FSA takes banks to task over complaint handling

The Financial Services Authority (FSA) is taking tough action after finding weaknesses in five banks handling of customer complaints.
As a result of the review, five banks are undertaking major changes to the way they deal with complaints and two of the five banks have been referred to enforcement for further investigation.
The review looked at several banking groups responsible for over 70% of the complaints firms receive and report to the FSA and over 60% of those resolved by the Financial Ombudsman Service (FOS).
It found poor standards of complaint handling within most of the banks assessed, including:
• A lack of senior management engagement and accountability for the delivery of fair complaint handling;
• Poorly designed staff incentive schemes that made branch staff reluctant to pay redress to customers, even in situations where the bank was at fault;
• Poor quality complaint handling by staff in branches and general call-centres leading to inadequate investigations, poor decision making as to the outcome of the complaint and unsatisfactory correspondence with customers;
• Complaint handling procedures that led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank;
• The failure of banks to learn from previous complaints and to make changes to prevent similar complaints arising in the future.
Dan Waters, the FSA’s director of conduct risk, said:
“While we found some good practice, there is clearly evidence of unacceptable standards of complaints handling in banks. Delivering change in this area is a major priority and we are determined to use all the tools available to us to ensure that banks comply with our rules.”

Source: FSA press release.