Click to edit Master title style

Complaints Management
Treating Customers Fairly Considerations

Contents Click to

edit Master title style

1. TCF considerations for complaints management 2. Our findings 3. Conclusions

TCF considerations for complaints management Click to edit Master title style

1.

Complaints are an indicator of areas of the business that are not operating satisfactorily for customers. Senior management should therefore ensure that their firm has a philosophy that understands and acts on the basis that effective management of complaints is a key part of treating customers fairly. Smaller firms that experience low numbers of complaints may also be able to benefit by considering these findings and conclusions. Complaints should not be viewed negatively, but as a source of rich customer feedback and an opportunity to identify how to improve performance. The FSA recognises that a short-term increase in the volume of complaints does not necessarily indicate non-TCF behaviour it may mean a firm is becoming more effective at capturing complaints and expressions of dissatisfaction. Handling complaints fairly is not just about processes and time limits. It is also about the culture within a firm and the behaviours and attitudes of staff when receiving complaints and deciding what actions to take. TCF does not mean that all complaints should be upheld. It is about having fair, consistent and prompt investigation, decision making, and redress which should be embedded in well documented procedures. Effective and prompt analysis of the root causes of complaints, and a commitment to remedying such causes, can help ensure fairer treatment to current and future customers.

2. 3.

4.

5.

6.

Our findings

(1) Although commercial considerations have led some firms to improve the standard of complaints handling more effort is needed

Click to edit Master title style

1. 2.

Some firms are working towards a step-change in their handling of complaints. This effort is mainly driven by commercial considerations and strategic focus on customer satisfaction and retention. A new mindset in these firms means complaints are understood as a valuable opportunity to enhance the customer relationship. This has required management to work to overcome views that complaints are an irritant best ignored. While we have seen some encouraging progress, it is not consistent across the industry and there is still considerable improvement required by many firms if the industry is to consistently treat fairly all customers who complain. Where improvement is still required, it generally needs to address one or more of the following: Spreading a progressive vision for complaints handling across the organisation; Changing organisational models to manage and respond to complaints better; Improving the ability to capture complaints; Improving the ability of staff to make fair decisions in response to complaints; Improving communication with customers; Gathering and using management information. Analysing the root causes of complaints and addressing those causes.

3.

4.

Our findings

(2) Not all senior management teams are setting the right tone for complaints handling within their organisation
Some senior management teams have started to build a culture valuing complaints and recognising the importance of managing them well. Actions taken include . . .
1. The executive team holding a Conference Hall session with staff where they explained the importance of complaints as the best business barometer rather than something that had to be done for the regulator. Management producing a high quality manifesto to set out for staff the corporate philosophy on complaints. Responsibility for complaints given to a senior director in the firm, or the head of complaints made a member of Executive Strategy Committee. Senior management meeting with financial journalists to gain an understanding of the issues consumers are most concerned about and the firms own reputation. The senior management team having call listening targets to listen in to a certain number of complaint calls. A Voice of the Customer committee established, including non-executive representation.

Click to edit Master title style

But not all senior management view complaints positively. Some management teams . . .
1. 2. 3. Remain defensive about complaints, feeling they are unjustified criticisms of their past sales and work. Resolve complaints, but do not accept the value of complaints nor seek to learn from them. Are remote from the issues of complaint handling, seeing complaints as a matter purely for the complaints team. Have an attitude that complaints from more valuable customers are the only ones that need to be handled well. Remunerate staff on the number of complaints they handle, not on the quality. Fail to define any corporate philosophy on complaints, with no clear goals or guidance for staff. Do not take an interest in the complaints MI that is sent to them and do not interrogate or challenge the underlying trends.

2.

3.

4.

4.

5. 6. 7.

5.

6.

Our findings

(3) Some firms take a company-wide approach but others fail to link complaints to other parts of the business or to capture complaints well
Some firms are building stronger linkages across the business to improve their capture of, and response to, complaints.
1. Formal agreements between business units that new literature or marketing material is reviewed by Customer Relations to help identify and eliminate potential sources of complaints. Central complaints policy area established with responsibility for complaints strategy, procedures, training, QA and for compiling and analysing MI. Formal root cause committees established to implement lessons learned from complaints data. Management reassure staff that complaint numbers may increase as they make complaining easier by
phone, mail, email, face-to-face and fax.

Click to edit Master title style

But some firms remain uncoordinated in their approach and fail to capture complaints . . .

1. 2. 3.

Complaints viewed just as a compliance or legal task. No interaction from complaints handling units to management or other parts of the business. Information gathered and held in complaints department not shared with strategy, marketing, product design, sales or risk departments. Firms not clearly publishing their complaints processes and procedures. Not accepting complaints verbally over the counter, instead making the customer contact a telephone number or write a letter. Poorly staffed call centre help-lines making it difficult and frustrating for customers to register a complaint. Only recording complaints when there is a serious problem with others classified as queries.

2.

3. 4.

4. 5.

5. 6.

Training for staff on how to identify a complaint and the process to record and acknowledge complaints. Detailed procedures and hand-offs provided for all staff receiving or handling complaints.

6. 7.

Our findings

(4) There are wide variations in how well firms assess complaints

Click to edit Master title style

There are examples of firms improving how they identify, capture and assess complaints . . .

But some firms fail to encourage or capture complaints well and do not assess complaints fairly. This includes . . .
1. 2. Aggressive and negative internal culture predisposed to view complaints as mainly unjustified. Applying a rigid or tick-box decision making approach with too narrow an interpretation of the issue as expressed by the customer. Inconsistent decision making, particularly between more and less valuable customers. Failing to investigate the issues diligently or clarify ambiguous issues or achieve a fair reconstruction Failing to consider relevant guidance published by the FSA or FOS Avoiding significant potential redress by offering smaller ex-gratia payments to encourage the complainant to settle Incorrect and inappropriate use of time barring or of mitigation Inconsistent decision making, reflecting excessive subjectivity by case handlers or lack of guidance

1. 2. 3.

Decision making policy set by a committee comprising strategy, compliance, legal, and senior management. Piloting new decision making approach on a number of test cases before adopting them more widely Gap analysis completed on decision making procedures, in light of recent FSA enforcement decisions on complaint handling Procedural changes communicated through company intranet, which staff have to read before being able to start work that day. Senior management review a sample of decision letters each month to check appropriateness and consistency. Risk-based QA samples complaint decisions focused on new approaches, technical issues and weak handlers New central FOS liaison team tracks & understands FOS decisions & trends & applies them to case flow All handlers have to pass training tests as new decision making policies are implemented

3. 4. 5. 6.

4.

5. 6. 7. 8.

7. 8.

Our findings

(5) Standards of communication with customers are mixed

Click to edit Master title style

Some firms recognise that clear and constructive communication with customers is a key part of handling complaints fairly . . .
1. Calling the complainant after receiving a complaint to check the nature of the complaint and gather more details and background about it. Phoning the customer to explain why the complaint is taking longer than expected to resolve. Launching a campaign to improve the clarity and consistency of letters. Improved training for staff on how to write letters in response to complaints and how to handle complaints over the phone. Tracking the amount of communication following the issue of a final decision letter to identify errors in the explanation of the decision. Sampling and comparing letters to raise standards and quality. 1. 2. 3. 4. 5.

But standards of communication are mixed . . .

Unclear decision letters with a lack of focus on the actual complaint matter and inclusion of unrelated issues. Poor drafting and over-use of legalese and corporate jargon. Standard paragraphs used that fail to address the particular complaint. Failure to keep customers informed with the progress of complaints and not responding to queries from customers. Use of defensive and dismissive language that could dissuade customers from pursuing their complaint or taking their complaint up with the FOS.

2. 3. 4.

5.

6.

Our findings

(6) The quality and use of MI, and efforts to understand and tackle the root causes of complaints, is inconsistent
There are good examples of some firms acting to improve MI and tackle the root causes of complaints . . .
1. Analysis of number of complaints received and completion times set against predicted levels with commentary explaining variance, peaks and troughs. Complaint numbers put in better context and contextualised, for example per 1,000 policies in force. Complaint volumes broken down into business processes that caused them (e.g. administration, literature, helpline) with commentary stating how improvements are being made. Review of complaints that went to the FOS to investigate why the complainant was not satisfied with the original outcome, in order to improve the quality and effectiveness of communications. Customer surveys and QA to assess quality of complaint handlers decision making, redress, communication, speed of resolution, audit trail and number of queries following final decision. In response to complaints trends, rectification plans set by Complaint committee comprising Marketing, Product Design, Financial Promotions, Legal and Compliance. Each complaint subject to a root cause review that has to be approved by a manager before the complaint can be closed.
9

Click to edit Master title style

But many firms have inadequate MI and are not addressing the root causes of complaints . . .
1. 2. MI does not adequately show or explain numbers, trends, anomalies or issues. One firm had low complaints volumes but very high call centre query volumes, yet there was no MI about what the queries were about, whether they were recurrent or what was causing them, which they could also draw upon. Poor systems means complaint data can take a long time to assemble and analyse, meaning it can lose its relevance and be of less use to the business in identifying issues affecting customers. Some firms are assessing the cause of individual complaints but not collating findings to draw wider conclusions to enable systemic root causes to be fixed. Failure to extrapolate issues from one process or product to see if it affects other processes or products. Where effort has been made to identify root causes, there is no attempt to track if improvements have been made. Customer surveys undertaken, but no examples of where the information from these has been used to improve customer service or complaints handling.

2. 3.

3.

4.

4.

5.

5. 6. 7.

6.

7.

Conclusions Click to edit

Master title style

1. 2. 3.

Complaints management is fundamental to TCF and the FSA will closely monitor activity and performance in this area. Following pensions and endowment reviews, many firms have invested in improving complaints handling. Management should ensure lessons from these exercises are spread across the rest of the firm. Although senior management in some firms have realised the commercial advantages of viewing complaints positively and handling them well, negative attitudes and poor performance prevail in many organisations. The culture of a positive approach to complaints needs to be spread through strong messages from senior management backed up by practical commitment. Further effort is needed by firms to: Develop a culture that does not view complaints negatively. Make it easier for customers to complain and express their dissatisfaction. Improve the investigation and prompt and appropriate decision making of complaints. Communicate more clearly with complainants. Generate meaningful and granular management information and use this to guide decisions. Identify and tackle the root causes of complaints to prevent similar problems re-occurring.

4. 5.

10