The document discusses effective complaints handling processes and the importance of taking a holistic, 360-degree approach. It notes that the FCA has challenged firms for failing to properly handle customer complaints, which can be a sign of wider issues. An effective complaints process includes consistently capturing, categorizing, and conducting root cause analyses of complaints, while also ensuring senior management is aware of issues and takes appropriate action. Firms should aim to reduce the underlying reasons for complaints rather than just focusing on complaints processes.

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Customers potentially impacted
Customers aware of poor outcome
Customers who complain
Process failure
Customers
contact the
firm
Complaints
logged
Root Cause
Analysis
undertaken
Management
informed
Management
take action
Process
modified
Complaints handling
A 360 degree view
The FCA has consistently challenged firms on the way they handle customer
complaints. The Regulator considers that failures in this area are symptomatic of
wider potential failings in firms. In our experience of helping firms, and in feedback
from the FCA, we’ve seen a number of common issues:
 Firms being inconsistent in the way complaints are captured, or categorised,
throughout the business
 Senior management not being aware of the volumes and reasons for
complaints, or not taking appropriate action to ensure they are resolved
 Root Cause Analysis (RCA) not taking place, or being insufficient in the
scope of analysis, the conclusions drawn, or the action taken
 Firms offering compensation to those customers who complain, but not
considering other customers who were also affected, but did not officially
complain.
Good complaints handling is good business sense
The information gained from complaints data gives insights into customer detriment,
and also operational issues within the firm, such as:
 Process failures – where the firm did not deliver, as promised
 Information deficiencies – where the customer was not clearly informed of
the expected performance of the product, or any limitations in its use
 Customer/product misalignment – where the product was unsuitable, for that
particular customer.
As the infographic below shows, there are clear financial risks (in potential redress
and remediation exercises) if firms are slow at spotting and fixing issues.
“..effective complaints
handling systems can
act as an early
warning system for
firms.”
Christopher Woolard
FCA
Potentialredress

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360 degree complaints handling
Effective complaints handling is a very important part of a firm’s overarching
approach to improving customer outcomes. The insights gained from feedback
received enables firms to focus their efforts on pre-empting and eliminating customer
detriment. But the complaints process should not be seen in isolation. Firms that
concentrate exclusively on the operational elements of complaints handling are
devoting resource to risks that have already crystallised, rather than identifying future
issues. Problems arise where firms focus too much on treating the symptoms, rather
than seeking the cure; for example where:
 Low complaints volumes and/or low FOS overturns are used as a proxy for
good customer outcomes
 The complaints process runs within stated parameters, and customer
satisfaction levels are good – but there is insufficient consideration given to
why complaints are happening in the first place.
Effective organisations use complaints handling as a part of the overall framework of
customer outcomes control - taking a holistic view across the interrelated elements of
Culture, Monitoring and Oversight:
 Culture – how does the firm view complainants?
 Monitoring – how aware is the firm, of problems occurring?
 Oversight – how quickly are issues addressed?
“..fair treatment of
customers is not, in
my view, something
that can be reduced to
a risk to be managed”
Clive Adamson
FCA
Reduce
opportunities
for customer
detriment
Capture and
categorise
complaints
Conduct
Root Cause
Analysis
Senior
management
aware of
issues
Senior
management
take action
Culture
Monitoring
Oversight

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What firms can do?
Adopting a joined-up approach enables organisations to move away from a
preoccupation with rules and process, and give greater thought to origins and
outcomes. The ultimate aim should be to reduce the reasons why complaints are
happening in the first place:
Culture  Develop a customer-focused culture, to reduce the
potential for customer detriment
 Empower and encourage staff to take action to prevent
poor customer outcomes happening in the first place
Monitoring  Train staff to recognise the broad definition of
‘expressions of dissatisfaction’, and record and categorise
events, when they occur
 Ensure all complaints (not just those previously defined as
‘reportable complaints’) have been included in MI and
analysis
 Build complaints MI that has sufficient granularity and
detail to enable full analysis
 Develop a customer-centric approach to Root Cause
Analysis, to uncover why complaints arise in the first
place.
Oversight  Make ‘ensuring good customer outcomes’ a defined
objective for all management, to ensure effective
oversight and action, in relation to customer detriment
 Feed the analysis from RCA into the firm’s business
change process, to ensure action is taken (and recorded).
How can we help?
Bovill is a specialist financial services regulatory consultancy dedicated to providing
high quality, technically-focused advice to clients across the financial services
spectrum. Our consultants have supported clients in developing complaints handling
processes that improve their ability to:
 Apply the DISP rules effectively
 Demonstrate an effective culture, with senior management taking
responsibility to drive improvements
 Utilise MI and Root Cause Analysis to identify concerns
 Show strong operational controls and oversight, to address issues
proactively.
Frank Brown, Consultant
Frank has over 15 years’ experience in financial services – both
client side and consultancy, working with a wide range of firms.
He helps clients with all aspects of Conduct Risk – developing
sound control frameworks and customer outcomes monitoring.
He has undertaken a number of secondments with large
finance clients including the Head of Compliance role with the
UK branch of a major international finance firm.
T. 0207 633 5884 E. fbrown@bovill.com