Is no news always good news? Drop in complaints may hint at conclusions from over-due FCA complaints review

26 September 2014

The FCA's latest publication of complaints data has revealed a decrease of 5% in the overall number of complaints.

Firms will be pleased about the decline, although the drop was largely due to big drops (10-11%) in the numbers of complaints about PPI (by far the most complained about product) and credit cards. There was only a slight drop of 1% in complaints about general insurance products.

But before firms congratulate themselves on progress, they should await the outcome of the FCA's thematic review into complaints handling announced in a speech in September 2013. It is worth recalling the comments on the FCA's objectives for the review:

"The amount of complaints that go to the Ombudsman suggests that something isn't working in the way in which firms manage and investigate customers' complaints.  So, as signposted in our 2013/14 Business Plan, we are going to undertake a thematic review of complaint handling and management in major firms, including building societies.

The thematic review will identify why complaint handling is not working well for some consumers and address any poor practice within firms. We will use our new assessment approach to place greater onus on 'senior persons' to understand how effective their firm's complaints handling process is, and how they use the complaints experience to identify and correct the systemic causes behind customers' complaints.

We will conduct our review in two phases.  Phase 1 will consider how firms identify, record and report complaints, and will be completed by the end of 2013.  Phase 2 will commence in early 2014, and will consider firms' approach to redress and root cause analysis.  We intend to reach a conclusion on our findings from the thematic review, and provide recommendations, in Q2 2014".

The drop in complaint numbers revealed in the FCA's data yesterday may, in part, be because firms are rooting out problems before they become complaints.  Although, investment advice complaints have increased by nearly 10% which suggests that this sector has yet to embrace 'voluntary' past business reviews fully. Phase 2 of the thematic review is due to comment on redress and the 'root cause analysis' rules which require firms voluntarily to undertake past business reviews (PBRs) and deal with mis-selling whether or not complaints are made.

I expect firms 'voluntarily' conducting PBRs to be a trend for the future as greater emphasis is placed on proactive reviews and customer contact and redress exercises rather than reactive complaints handling.

I note that the date for publication of the thematic report is long past, which might simply reflect the FCA's current workload. However, once the report is published firms can expect follow up work from the FCA to ensure that firms – and the individuals responsible for complaints (under DISP 1.3.7) - are embedding its conclusions into their businesses.

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