FCA Publishes New Rules For Customer Complaints Handling
Under the new rules, financial services firms will have longer to resolve complaints less formally as the target goes from one day to three.
Customer complaints handling, especially within the financial services industry, still has space for improvement.
Caroline Wells, the Head of Costumer Insight at the Financial Ombudsman Service, gave us her insight into the best ways to handle customer complaints in an interview last month.
She said: "You need to make sure you really understand what the problem is. So often we see that customers are not very good at articulating what the problem is. In particularly for financial problems this can be quite complicated as there is a lot of jargon. It is really hard for a customer to lay-out, in the kind of language and terms that we might use internally, what the problem is."
"Sometimes they don't even know what the problem is," she continued, "they just know that something doesn't feel right. So we get an attempt from a customer to set out as best as they can what they think the problem is, and sometimes you get a sense where a customer feels like they have to act in a certain way in order to get the results that they want. What you end up with is layers of behaviour and language use which completely masks what the problem is.
"If a business doesn't dig underneath that and doesn't really understand what the customer is feeling, and it does come down to feeling a lot of the time, then any investigation you do will be completely off track. It's a really simple thing and a really common problem, we see it all the time."
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To encourage better complaints handling, the Financial Conduct Authority (FCA) has this week published a set of new rules for companies to incorporate into their strategies.
Under the new rules, financial services firms will have longer to resolve complaints less formally. This is intended to allow firms to resolve more complaints first time rather than try to meet the current one day target. Firms will now have three days to address a complaint to a consumer's satisfaction.
The FCA believes that the increased time will allow for better and easier resolution for a greater number of complaints, benefiting both consumers and firms. The regulator also expects this change to result in fewer consumers having to take their complaints further.
If a complaint is resolved during this three day period, firms will be required to send their customers a simpler, template message. This will inform the complainant of their right to take their complaint to the Financial Ombudsman Service.
Consumers will also have access to more data on complaints made to financial services companies. Firms will be required to report all complaints to the FCA, which will publish the data and provide additional context to allow consumers to better compare firms. Currently, firms are only required to report complaints to the FCA that take longer than a day to resolve.
Christopher Woolard, director of strategy and competition at the FCA, said: "Our rules will help deliver the quicker, easier and fairer resolution to complaints that consumers want. Getting this right is also vital for firms.
"A properly resolved complaint can keep a customer happy, and protect the firm's reputation. But, more than that, effective complaints handling systems can act as an early warning system for firms."