On 28 April 2010, the FSA published a report entitled: “Review of complaint handling in banking groups”. Although the review focuses on banking groups, the FSA expects all firms that handle complaints to take note of its findings.
http://www.fsa.gov.uk/pubs/other/complaint_rvw.pdf
The review follows FSA concerns about the quality of banking groups’ complaints handling highlighted in work on payment protection insurance (PPI) and bank overdraft charges. The FSA identified poor complaint handling as a key conduct risk in its Financial Risk Outlook for 2010.
The FSA assessed complaint handling standards in banking groups responsible for over 70% of complaints reported to it and for over 60% of complaints resolved by the Financial Ombudsman Service (FOS).
The FSA found poor standards at most of the banks assessed:
- Most banks did not have a culture that focused on delivering fair outcomes for complainants. This was often caused by a lack of senior management engagement and accountability and by incentives schemes that made staff reluctant to pay customers redress, even where the bank was at fault.
- Banks that undertook effective analysis of the root cause of complaints were able to identify problems before they became widespread.
- Complaint handling by front-line staff was poor in most banks assessed. The FSA found that these staff were given inadequate support, for example in training and technical support.
- Banks’ quality assurance processes focused on checking adherence to process rather than assessing the quality of the response and the fairness of the outcome.
Five of the banks assessed have agreed to make changes as a consequence of the FSA’s work and two of the five banks have been referred to enforcement for further investigation.
The FSA expects all firms which handle complaints to take note of its findings and make changes to their processes where appropriate.
The FSA will continue to monitor complaint handling data submitted by firms and produced by FOS and will take action against firms where appropriate.
The FSA has also published a complaint handling file review template, together with explanatory notes, which it uses when assessing firms’ complaint handling files. It suggests that firms may wish to adapt the template to assess their own complaint handling processes, although use of the template is not mandatory.
http://www.fsa.gov.uk/pubs/other/ch_assess_template.pdf
http://www.fsa.gov.uk/pubs/other/ch_assess_exp.pdf
Following the review, the FSA is considering making changes to its Dispute Resolution: Complaints sourcebook (DISP) to:
- Strengthen senior management oversight and engagement in complaint handling.
- Remove the DISP 1.6.5 R “two-stage process”, which the FSA regards as a potential barrier to fair complaint handling.
- Strengthen root cause analysis requirements.
- Strengthen factors that firms should consider when investigating and assessing complaints, especially FOS decisions.
The FSA intends to consult on these changes in the third quarter of 2010.
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