The regulator’s expectations of complaints handling during coronavirus

If there was ever any doubt about the importance of a firm’s handling of complaints, then this was quashed in the FCA’s recent publication ‘Firm handling of complaints during coronavirus’.

The message from the regulator was simple and to the point: prioritise vulnerable customers and take all reasonable steps to ensure complaint handling continues through the current circumstances, relating to coronavirus. To achieve this, expectations are that complaints teams will continue to support organisations through home working, and where this is not possible, onsite, but following the Government’s guidelines for social distancing.

How have complaint volumes been trending?

The FCA indicated that, at the outset of the pandemic, firms were likely to have been dealing with fewer complaints. This has been supported by our discussions with firms across many sectors in Financial Services and Utilities. However, since early April, firms are telling us that complaint volumes have begun to return to normal levels, with a mixture of ‘business as usual’ and COVID related complaints.

Firms should also be mindful that customers were likely to be sympathetic to operational challenges around customers service, claims and complaints at the start of the lockdown, but as time passes and consumers’ finances are put under further stress, their sympathy and understanding will likely wane and generate additional complaints.

We are also starting to see claims management activity ramp up and have seen organisations targeted about the treatment of customers relating solely to coronavirus, or including coronavirus as an element within a wider complaint e.g. irresponsible lending.

Vulnerable customers

A consequence of the coronavirus is that consumer vulnerability has never been more important and relevant. With a large proportion of the UK suffering from some form of impact on their financial circumstances, the effects of bereavement, or the impact of the virus on mental or physical health means that some consumers will be seeking extra care and support during this period.

Unless consumers are explicit about their personal circumstances, it's hard to see how an effective complaint outcome can be achieved without some form of dialogue with the consumer, be that in front line customer services teams, or within the complaints team itself.

Not only will this help identify and deal with consumers (including vulnerable customers) appropriately, it will help meet the three priority areas the FCA focuses on:

1. The payment of prompt redress
2. A fair and prompt resolution for
   1. Vulnerable customers
   2. Micro-enterprises and small businesses
3. Timely communications, especially to those above in 2.

Steps to consider

We set out below some important areas to consider in relation to ensuring your complaint process is robust during these challenging times. It’s also important for firms to think about how minor issues can be prevented from being turned into a complaint by some of the operational challenges firms are currently facing. Given this, firms may wish to consider:

• ensuring adequate resource is available within the front line to deal with customer servicing calls
• ensuring operational systems changes are made given the recent payment holiday and payment deferral plans outlined by the FCA
• ensuring claims are handled fairly and promptly, and plan for future spikes e.g. likely increase in travel claims over the UK’s peak holiday periods
• ensuring fair customer outcomes are delivered, taking into account individual circumstances
• handling consumer complaints in line with the evolving coronavirus guidance issued by the FCA

Identifying complaints

It will remain key for firms to consider the following areas:

Access – ensure consumers have multiple channels available to them to make a complaint e.g. phone, email, website. If one access point is harder for consumers to complain, for example by phone, be open and clear that this is the case to manage consumers’ expectations.

Front line – where possible, identify as many complaints in the front line. This will allow for earlier resolution, the identification of vulnerability, and a higher probability of an outcome linked to what the consumer wants and expects.

Vulnerability – no matter how the complaint arrives, staff should be trained to identify underlying vulnerabilities through the tone of the complaint, and in particular the types of vulnerability that are more prevalent during this period. But in addition, use other data to highlight vulnerability, for example, with open banking, firms may be able to spot a loss of income and take proactive measures and interventions.

Handling complaints

As an overall principle, it’s possible that desired consumer outcomes may be different during this period, and firms should review their end-to-end complaints process to identify where changes are needed. For example, sending redress by cheque, may no longer be the best consumer outcome.

Given this, firms should continue to consider:

Communication – Acknowledge receipt of complaints promptly and clearly set out if delays are likely and estimate when the consumer is likely to have a resolution. Send regular communications throughout keeping the consumer informed of progress.

Resource – Ensure the complaints team is adequately resourced and trained to handle complaints in line with existing regulatory requirements. Where this is not possible, focus the resource on priority customers.

Outcomes – Fair consumer outcomes are of paramount importance. They keep customers happy, the regulator happy, and reduce the likelihood of extra costs and resources required when consumers choose to escalate to the Ombudsman. Quality assurance pays dividends at this current time and is an important role in evidencing outcomes and learning from mistakes.

Last but not least, learnings from complaints should continue to be driven by root cause analysis that’s fed into the firm’s senior management and appropriate actions should be taken by the business in a timely manner to prevent future reoccurrence.