FCA's decision to require firms to declare all complaints is 'an inevitable step' says complaints boss.
Plans unveiled by the Financial Conduct Authority (FCA) today, could see that firms are required to report all complaints, not just those where a final response letter, has been issued. The consultation paper CP 14/130 'Improving complaints handling', follows the recent FCA thematic review on complaint handing.
The review noted that while some improvements and innovations have already been made firms could and should be doing more. In particular, firms did not always consider the impact on consumers when designing and implementing processes and procedures; the proposals hope to address this concern.
Christopher Woolard, the FCA's director of policy, risk and research, said: "Consumers want a simple way to complain that does not leave them out of pocket. And they want to be assured that their concerns will be dealt with fairly and quickly. These proposed reforms will further improve the system, making it less bureaucratic for firms, easier for consumers and will provide us with improved intelligence on complaints.'
Under the current rules, complaints that are dealt with by the end of the next business day do not require a letter to be sent to the customer. For these quickly resolved complaints, if dissatisfied the customer could have to wait up to eight weeks before being able to go to the Financial Ombudsman Service.
The recent thematic work showed the one day deadline could lead to some unintended consequences, with consumers often reasonably expecting a complaint to be dealt with quickly and, where appropriate, informally.
The FCA is now proposing to extend the period during which complaints can be resolved without the need for a formal letter. Firms will be allowed up to three business days to deal with less complex complaints. This will help avoid unnecessary procedure and ensure that consumers have matters resolved faster.
In addition, complainants will be able to refer all cases to the ombudsman service immediately after receiving the firm's response. Firms will also have to inform customers, in writing, that they are able to take their complaint to the ombudsman service if they are dissatisfied with the resolution.
The FCA also proposes to improve transparency by requiring firms to report all complaints to the FCA, not just those where final response letters are issued, as is the case at present. Firms will also have to analyse and report the causes and categories of complaints, which will be published alongside details about the size of firms, to provide greater context and allow for comparison of their performance.
Paul Clark, CEO of Charter UK said the proposed reforms were an inevitable step from an increasingly active regulator. "The change is an important move forward from the previous system which encouraged firms to take a short term view of complaints to improve their public image," he said.
"Under the old system firms which reported complaints quickly could remove those complaints from reports, incentivising them to rush through solutions which appease the customer in the short term but don't necessarily shed any light on the root cause of the problem.
"Now however, forward looking firms that spend more time exploring the source of a complaint, and the reasons it surfaced, will find themselves in a far better position to understand the root cause of grievances and make the business improvements necessary to fix them. This is an issue that the FCA's decision today could go a long way toward resolving."