Correct as of 9am, 12th May. This article is not being maintained.
The FCA has published guidance on the handling of complaints during coronavirus. The FCA reminds firms that handling complaints remains an important function which should continue and says that firms should take all reasonable steps to ensure as much complaint handling as possible continues through staff working from home, where this can be done fairly and effectively.
The FCA expects firms to prioritise:
- Prompt payment to complainants who have been offered redress and accepted that offer; and
- Prompt and fair resolution of complaints from:
- consumers who are likely to be vulnerable to harm if their complaint is not resolved promptly and fairly, and
- micro-enterprises and small businesses who are likely to face serious financial difficulties if their complaint is not resolved promptly and fairly with timely holding responses to be sent as necessary.
If a firm cannot address these priorities adequately and effectively through home working, then they should maintain the minimal physical onsite presence needed to do so, so long as the site is configured for social distancing in line with Government guidelines.
The FCA does not expect any reduction in the quality of firms’ complaint handling. Firms should ensure they continue to meet the relevant obligations, including investigating complaints competently, diligently and impartially, and paying appropriate redress or making other appropriate remediation.
Individuals and small businesses
Firms are reminded that the coronavirus and associated public health measures are likely to exacerbate personal vulnerabilities. They may also cause many people who would not normally think of themselves as vulnerable to suddenly face personal circumstances that can cause vulnerability.
Firms are also reminded that while the FCA’s vulnerable customer definition was developed with individuals in mind, micro-enterprises and small businesses can also face circumstances that can make them especially susceptible to harm. Personal circumstances can play an important role in how business owners respond to difficult situations. The sole traders, company directors, partners and other business owners are just as susceptible to life changing events as any other person. Again, these personal difficulties can be exacerbated by problems in the business itself.
In many cases, vulnerabilities can be complex and multi-layered, with one set of vulnerabilities having a consequential impact that triggers yet more vulnerability. There can often be a direct link between a business in financial difficulty and the susceptibility of the business owner to vulnerability. This can in turn limit their capacity to engage and make informed decisions, increasing the risk of harm to them and their business. It is critical they get the right support at the right time to help minimise the impact and where possible enable a viable business to succeed. Regulatory focus on the treatment of micro-enterprises and small businesses is reflected in the extended jurisdiction of the Financial Ombudsman Service from 1 April 2019 and the increase in award limits to £350k for complaints about conduct post this date.
Firms should assess complaints fairly, consistently and promptly. Key to this is paying attention to and engaging with the Principles when evaluating complaints. The FCA will be watching how firms prioritise the most vulnerable; how they identify vulnerability, engage with the vulnerable, and how they offer dedicated support.
- Give staff clear guidance on what a complaint is
- Have processes to help determine who may be vulnerable, how vulnerabilities may impact customers and to prioritise the needs of vulnerable customers
- Be aware vulnerable customers may have a reduced ability to complain / obtain redress
- Enable staff to exercise good judgment – avoid an unduly tick box approach, give them the skills and ability to deliver the right outcome and avoid over-zealous implementation of ‘rules’ that create barriers
- Determine whether the customer’s outcome and experience demonstrate that the firm has really put the interests of customers first
- Determine how the customer would have acted if a breach or failing had not occurred and make appropriate redress
- Clearly set out in the final response to the customer the reasons why the complaint has been upheld or rejected, explain the context of the decision
- Keep an accurate record of complaints and outcomes – make it easy for staff to categorise and make categories meaningful
- Employ a central root cause analysis team to review MI and monitor root cause analysis across the business
- Where complaints handling is outsourced, take steps to assess whether the processes and procedures that the third party has in place for handling complaints ensure fair treatment of customers. Senior management should maintain adequate oversight of conduct risk.
- Assess the complaint to establish if the firm’s conduct failed to comply with regulatory requirements, was in breach of a duty of care or any other requirement of general law, taking into account materials published by the FCA, the FOS, any former schemes as applicable and industry guidance. Consider:
- Information provided by the customer and their individual circumstances
- Information held by the firm (including from any prior root cause analysis, FOS decisions etc)
- Focus on the substance of the complaint, do not take an overly narrow view – clarify the nature of the complaint if needed
- Consider if need to contact the customer directly to ensure fully understand the issues raised but also be mindful of requests from vulnerable customers to engage with a third party acting on their behalf (where appropriate ensure the requisite authority is in place)
- Irrespective of the main focus of the complaint, proactively consider any other issues which may give rise to a breach or failing
- Ensure a deeper dive where vulnerability is identified. Trace the case back through the customer journey to understand if there is anything the firm could have done earlier on or better
- Consider not only whether communications were clear and fair but also the tone and pace of communications where conducted orally
- Consider if mechanisms of support are fit for purpose, and if any support that could have been provided earlier on in the process might have mitigated the risk of harm and prevent the situation from worsening
- Do not put a large burden of ‘proof’ on vulnerable consumers, which can cause them to disengage. Only request information if it will assist the firm in understanding the customer’s situation better and to help the customer
- Recognise that oral evidence may be sufficient evidence and do not dismiss evidence from the customer simply because it is not supported by documentary proof
- Take into account any limitations the customer may have in articulating their complaint or in explaining their actions and decisions - be particularly cognisant of this when dealing with vulnerable customers
- If the customer’s account conflicts with firm records or leaves doubt, make reasonable efforts to resolve any ambiguity
- Do not reject a complaint simply because a customer signed certain documents / failed to exercise a right to cancel
- Just because a firm is not authorised to give advice, do not assume advice was not given
- Staff need to:
- Be trained to spot signs of vulnerability - BRUCE and IDEA protocols
- Know when and how to delve deeper
- Know when and where to find internal and external expertise and signpost to support
- Be able to have difficult conversations involving personal and sensitive questions
- Have time to listen
- Where potential or actual vulnerabilities identified or customers disclose vulnerabilities:
- Empathise and acknowledge the strength it has taken to do so
- Take a sensitive approach to handling communications and build rapport
- Establish customer needs and clearly record
- Work with customers’ preferred choice of communication - consider how to accommodate ‘face-to-face’ meetings if necessary either at a branch or through video conferencing
- Flex to vulnerable customer needs, e.g. calling back at a certain time of day or when a family member or business partner can join the call
- Identify if there are any immediate ways in which can help alleviate some stress or mitigate the risk of any ongoing harm/the situation deteriorating
- Provide regular or on-going assistance to customers
- Ensure that customers have dedicated points of contact
- Ensure information on customer vulnerability and needs is recorded properly in order to avoid repetition
- Get consent to record, or if consent cannot be obtained, record the reason why
- Ensure customers are given enough time to review communications and test customer understanding of the implications of different options and ensure any misunderstandings are corrected
- Monitor calls with customers:
- Apply a risk based approach to call selection
- Review a sufficient volume of calls
- Apply sufficiently rigorous criteria – check holistically whether customers treated fairly and not just adherence with firm scripts and processes
- Listen to entire call before grading
- Follow up effectively on issues identified during the monitoring of calls – both at an individual customer level and any systemic issues
- Keep in mind vulnerable customers may have:
- Increased stress levels
- Increased time pressures
- Be otherwise pre-occupied
- Have decreased ability to process information
- Lack perspective and not understand the broader implications
- Have a different attitude to risk – more reckless or care less
Root Cause Analysis
- Adopt a centralised approach to root cause analysis – put in place a team to review MI and identify and monitor root cause analysis across the business
- Look at:
- Concerns raised by customers
- Reasons for rejected complaints
- Reasons for upheld complaints
- Evidence of the firm’s sales practices at the time (may include staff recollections, call recordings, compliance records, internal audit reports, MI, regulatory enquiries and other materials)
- Relevant regulatory findings
- FOS decisions
- Strategic causes (e.g. business models and culture) and not just operational causes
- If suggests recurring or systemic problems, consider whether:
- Likely to have contributed to a breach or failing in individual cases; and
- Ought to implement proactive redress exercise or give customers a proper opportunity to obtain redress – need to establish the scope and severity of any customer detriment and whether it would be fair to conduct a proactive redress programme
- Rejected complaints should be revisited
- Do not focus just on the highest number of complaints. Consider impact on particular customer groups (especially vulnerable groups) when deciding how to carry out root cause analysis
Culture of care
An effective vulnerable customer strategy means adopting a culture of care. Some vulnerabilities can remain hidden. Customers may have a limited awareness of what firms can do to help them. Encouraging more customers to self-identify vulnerabilities depends on strengthening customer trust through all stages of the customer journey, including when things go wrong. Trust that when they do disclose vulnerabilities, it will have an overall beneficial impact on their relationship with the firm and their financial wellbeing.
Firms should proactively seek feedback from vulnerable customers, their carers and/or their family and monitor the number of customer contacts made to resolve a matter. Firms should also consider tracking social media to pick up on trends and engage with charities to deepen their understanding of how people with different vulnerabilities may be affected.
Lastly, firms should not overlook the importance of looking after the needs of their own staff. Employees cannot adequately support customers if they are not receiving support themselves and so firms must also focus on their wellbeing too.
The FCA is in the process of engaging with the FOS on its approach to assessing complaints about specific issues that may arise as a result of the pandemic. Firms can therefore expect to see further guidance published in due course.
 On 1 May 2020. Also see exchanges of correspondence between the FOS and the FCA on 4 May 2020 in relation to the Government’s Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme.