COMPLAINTS ARE ON THE RISE

Let’s start with the good news. Most of the firms we work with receive very few or no complaints.

Now for the not-so-great news. The latest FOS data shows that complaints are on the rise. In quarter three of 2023/24, the ombudsman reported 47,868 new complaints, specifically about financial products and services. This is an increase of 6,565 on the same quarter the previous year and the quarter four statistics show that complaints overall are on the up.

In particular, the FOS is seeing a significant increase in cases brought by claims management companies (CMCs), accounting for 25% of all complaints in 2023/24.

You’ll have no doubt seen the headlines this year regarding St James Place. It is being presented with thousands of complaints by various solicitors, who are urging the firm’s clients and former clients to make a claim regarding ongoing advice charges, where annual reviews have not been carried out.

It would not be a surprise if we start to see FCA regulated CMCs join this campaign or particularly astute clients beginning to question their own service delivery/fees and raising similar concerns with their own adviser.

FCA focus

We know that service delivery is at the forefront of the FCA’s focus at the moment. Larger firms are being asked to provide data to evidence that they have carried out annual reviews for all their clients. This suggests the regulator regards the annual review as a cornerstone of service delivery and expects you to have oversight and controls in place to be able to monitor and report adequately.

Interestingly, a recent ongoing service complaint referred to the FOS, ruled that whilst the firm had failed to deliver on parts of its service agreement, other elements had been fulfilled. It was decided that a part-refund of the client’s fees was due, proportionate to the service feature not delivered, rather than a full refund.

Whilst this may sound fair, the approach raises an important question. Will you be able to analyse the delivery of all your service features in enough detail to address an individual complaint, or monitor this on an ongoing basis for possible Consumer Duty risks?

Responding to complaints – the challenges

Complaints are an indicator of poor consumer outcomes and when one is received, you must investigate, respond and where appropriate, compensate in a timely manner. Failure to do so could increase the chances of attracting FCA investigation and potential enforcement action, not to mention the reputational damage it can cause.

Whilst it may be a rare occurrence, all firms are likely to receive a complaint at some point and regardless of whether it is justified or not, how it is handled is just as important. Whilst you may have a complaint policy and procedure in place, if you have little or no experience in dealing with one, it can be a daunting task. Without the practical know-how, you run the risk of making a bad situation even worse.

In addition to the monitoring and reporting challenges we mention above, we know that handling a complaint is time consuming and time pressured, not only for the individual responsible for completing the investigation, but also for the wider team who may need to provide support and evidence.

Complaints are also emotive and within a small firm, where perhaps there isn’t a central complaints department, it can be difficult to take a dispassionate view on the situation or complete a successful root cause analysis.

Easing the burden

No one wants to receive a complaint, but the good news is you are not alone. Our team has seen a wide range of issues, across a broad spectrum of firms and we are equipped to support you.

By acting as an impartial, critical third person, we can assess the complaint using the evidence on file and either help you collate a robust and clear defence, or decide how to rectify and compensate the client if things have not quite gone to plan.

Regardless of whether the complaint is upheld or not, we can complete root cause analysis to help your firm and the individuals involved understand where things went wrong, what procedures, systems and controls can be improved and if any other clients could be affected by the issue. We will also identify and help you take action to plug any training needs.

A well-handled complaint can actually be a fantastic opportunity to turn a relationship around. Most clients understand that they are working with humans and mistakes can happen. It is how you respond to and rectify errors that demonstrate the importance a firm puts on Consumer Duty outcomes and the gravitas you give to monitoring and identifying the potential risks of harm.

If you have received a complaint and would like help carrying out your investigation or compiling a response, don’t hesitate to contact us on (0161) 521 8641 or email: info@b-compliant.co.uk