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Complaints Management

Treating Customers Fairly Considerations

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1. TCF considerations for complaints management

2. Our findings

3. Conclusions

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TCF to edit Master
considerations title style
for complaints management

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.

2. Smaller firms that experience low numbers of complaints may also be able to benefit by considering
these findings and conclusions.

3. 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.

4. 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.

5. 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.

6. 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.

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

1. 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.

2. 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.

3. 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.

4. 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.

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 Our findings
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(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.
2. Management producing a high quality “manifesto” to
set out for staff the corporate philosophy on
complaints.
3. Responsibility for complaints given to a senior director
in the firm, or the head of complaints made a member
of Executive Strategy Committee.
4. Senior management meeting with financial journalists
to gain an understanding of the issues consumers are
most concerned about and the firm’s own reputation.
5. The senior management team having call listening
targets to listen in to a certain number of complaint
calls.
6. A “Voice of the Customer” committee established,
including non-executive representation.
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But not all senior management view
complaints positively. Some management
teams . . .
1. Remain defensive about complaints, feeling they are
unjustified criticisms of their past sales and work.
2. Resolve complaints, but do not accept the value of
complaints nor seek to learn from them.
3. Are remote from the issues of complaint handling,
seeing complaints as a matter purely for the
complaints team.
4. Have an attitude that complaints from more valuable
customers are the only ones that need to be handled
well.
5. Remunerate staff on the number of complaints they
handle, not on the quality.
6. Fail to define any corporate philosophy on complaints,
with no clear goals or guidance for staff.
7. Do not take an interest in the complaints MI that is
sent to them and do not interrogate or challenge the
underlying trends.
 Our findings
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(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 But some firms remain uncoordinated in their
across the business to improve their capture approach and fail to capture complaints . . .
of, and response to, complaints.

1. Formal agreements between business units that 1. Complaints viewed just as a compliance or legal task.
new literature or marketing material is reviewed by
Customer Relations to help identify and eliminate 2. No interaction from complaints handling units to
potential sources of complaints. management or other parts of the business.

2. Central complaints policy area established with 3. Information gathered and held in complaints
responsibility for complaints strategy, procedures, department not shared with strategy, marketing,
training, QA and for compiling and analysing MI. product design, sales or risk departments.

3. Formal root cause committees established to 4. Firms not clearly publishing their complaints
implement lessons learned from complaints data. processes and procedures.

4. Management reassure staff that complaint numbers 5. Not accepting complaints verbally over the counter,
may increase as they make complaining easier by instead making the customer contact a telephone
phone, mail, email, face-to-face and fax. number or write a letter.

5. Training for staff on how to identify a complaint and 6. Poorly staffed call centre help-lines making it difficult
the process to record and acknowledge complaints. and frustrating for customers to register a complaint.

6. Detailed procedures and hand-offs provided for all 7. Only recording complaints when there is a “serious
staff receiving or handling complaints. problem” with others classified as “queries”.

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 Our findings
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(4) There are wide variations in how well firms assess complaints
There are examples of firms improving how they
identify, capture and assess complaints . . .
1. Decision making policy set by a committee comprising
strategy, compliance, legal, and senior management.
2. Piloting new decision making approach on a number of
test cases before adopting them more widely
3. Gap analysis completed on decision making
procedures, in light of recent FSA enforcement
decisions on complaint handling
4. Procedural changes communicated through company
intranet, which staff have to read before being able to
start work that day.
5. Senior management review a sample of decision letters
each month to check appropriateness and consistency.
6. Risk-based QA samples complaint decisions focused on
new approaches, technical issues and weak handlers
7. New central FOS liaison team tracks & understands
FOS decisions & trends & applies them to case flow
8. All handlers have to pass training tests as new decision
making policies are implemented
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But some firms fail to encourage or capture
complaints well and do not assess complaints
fairly. This includes . . .
1. Aggressive and negative internal culture predisposed
to view complaints as mainly unjustified.
2. Applying a rigid or tick-box decision making approach
with too narrow an interpretation of the issue as
expressed by the customer.
3. Inconsistent decision making, particularly between
more and less valuable customers.
4. Failing to investigate the issues diligently or clarify
ambiguous issues or achieve a fair reconstruction
5. Failing to consider relevant guidance published by
the FSA or FOS
6. Avoiding significant potential redress by offering
smaller ex-gratia payments to encourage the
complainant to settle
7. Incorrect and inappropriate use of time barring or of
mitigation
8. Inconsistent decision making, reflecting excessive
subjectivity by case handlers or lack of guidance
 Our findings
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(5) Standards of communication with customers are mixed

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.
2. Phoning the customer to explain why the complaint is
taking longer than expected to resolve.
3. Launching a campaign to improve the clarity and
consistency of letters.
4. Improved training for staff on how to write letters in
response to complaints and how to handle complaints
over the phone.
5. Tracking the amount of communication following the issue
of a final decision letter to identify errors in the explanation
of the decision.
But standards of communication are mixed . . .
1. Unclear decision letters with a lack of focus on the actual
complaint matter and inclusion of unrelated issues.
2. Poor drafting and over-use of legalese and corporate
jargon.
3. Standard paragraphs used that fail to address the particular
complaint.
4. Failure to keep customers informed with the progress of
complaints and not responding to queries from customers.
5. Use of defensive and dismissive language that could
dissuade customers from pursuing their complaint or taking
their complaint up with the FOS.

6. Sampling and comparing letters to raise standards and

quality.

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 Our findings
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(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.
2. Complaint numbers put in better context and
contextualised, for example per 1,000 policies in force.
3. Complaint volumes broken down into business processes
that caused them (e.g. administration, literature, helpline)
with commentary stating how improvements are being
made.
4. 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.
5. 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.
6. In response to complaints trends, rectification plans set by
Complaint committee comprising Marketing, Product
Design, Financial Promotions, Legal and Compliance.
7. Each complaint subject to a root cause review that has to
be approved by a manager before the complaint can be
closed.
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But many firms have inadequate MI and are not
addressing the root causes of complaints . . .
1. MI does not adequately show or explain numbers, trends,
anomalies or issues.
2. 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.
3. 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.
4. 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.
5. Failure to extrapolate issues from one process or product to
see if it affects other processes or products.
6. Where effort has been made to identify root causes, there is
no attempt to track if improvements have been made.
7. Customer surveys undertaken, but no examples of where
the information from these has been used to improve
customer service or complaints handling.
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Conclusions Master title style

1. Complaints management is fundamental to TCF and the FSA will closely monitor activity and
performance in this area.

2. 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.

3. 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.

4. The culture of a positive approach to complaints needs to be spread through strong messages from
senior management backed up by practical commitment.

5. 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.

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