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The Importance of Complaints

The word is enough to strike fear into the heart of anyone who works in financial services. As unlikely as it might seem, however, complaints can offer excellent opportunities to put things right, review customer service and outcomes, and make improvements. With the Consumer Duty coming in at the end of this month, older compliance processes can get overlooked as a habit, but let’s explore how existing processes can help us to demonstrate strong compliance with the Duty.

Complaint handling is back in the news. The Financial Conduct Authority wrote to insurers in June warning them it is about to clamp down on firms that fail to settle claims appropriately and in a timely fashion. The FCA noted an increase in complaints – particularly from vulnerable customers – about the way insurance firms were handling claims. The FCA investigated and found that companies were failing to identify vulnerable customers, offer them appropriate support, and settle claims properly and in line with DISP.

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The impact on customers of failure to deal with complaints in time and fairly is exacerbated by the cost-of-living crisis. For example, whilst it has always been against FCA rules to offer a price to an insurance customer that is lower than fair market value, affected customers are now going to be squeezed even more, losing out if fair treatment isn’t guaranteed.

The FCA also found that some firms could not demonstrate that they were monitoring customer outcomes.

Complaints are continuing to increase across the industry. The Financial Ombudsman’s latest data, published in June, shows an increase to 48,449 new complaints in Q3 2022/23, up from 41,303 in the previous quarter. With the cost-of-living tightening the purse strings for everyone, this trend is likely to continue upwards as customers who might not have complained in different circumstances are more affected when something goes wrong.

With the current focus on the Consumer Duty, other areas of compliance are often left to one side. But complaints themselves can help us to understand where our firm stands on the Duty.

Although a complaint is often a measure that something has gone wrong where it shouldn’t have, they can help flag an issue at an early stage, before it becomes embedded. That’s why a robust complaints process – and the ability to identify and investigate a complaint thoroughly – is so important. The connection between the cause and effect might seem clear, but unless a strong procedure explains how the cause of a complaint is to be put right, this can easily fall through the cracks.

Complaints Handling in a post-Consumer Duty world means that there’s a number of hats that need wearing – complaints themselves must be dealt with fairly and within the time limits set out in DISP. Any issues highlighted by the investigation can be put right, offering an excellent opportunity to document compliance and to get something sorted before it becomes a bigger problem – ideal if the issue potentially affects customer outcomes.

Also at play is customer service. Complaint handlers – as much as any other customer-facing staff – must be able to identify vulnerable customers and support them through the complaint process. And complaints can be made via any means, meaning any member of staff could potentially receive a complaint. It’s vital that all customer-facing staff are trained to recognise a complaint – the onus is not on the customer to make it clear that it’s a complaint, but on the firm to identify it, log it, and get the ball rolling quickly.

Once the complaint has been investigated and closed, if it has flagged any underlying issues, this offers a perfect opportunity to learn lessons, make changes or train staff.

Regular, engaging training on identification of complaints and support of customers making a complaint is only getting more important. Our online Complaints Handling course provides everything that your staff needs to know to identify and investigate complaints, and support customers in an easy to understand, relatable way. Priced at £20, the course is accessible at the user’s convenience and provides a certificate upon successful completion.


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