Customer complaints received by financial services organizations in the first half of this year were down 2.6% on the previous six months, according to the latest data published by the Financial Conduct Authority (FCA). The total number – 2.05m complaints – represents a 40% reduction since the peak in 2012.

Banks and building societies attracted most of the complaints, 64%, although the actual number was down 3.2% to just over 1.3m. Personal investment firms saw the largest increase in complaints, up 15% on the second half of last year, but the numbers are low compared with other types of firms.

Almost half the complaints, 927,631, were about payment protection insurance (PPI). That is more than double the number received about current accounts, the second most complained about product.

Other than PPI, firms reported 318,141 general insurance and pure protection complaints, a rise of 1.7%, although complaints in this sector as a whole have now fallen to half their peak total of 2.5m in 2012.

Despite current accounts coming second in the complaints league table, the actual number has fallen by 10%, the biggest six-month reduction in complaints for any product. The number of credit card complaints decreased for the first time since 2014 and is now 61% lower than the highest level recorded four years ago,

More than 93% of all complaints were closed within eight weeks, 57% of complaints about financial products were upheld – 3% more than in the previous six months – and the total amount of redress paid to consumers was 0.8% down at £1.96bn

The FCA is changing the way it reports and publishes complaints. The next data set, due in April 2017, will put the number of complaints into context in relation to the size of each business, giving consumers and industry better information.

How KRI’s on customer complaints can provide valuable insight

Customer complaints are often seen by many as a bellwether for the effectiveness of the business and its future success. KRI’s that focus on complaints and customer feedback can provide an early warning system on future prosperity as well as on overall operational compliance and effectiveness.

In order to keep track of customer complaints and their potential effect on the organization, it is essential to have strong reporting and monitoring systems as well as processes in place within your RIsk Management.

This should consist of the following:

  • A set of key conduct risks relating to customers, which can be aggregated across the entire organization
  • A collection of related Key Risk Indicators (KRI’s) and Key Control Indications (KCI’s), which are aligned with the conduct risks and their associated controls. Each of these should focus on key forward metrics, such as number of complaints, social media sentiment and the effectiveness of controls in place to reduce the likelihood of the risks occurring
  • Systems for measuring the metrics needed to support the KRIs and KCIs. In particular tracking customer complaints, incidents relating to conduct and treating customers fairly, and related conduct training and policies.

By combining intelligent data collection, along with aggregated KRIs, KCIs and Risk assessments, it’s then possible to keep a finger on the pulse of all conduct related activities across the business; ensuring that controls are working effectively, and provide evidence to regulators and the Board of a pro-active, rather than re-active approach to customer well-being.