The Financial Conduct Authority has published amended rules on complaints handling (PS 15/19).
With this Policy Statement, the FCA is acting on a prompt from the Parliamentary Commission for Banking Standards to ensure firms take complaints seriously and provide consumers with transparency. The focus of the changes also aligns with the FCA's risk-based supervisory priorities.
The FCA has extended the period during which firms can deal with complaints informally from one to three days, but the balancing factor is that firms will now need to report data on all complaints (with the consequence that it becomes public), whereas previously they did not need to report on complaints that were resolved on an informal basis.
For complaints resolved within the three-day informal timeframe, firms need to provide a "summary resolution communication" to the client. This will follow a prescriptive format, usually in writing. A controversial point is that this communication must flag the Financial Ombudsman Service to the client, even where a complaint is dealt with readily.
Firms will need to submit a six-monthly complaints return to the FCA across a much more granular range of product or service categories, and across an adjusted list of "causes" of complaint. Implementing these changes will require significant amendments to the data capture and processing tools staff use to deal with customer queries, staff training and reporting systems. Notably, the requirements are not modified merely for being a "small firm" and some may feel that the simplified process, only available for those firms receiving fewer than 500 complaints, does not pare the obligations back enough.
The FCA has also adjusted the so-called context rules that enable firms to publish data about the size and focus of their sales and customers, with a view to their complaints data being seen in proportion to the size of their business. While this enables focus on areas of disproportionate volumes of complaints, the revisions are unlikely to cure the issue of headline grabbing figures being reported in the press, with context seemingly a secondary consideration.
Firms have historically taken divergent approaches to classifying customer contact dealt within the first day, with some applying the FCA complaint definition tightly (it includes a measure of materiality) and others taking a more relaxed approach. Now that this data will be reported and made public, there will be much more focus on precise categorisation to avoid inflated complaints data being published against the firm's name. Depending on a firm's current approach, this could require significant change. Furthermore applying the qualitative test accurately is not an easy task for frontline staff.
These changes will undoubtedly cost firms. Firms need to carefully break down their businesses and product lines against the revised complaints handling return and ensure front line staff and specialist complaints handlers can map consumer interactions onto their data collection systems. From the tone of the Policy Statement, the FCA has not been sympathetic to arguments of undue cost and makes it clear that firms must find appropriate business solutions, which may include modernising and updating systems, and also roll out enhanced training.
Can firms benefit from these changes?
The greater penetration of data collection across the industry will bring firm-specific and industry-wide systemic issues into sharper relief and may give the FCA a steer as to which firms should be involved in thematic work. Product line leaders will want to take into account the management information generated by the firm's complaints return as well as FCA's published data. Failure to act on the business intelligence on offer may well result in supervisory activity and firms and senior managers will want to react decisively to where outlier data suggests a root cause issue.
The rules apply across all financial services sectors from 30 June 2016, with some niche exceptions. This is a challenging timeline in which to compare systems, policies, processes and staff training against the involved requirements of the Policy Statement.
PS 15/19 contains The new rules in PS 15/19 on the extent to which firms can charge customers for all post-sale phone calls (not just complaints) will please customers and require changes from some firms. Firms can use a basic rate number but should avoid certain prescribed numbers and rates structures that can be seen as excessive or unfair to customers. Firms should consider the information needs of their customer in this context, and the FCA makes it clear that this may mean providing Freephone numbers for certain types of service (e.g. debt advice). These rules, in line with general changes introduced by Ofcom from 2 July 2015, apply from 26 October 2015.