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Complaints handling under scrutiny

by: Mortgage Solutions
  • 30/09/2010
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Complaints handling under scrutiny
Banks' complaints handling was heavily criticised by the FSA today as it proposed a number of changes to its complaints handling rules.

These included increasing the limit on awards made by the Financial Ombudsman Service from £100, 000 to £150,000 to provide fairer and more effective redress for customers. It had consulted with firms on raising the limit to £200,000.

Lloyds Banking Group, the UK’s biggest bank, tops the list of complaints at 288,717 for the first half of 2010 (97% of cases closed within eight weeks). Barclays was second on 259,266 (91%) while Santander was third on 244,978 (46%).

Sheila Nicoll, the FSA’s director of conduct policy, said: “Good complaints handling standards should be the rule not the exception and complaints handling forms a key part of our intensive and intrusive approach to supervise how firms deal with their customers.

“While the FSA’s review into complaints handling by banks in April found some good practice, this is far from universal and it is clear that not enough is being done by senior management to prioritise complaints handling.”

Other FSA proposals included:

– Requiring firms to identify a senior individual responsible for complaints handling;

– Abolition of the ‘two-stage’ complaints handling rule to incentivise firms to resolve complaints fairly the first time;

– Underlining the requirement for firms to carry out root cause analysis, by identifying and remedying any recurrent or systemic problems with complaints, and to take action where appropriate; and

– Additional guidance in relation to taking account of ombudsman decisions and previous customer complaints and learning from the outcome.

The FSA has also published firm-specific complaints data, enabling customers, for the first time, to compare and contrast the way different firms deal with their complaints.

Adam Phillips, chair of the Financial Services Consumer Panel, said: “The FSA has recently been doing excellent work in getting the public the information they need to make informed choices about financial services.

“However, the FSA is forced to pull its punches by outdated legislation. The planned replacement of the FSA by the Consumer Protection and Markets Authority creates an opportunity to improve the information available to help consumers make better choices. It is vital the government takes steps to introduce greater transparency and takes away the bankers’ cloak of secrecy.”

He added: “Consumers have the right to know about the level and type of complaints made against banks. Only when consumers are empowered with enough of the right sort of information can they choose banks which will treat them fairly.”

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