Complaints handling is a tough nut to crack. It can be a complex, time consuming and frustrating process to put matters right – or indeed decide after due consideration that a complainant is not justified.

Failing to take complaints seriously or being insufficiently resourced, now lays a business wide to a range of risk, from regulatory intervention and the Ombudsman to reputational damage. Yet dealing with complaints is usually viewed as an administrative function. Even in larger organizations those tasked with the role may work in relative isolation from the rest of the business and findings may not always reach the risk manager’s remit.

If large numbers of complaints are being dealt with, then there can be pressure to try and sort matters out as quickly as possible, but without seeing the wider picture.

This was the theme of a paper by risk management consultants, Bovill, called Complaints handling: a 360 degree view. This stated there were a number of issues common to firms in financial services, including:

  • Inconsistency in the way complaints are captured and categorized throughout a business
  • Senior managers being unaware of volumes or reasons of complaints
  • A failure to conduct root cause analysis
  • Firms giving compensation to those who complained but ignoring other customers who were wronged, but did not complain.

Revisit complaints procedure?

So should risk managers be revisiting the complaints handling service their firm is offering? If so, they may well find they need to advise boards of the need to beef up resources and in particular, ensure that knowledge gained from complaints is shared.

As Bovill said: “The insights gained from feedback received enables firms to focus their efforts on pre-empting and eliminating customer detriment. But the complaints process should not be seen in isolation. Firms that concentrate exclusively on the operational elements of complaints handling are devoting resource to risks that have already crystallized, rather than identifying future issues. Problems arise where firms focus too much on treating the symptoms, rather than seeking the cure.”

FCA’s new reporting rules

The regulator follows complaints handling carefully as it a key indicator and the FCA’s new reporting rules mean that the number of all complaints now needs to be passed on. Once published, there is plenty of data that appeals to the media.

As Christopher Woolard, the FCA’s executive director of strategy and competition, 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.”

Barclays cautionary tale

Most recently, Barclays was the most complained about bank, receiving a slew of unwanted publicity, which stated it had received 47% more complaints than the next worst bank, and was responsible for 28% of the entirety of complaints made in the six months. Many of the complaints were connected to payment protection insurance (PPI) and these will now be tailing off as a result of the deadline for mis-selling claims, but for businesses that are attracting more than their fair share of complaints, there is no hiding place.

A positive note

There is the positive aspect in extracting value by conducting proper analysis of complaints data. With risk assessment software, large numbers of complaints can be analyzed to provide information on where problems with products lie. It could also reveal where there are issues with staff training, such as if customers do not understand what they are buying or indeed, if there is mis-selling.

It provides the opportunity to nip potential problems in the bud and for risk managers, knowing there is a sound complaints handling policy in place with sufficient investment is a vital way to prevent regulatory intervention.