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Navigating complaints in a Consumer Duty world – Clifford

by: Rob Clifford, chief executive, Stonebridge
  • 17/01/2024
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Navigating complaints in a Consumer Duty world – Clifford
Not much more than six months after the introduction of the Consumer Duty rules, you might surmise advisers will have embedded changes to their process demanded by the new regulations and will be becoming increasingly comfortable with the approach. That is certainly what we’ve seen within our network.

However, when it comes to new regulations, we are always looking for early precedents which might give us a hint of what behaviour the regulator is seeing, what it doesn’t like, and how it is going to deal with this. Towards the end of last year, FCA chief executive Nikhil Rathi, spoke before the Treasury Select Committee and perhaps provided some solace to regulated firms by suggesting the regulator will take a “proportionate” approach when it comes to Consumer Duty adherence.

He said: “We won’t seek to enforce every technical breach of Consumer Duty. We are going to go after the most egregious harms, to allow the Duty to settle in.”

From my perspective, that seems like a very sensible approach, especially given Consumer Duty rules needed to be introduced by firms during an incredibly challenging year, and as always, turning theory into practical applications can take time.

However, as we know, when it comes to consumer/client complaints, it is not the FCA who are judge and jury, but the Financial Ombudsman Service (FOS).

Now, for anyone thinking there may be some disconnect between the FCA and FOS, given their independence from each other, they should quickly quash that notion as the two bodies have worked, and will continue to work, closely with each other as they did on the introduction of sector-specific directorates to cover particular areas of financial services.

As an industry, mortgage/protection advisers tend to receive a relatively low level of complaints from clients about their work, but we can’t deny that complaints are received and must be treated with diligence and care.

Indeed, as a network, part of our job is to not only highlight the potential areas where complaints might emanate from, but to deal with any root causes before issues might arise. That seems like an increasingly important aspect of our ‘service’ to AR firms.


Using tech to spot poor advice in a Consumer Duty world

It’s why we use both technology, via Revolution, and human interaction to spot potentially poor advice, and it also gives us the opportunity to question whether the right customer outcome is delivered and to identify questionable adviser behaviour.

That allows us to intervene, raise any concerns with the adviser, and to make sure they don’t continue down a road which might inadvertently deliver a sub-optimal outcome for the consumer and could ultimately lead to complaints.

We’ve also recently issued a complaints-related communication to all our members which outlines recent industry complaint trends, tips on how to deliver exceptional consumer outcomes, and insights from the FOS itself.

Identifying trends can be an important part of ensuring complaints don’t arise and to also learn from mistakes. So, whether it’s the provision of inaccurate data to a lender or provider, or poor communication with the client, or not returning documents efficiently, or AIPs/DIPs submitted without evidence of the awareness of a client or consent, these issues can all be rectified quickly, but it’s clearly better not to have taken place in the first place.

We should not forget that every complaint investigated by FOS currently costs a firm £750 regardless of the outcome. Ensuring issues do not reach that stage and doing everything to resolve a complaint, such as mediation, is highly important, not just financially but what it could mean for an adviser/firm if FOS eventually find in favour of the complainant.

In that vein, advisers who are clearly in the wrong, should have no issue in admitting to this in a professional manner and at the earliest stage possible. When we see mistakes or errors which are obvious then it makes absolute sense to hold your hands up, rectify them and compensate the client. Overall, therefore, while we continue to bed in the Consumer Duty rules and while the market awaits details of the action, the FCA may take against those who fail to comply, it’s important to recognise where complaints might be generated from, how to mitigate the risk, but also how to deal with them should one land on the desk.

Part of providing a positive consumer outcome inevitably means dealing with a complaint professionally and amicably; complaints in life and business are inevitable to some extent – it’s how you deal (and learn) from them that will mark you out.

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