UK: Complaints Handling | Implementing The Complete FCA Complaint Definition

Last Updated: 28 August 2015
Article by Nicholas Kemp

Most Read Contributor in UK, August 2017

Implementing the regulatory changes in Policy Statement 15/19 will make complaint volumes more transparent; giving the regulator, the public and the media greater awareness of the actual number of complaints received by a firm.

Despite the FCA's promise to contextualise the first published set of revised complaints data, there remains a possibility that some elements of the media may portray a firm, which by volume has moved towards the top of the table, in a less than positive manner. This risk is especially pertinent to firms which, under the current reporting metrics, are placed comfortably and fairly anonymously towards the bottom end of the table when sorted by number of complaints.

As complaints data becomes more relevant and focused, it will likely become an additional factor consumers consider when shopping for financial products and services.

It is therefore in a firm's interest, from both a consumer and regulatory perspective, to report only complaints that meet the FCA Handbook Glossary definition.

The purpose of this blog is to consider the actions a firm could take to implement the full complaint definition and thus present a more accurate picture of their complaint volumes.

The FCA's position on accurate complaint identification

The FCA has been very clear in both CP14/30 and PS15/19 of its desire for firms to only report complaints that are aligned to the Handbook Glossary definition. They go so far in PS15/19 to threaten firms with supervisory or enforcement action if they do not take all measures necessary to comply.

The FCA acknowledge that firms may apply a wider definition to capture all feedback from consumers and that training staff to a level, which allows them to apply all the tests contained within the definition, is challenging. However, their intent is clear: firms should only report complaints which meet the definition within the Handbook Glossary.

The complaint tests

In our experience, it is the challenge in training staff to apply a consistent definition of material which causes firms to apply a far wider internal complaint definition, e.g. 'any expression of dissatisfaction', and as a consequence over-report (and thus make public) more complaints than they have actually received.

The majority of the tests within the complaint definition are straightforward:

  • Has an expression of dissatisfaction (orally or in writing) been made?
  • Does the expression of dissatisfaction relate to the provision of (or failure to provide) a financial service?
  • Does the expression of dissatisfaction relate to a financial service or product which comes under the jurisdiction of the Financial Ombudsman Service?

And then there's the tricky part:

  • Does the complainant allege that they have suffered (or may suffer) financial loss, material distress or material inconvenience?

Implementing the complete complaint definition

Based on our experience, and with the right time investment and culture from senior management, it is perfectly possible to successfully train staff to correctly identify complaints. Some of the practical actions a firm could consider taking are:

  • Providing classroom based training to all complaint logging staff ('Staff') which
    • clearly explains and defines the three binary tests noted above with comprehensive illustrations for each, e.g. what would and would not be considered a failure to provide a financial service
    • explains what constitutes a potential or actual financial loss
    • explains how the firm have defined material with examples of how it should be considered in a wide range of firm-specific circumstances
  • Providing decision making trees for each of the tests to help Staff identify complaints correctly
  • Empowering Staff to make their own assessment of whether there has been material distress or inconvenience on a case by case basis. Firms should accept, as the FCA does, there will always be some subjectivity to this assessment
  • Training quality assurance staff to make judgement based decisions when assessing complaint identification instead of applying binary rules
  • Providing access to SMEs (certainly in the early stages of implementation) who can support Staff with correct complaint identification
  • Providing weekly bulletins to Staff with examples of correct and incorrect identification of complaints to support calibration of understanding
  • Reviewing any Staff assessment process to ensure that Staff are not penalised for mis-categorising consumer 'concerns' as complaints. In our experience, if there is a penalty for mis-categorising complaints staff will likely err on the side of caution, but this needs to be countered with robust controls to ensure there is no under-reporting
  • Enabling the firm's complaint management system to be able to re-categorise complaints and 'concerns' once logged
  • Implementing adequate competency tests and annual refresher / training assessments.

It goes without saying that firms should also acknowledge, address and learn from all customer concerns regardless of whether they meet the FCA definition. How a concern or complaint is defined should not impact customers, who remain at the heart of the process.

What are the benefits?

Accurate complaint identification means only true complaints enter a firm's formal complaint handling process leading to less confusion for consumers who do not think they have complained but then receive a final response letter or (after June 2016) a summary resolution communication.

It also presents an accurate portrayal of a firm's complaint volume to the regulator, the public and the media.

Finally, root cause analysis can be more appropriately focused enabling firms to identify and improve areas of the business, which are delivering a poor customer experience.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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