With the increase in awareness of customer rights, and the relative ease of issuing a complaint via technology, a culture of complaints has emerged. Nancy Hamling looks at the rise in this culture, along with how the FCA are recording such data.
It is in everyone’s nature to complain when things don’t go their way. However, now that customers are becoming increasingly more aware of their rights, combined with the way new technologies and regulatory bodies have made the process relatively quick and easy; a complaint culture has emerged.
Social media allows for a quick and immediate response from the recipient of the complaint; and social online forums have encouraged the sharing of information on mis-sold products, changes in policies, and open discussion for disgruntled consumers. The growth in regulatory bodies, FSA (since changed to the FCA in 2013) and the Financial Ombudsman, has given the consumer a considerable power that they never had before.
The FCA defines a complaint as: “an oral or written dissatisfaction, whether justified or not, from, or on behalf of, a person about the provision of, or failure to provide, a financial service or redress determination.”
Behind every complaint is an idea, belief or value that a person is committed to, and whether their complaint comes from unexpected overdraft charges, long queue times, not getting through on the phone or poor customer service; it is important that the consumer believes they are treated fairly and as an individual.
Unfortunately the coined phrase ‘where there’s blame, there’s a claim’ has been all too often used by consumers and Claims Management Companies (CMCs). The rise in CMCs has lead to an increase in complaints, as the consumer would often prefer to use a third party rather than deal with and negotiate a complaint directly themselves.
Often consumers are unhappy with the service of the CMC, leading to further complaints and dissatisfaction. It is estimated that there were some 1000 CMCs in the UK in 2003, many of which were using aggressive sales tactics to gain exorbitant compensation. In 2006, due to this rise in ‘compensation culture’ the Compensation Act 2006 was brought in, of which Part 11 was the Claims Management Service Regulation.
An article published in August 2013 from the FSCL showed a sharp rise in complaints against lenders and finance companies, with motor credit arrangements accounting for 35 of 149 complaints investigated in the last year.
The FOS reported that there has been a dramatic change in the proportion of complaints made to the FOS since 2009. 2009 saw banking and credit complaints making up 43% of complaints, with 30% (49,196) of complaints being made up of Payment Protection Insurance. This has dramatically changed with the 2013 statistics showing 74% (378,669)* of complaints being made up solely of PPI complaints.
Complaints can lead to change and development:
The FCA bi-annually publishes complaint data showing individual firm complaints data and aggregate complaints data, based on product, type of firm and type of complaint (the data shows complaints not resolved on the day they were registered). This offers a transparent view for consumers into the firms they are using, the firms the FCA are regulating, and offers the firms themselves a helpful development tool.
Although there is rise in complaints, the CEO of the FSCL suggests this is due to growing consumer awareness and the availability of dispute resolution services, rather than a rise in issues and problems. This means that complaints can be the seed for change and development as they bring to the forefront issues that a firm may otherwise not be aware of. The FCA complaint data offers firms an insight into their performance against their peers, meaning that areas of change and development can be recognised.
The rise in complaints has lead to firms launching past business review projects, reviewing policies and analysing products and their sale. This in turn has lead to a development of jobs opportunities and for highly aware and developed firms, offering reviewed and tailored product choices for the consumer.