The Financial Sector Conduct Authority this week published a report detailing the findings of a review it conducted more than two years ago into the banks’ handling of customer complaints.
The initial stages of the review disclosed that most banks exhibited unsatisfactory complaints management processes across the assessed requirements, the report says. The FSCA told the banks they need to align their processes with Conduct Standard 3 of 2020.
The desktop review was conducted between 18 July 2022 and 17 November 2022. It assessed the ability of 23 banks to deliver consistently on fair customer outcomes when handling complaints and the extent to which the banks adhered to section 8 of the Conduct Standard.
The Conduct Standard for Banks, which became effective in July 2021, sets out various requirements for the fair treatment of financial customers by banks.
In a statement on 17 March, the Authority said several banks have taken significant steps to improve their complaint-handling processes and bring them in line with the regulatory requirements. Nevertheless, some challenges and inconsistent practices continue to be observed across the sector. These include:
- Inconsistencies in the categorisation of complaints, resulting in inaccurate reporting.
- Deficiencies in record-keeping, which impacts effective oversight and decision-making.
- Failure to keep complainants informed and a lack of transparency in decisions.
- Limited disclosure about the availability of redress via the ombuds, reducing the ability of complainants to pursue alternative recourse options.
Compliance failures
Most of the banks failed to satisfy the seven assessed requirements per section 8 of the Conduct Standard. These requirements are:
Categorisation of reportable complaints
Section 8(7) requires banks to categorise reportable complaints received from a retail client in accordance with the minimum categories in the Conduct Standard. Only 40% of the banks were found to comply satisfactorily with the criteria by sufficiently and accurately categorising reportable concerns. Complaint outcome and review process
Complaint outcome and review process
Section 8(13) stipulates that when a bank rejects a complaint, the bank must provide the complainant with clear and adequate reasons for the decision. The bank must also inform the complainant of any escalation or review processes the bank has in place, taking care to explain how such processes should be used and the applicable timelines. This section of the review applied only to banks that had instances where complaints were rejected. The review found that 40% of the banks that rejected complaints did not satisfactorily comply with the requirements.
Accurate, efficient, and secure recording of complaints
Section 8(14) stipulates that a bank must ensure the accurate, efficient, and secure recording of complaints-related information in respect of each reportable complaint received from a retail complainant. Only two banks satisfied this requirement.
Maintaining complaints data in line with minimum categories
Section 8(15) dictates that banks must maintain data in relation to reportable complaints received and must categorise complaints in accordance with sub-section (7). Only three of the banks were found to be compliant.
Acknowledgement of complaints received and process information
Section 8(21) requires a bank to acknowledge receipt of a complaint and promptly notify a complainant of the process to be followed in evaluating the complaint. The overwhelming majority (85%) of banks were non-compliant.
Adequately informing complainants about progress
Section 8(22) requires banks to keep complainants adequately informed about the progress of a complaint and of causes for any delay in finalising the complaint. The desktop inspection found that 92% of the banks were non-compliant.
Communication of ombud details during customer journey
According to section 8(23)(b), a bank must communicate in a clear and transparent manner the availability and contact details of the relevant ombud services to customers and complainants. This must be done at all relevant stages of the relationship, including at the point of sale, in relevant periodic communications, and when a complaint is rejected. Most of the banks (85%) did not satisfy these requirements.
Recommendations to the banks
Given the overall finding that none of the sampled banks were found to comply satisfactorily with all of the relevant sections, the FSCA recommended that banks improve their complaints-handling processes. It said the banks should:
- Correctly categorise customer complaints, which will assist in conducting robust root-cause analysis and improve the measures put in place to mitigate recurrence.
- Keep copies of all relevant evidence, correspondence, and decisions as required. In addition, they should implement measures to ensure that employees keep a record of all correspondence relating to complaints, and that all communication with complainants is recorded and easily retrievable.
- Ensure that complaints registers indicate whether the complaint resolution status is within or outside the set timelines.
- Ensure there is an alignment between the customer details captured on their complaints registers and what is captured on their systems.
- Review their processes to include effective communication of the internal complaints’ escalation process.
- Ensure the details of the relevant ombuds are clearly communicated to customers at all relevant stages of the product life cycle. Using suitable/appropriate communication platforms, based on where the broader customer base is accessible to notify customer of the complaint status, progress, or any delays.
- Ensure that complaints statistics are accurately recorded.
The FSCA says it will continue to monitor the conduct of banks in terms of addressing all the shortcomings and implementing the recommendations.
Click here to download the Banking Sector Complaints Management Review Report
