UK FCA Complaints Handling, RCA

On Aug. 15, FCA issued complaints handling review, RCA case study.

  • FCA published findings of its review of how non-deposit taking mortgage lenders
    (NDTMLs), and mortgage third-party administrators (MTPAs) handle complaints.
  • Examined how firms treat customers; if complaint handling arrangements pose
    potential consumer harm; what, if anything, can do to handle complaints better.
  • Published understanding complaints root cause analysis hypothetical case study.

Poor Root Cause Analysis

  • Found management information (MI) including poor root cause analysis (RCA).
  • Not always clear how firms use MI to deal with underlying reason for complaint.
  • Complaints not identified and recorded consistently, not recording a root cause.
  • Found that senior management and board reports often only contain operational
    data and not details on symptoms of complaints, root cause, preventive actions.
  • No details on customer experiences, outcomes or quality of complaints handling.

Tick Box Compliance

  • Review found tick-box compliance is resulting in inflexible complaints handling.
  • Some firms approach, they are not fully appreciating the effect on customers.
  • Can drive complaints operations in ways which not in customers’ best interests.
  • Concluded that in some firms there is an over reliance on policy and processes.
  • Can limit staff ability to exercise judgement, lead to potential harm to customer.
  • E.g. financially vulnerable customer asked to contact their own bank to resolve
    an issue, as quicker. Didn’t adequately consider impact on vulnerable customer.

Handling Complaints Better

  • Some firms not effectively applying lessons learned from FOS determinations.
  • Review FOS decisions, technical guidance if changing policies and procedures.

Key Messages

  • Ensure MI firm collects and analyzes is accurate and relevant to its operations.
  • Have robust RCA capability to identify and remedy recurring systemic problem.
  • Appropriate governance, processes to ensure RCA provides strategic purpose.
  • Effective, transparent procedure for reasonable, prompt handling of complaint.
  • Reduce risk of over reliance on policy, procedure. Consider, for each complaint,
    if customer outcome and experience shows firm put customer's interests first.
  • Firm should make sure it assesses complaint fairly, consistently and promptly.
  • Internal systems, controls allow staff to identify, record a complaint correctly.
  • Process to ensure FCA annual, or biannual, complaints return data is accurate.

Case Study

  • Helps firms to distinguish between symptom and the root cause of a complaint.
  • What complaint RCA looks like, not sector specific, any regulated firm may use.