FS firms ill-equipped to deal with new complaints

Research carried out by feedback system expert www.managemycomplaints.com (mmc) shows that few have put in place systems capable of dealing with the demands of the new regulations.

Failure to meet the new rules opens companies up to facing severe fines and reputational damage. Companies need to act urgently to avoid the risk of this happening.

And mmc is urging companies to exceed basic levels of compliance, to prepare for an expected clamp-down when the Financial Conduct Authority takes over in 2013.

Andrew Aldred has warned nominated heads of complaints that they must be confident that decision-making controls are in place, with managers overseeing every step of the overall process.

He said that this has become “all the more critical” since July 1st when the single stage complaint handling process came into force – “the biggest change to complaints handling the industry has ever seen”.

Under these new FSA rules, a firm’s first response will be its final response.

The FSA hopes that this change will encourage firms to resolve complaints fairly when they are presented for the first time, rather than relying on a customer’s persistence – or lack thereof – when pursuing a complaint.

Mr Aldred said: “Complaints handling demands a highly specialist approach. Nominated heads of complaints within firms must be confident that the technology they use is able to evidence an entire complaint’s audit trail, which is paramount in satisfying the FSA’s requirements.”

It is believed that many financial services companies, particular smaller and medium-sized businesses which currently use Excel spreadsheets to look after complaints and feedback need to adapt to the rules by installing a specialised, cost-effective system which meets the new guidelines and can also undertake root cause analysis.

Mr Aldred said: “There is increasing criticism from consumers and many more channels through which they can make their voices heard.

“Consumer trust is at an all-time low and what’s happened over the past couple of weeks with NatWest and Barclays shows that there is increasing scrutiny and focus on financial services firms.

“Sectors like insurance are already undergoing more reviews by the FSA and it’s having an impact on these businesses.

“When the FSA is reformed the scrutiny will get even closer and it’s going to cause some companies a problem.”

But it’s not just about compliance. Mr Aldred says that, with the right system in place, firms can steal a march on their competitors by using the management information from complaints and feedback to effect positive changes throughout the company.

He said: “Customer complaints and feedback also provide a rich pool of business intelligence about your company that can help you identify new ideas, ways to improve and additional income streams to let you stay ahead of your competitors.

“Companies that don’t take advantage of this ‘free business advice’ are really missing out.

“The internet and the rise of social networking mean that the potential for bad news to spread fast has increased enormously. Unhappy customers will take their business elsewhere and tell others to do the same.