In Focus: When things go wrong  

How to respond to a client complaint

  • Explain how to handle incoming complaints
  • Explain how to work with the Fos
  • Communicate how to learn from complaints
How to respond to a client complaint
There is a proper way to handle complaints. (Mohamed Hassan/Pixabay)

Believe it or not, there is an upside to receiving a complaint – it is an excellent opportunity to review your proposition and make improvements.

Hearing from the Financial Ombudsman Service might make your heart sink, but it does not necessarily mean you have done anything wrong. With the right processes in place, the matter can be dealt with efficiently. 

The Financial Conduct Authority rules around complaint handling can be found in the DISP sourcebook, but for now, let us start at the beginning. If you have had contact from the Fos, it is likely it was not a surprise.

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What is a complaint?

The FCA defines a complaint as: “Any oral or written expression of dissatisfaction, whether justified or not, about the provision of, or failure to provide, a financial service; and which alleges that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience.” 

Complaints must be accepted in the format they are received, for example, by letter, telephone, email, personal visit, etc. If someone calls your office, it is not acceptable to ask them to put the matter in writing before it is reviewed and you cannot charge for handling their complaint. 

Similarly, matters raised by third parties must be treated as if the customer had made contact. You cannot ignore contact from a claims management company, solicitor or relative. 

What can be complained about?

In short, anything. However, not all complaints are deemed regulated complaints. 

A service or administration issue may not have caused any financial loss, but may have resulted in distress for the client and, therefore, needs to be dealt with appropriately. 

A client may complain about the performance of an investment, even if it is one of the risks a consumer should understand and be able to tolerate.

In this situation, you would need to consider the suitability of the advice given and whether the investment was in line with the risk profile.

As a general rule, complaints will not be upheld for poor performance, but if the investment is in the wrong risk profile, then compensation could be due. 

What should you do when receiving a complaint? 

Almost any member of staff could receive a complaint, so it is important your entire team is trained to identify one and handle it appropriately. 

The person taking the complaint needs to gather as much information as possible to enable you to investigate it thoroughly. If it can be resolved within three business days, a summary response letter needs to be sent to the customer and the matter logged on your complaints register. 

However, if the issue is more complex, making it impossible to resolve in three business days, then a detailed complaints investigation needs to be launched.

This is also the case if the client does not accept your attempts at resolution. The process for this is detailed below.