In the financial services industry, maintaining trust and confidence is paramount.
When a firm authorised by the Financial Conduct Authority receives a complaint, it triggers a series of crucial steps aimed at resolving issues, improving processes, and upholding regulatory standards.
In this article, I will outline the key actions and considerations for firms when dealing with customer complaints.
Acknowledgement and record-keeping
Upon receiving a complaint, the individual within the business responsible for complaint management should be notified. This is generally the compliance officer.
At this point, an initial assessment will be carried out to determine if an immediate resolution can be made. Where this is possible, the complainant should be provided with a written summary of your findings and conclusion (summary resolution).
If this is not possible, the firm should provide the complainant with an acknowledgement of their complaint. Regulations stipulate that a prompt acknowledgement of the complaint be made, typically this is within five business days.
This acknowledgment should include details on the firm's complaints handling process and an estimate of when the customer can expect a resolution.
Simultaneously, the firm must maintain detailed records of the complaint, documenting the nature of the issue, the customer's details, and any steps taken during the resolution process. Proper record-keeping is not only a regulatory requirement, but also essential for demonstrating compliance and continuous improvement.
Notification to your PI insurer
Upon receipt of a complaint, you should notify your professional indemnity insurance provider. This is generally part of the PI insurer’s terms and conditions.
Most PI insurers will have a notification of claim form you are required to complete. However, we would suggest you review your policy conditions to ensure you are compliant with your insurer’s requirements.
Investigation and resolution
The core of complaints handling involves a thorough investigation of the issues raised by the customer. FCA regulations emphasise the importance of fair and unbiased assessments.
The firm should assign a competent and independent individual to investigate the complaint, considering all relevant evidence and documentation.
Depending upon the size of your firm, or the complexity of the complaint, you may also wish to obtain an independent assessment of the customer’s concerns.
During the investigation, the firm should maintain open lines of communication with the complainant, providing updates on the progress and any additional information required.
Firms are encouraged to review trends in complaints, looking for patterns that may indicate systemic issues.The goal is to resolve the complaint fairly and promptly, addressing the customer's concerns and providing appropriate redress if necessary.
Timely responses and escalation
Regulatory guidelines outline specific timelines for responding to complaints. Firms must provide a substantive response within eight weeks of receiving the complaint.
If additional time is needed, the firm should inform the customer of the delay, providing a revised timeframe for resolution.
In cases where resolution within the stipulated timeframe is not feasible, the firm must inform the complainant about their right to refer the matter to the Financial Ombudsman Service and provide the necessary details for doing so.
This emphasises the importance of internal resolution mechanisms and sets the stage for external intervention if needed.
Learning and improvement
Each complaint received by the firm presents an opportunity for learning and process enhancement. It is crucial to conduct a post-resolution analysis, identifying root causes and areas for improvement.
This analysis contributes to the firm's commitment to continuous improvement and helps prevent similar issues from recurring.
Firms are encouraged to review trends in complaints, looking for patterns that may indicate systemic issues that may also require addressing.
This proactive approach to learning not only aligns with regulatory expectations but also strengthens the firm's risk management and compliance frameworks.
Reporting to the FCA
As part of regulatory compliance, firms are required to report complaints to the FCA, typically via their RegData return. This includes complaints that are not resolved within the stipulated eight-week timeframe.
Timely and accurate reporting to the FCA is essential for transparency and regulatory oversight.
Management information and consumer duty
Complaint MI plays a crucial role in fulfilling the principles of consumer duty by providing accurate and comprehensive data for monitoring and ensuring that the firm's practices align with regulatory requirements.
The MI generated serves as a tool to demonstrate the fair treatment of consumers, promoting transparency, ethical conduct, and a customer-centric approach.
Handling customer complaints is an integral aspect of maintaining a robust and customer-centric business. Firms must approach complaints with a commitment to fairness, transparency, and continuous improvement.
Following the implementation of consumer duty, all firms are required to deliver good customer outcomes with no unreasonable barriers.
Those firms that acknowledge complaints promptly, conduct thorough investigations, and learning from each case not only fulfil regulatory obligations but also foster trust and confidence among their clients.
Rob Fardey is director of compliance services at SimplyBiz
