSA] conference (20 November 2014) a senior manager from the FCA specialist supervision division will “explain why the review was needed, what it covered and its insights [emphasis added]”.

Possible enforcement action to follow the review?

Those awaiting the FCA thematic review into complaint handling are expecting that the results, and possible enforcement actions which will flow from the review, will be a better indicator of reality than a six month numbers snapshot!

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