The FCA has published the key findings of a review of firms’ approaches to complaints and root cause analysis, setting out examples of good practice and areas of improvement across the Consumer Duty requirements regarding:
- complaints data/management information;
- root cause analysis; and
- governance.
This feedback comes at a time when there is much focus by the FCA on complaints, including in the form of the recently launched joint FCA and FOS Call for Input on ‘Modernising the Redress System’. The Call for Input identifies a number of challenges with the rules as they stand. Nevertheless, it is clear that complaints data is a key metric which the FCA expects firms to use to evaluate their own compliance with the Consumer Duty and drive better customer outcomes. Complaints data will also be of interest to the FCA to evaluate the success of the changes introduced under the Consumer Duty banner. Therefore, it is likely to be an area of continued scrutiny and getting this right is going to be imperative for firms.
The findings are based on a review of approaches in 40 firms from a range of sectors (spanning retail banking, insurance, payments, consumer investments and consumer finance) and of a range of sizes. They provide a helpful indication of the type of complaints data the FCA is expecting firms to be looking at and what firms should be doing with it.
Importantly, the FCA acknowledges that a ‘one size fits all’ approach would not be appropriate as smaller firms may have fewer resources and may face different challenges to larger firms. That said, the feedback provides a helpful quasi-checklist to evaluate existing approaches and to consider uplifts where it would be proportionate to do so.
A summary of the examples of good practice and the practices which are missing the mark - and therefore present opportunities for improvement - is set out below.
| Topic | Examples of good practices | Missing the mark |
|---|---|---|
| Complaints data / management information (“MI”) | ||
Internal data capture
| Capturing MI (such as complaint volumes, complaint outcomes, FOS complaints, quality assurance and complaints from customers with characteristics of vulnerability) in dashboards to help track Consumer Duty outcomes, identify harm, indicate where deeper root cause analysis may be required and highlight priority areas of focus. | Complaints metrics and data being of an insufficient granularity to capture outcomes for different groups of customers, including consumers with characteristics of vulnerability.
|
| Creating data packs including a range of data points and setting out the root causes of complaints and the actions the firm is taking, thereby prompting more meaningful discussion at relevant board and committee meetings. | ||
| Reviewing FOS complaints against the firm that were not upheld to understand what drove the complaint even though the outcome was judged to be fair. | ||
Use of external sources
| Using social media feedback alongside firm’s own data to determine if there are common themes. | N/A |
| Using external insights such as FOS decisions, FCA letters and industry news to identify potential harm. | ||
| Root cause analysis (“RCA”) | ||
| Actions focus | Following RCA, creating an action plan with clearly designated owners, deadlines and remediation actions. | High-level RCA processes that don’t effectively identify trends and systemic issues. |
| Implementing appropriate action to prevent issues from recurring. | Not drawing out themes, symptoms of complaints, root causes or preventative actions from complaints data reports. | |
| Reviewing the effectiveness of solutions implemented. | Not taking action after identifying harm or not monitoring changes made to ensure they had the intended impact. | |
| Having monitoring systems in place and the ability to evidence the changes made as a result of identifying harms through RCA. | ||
| Measuring impact | Having a process in place to measure the impact of changes made to improve customer outcomes. | Not monitoring whether actions taken were the right changes/delivered the desired impact and if more needs to be done. |
| Cross firm action | Responsibility for RCA being expanded beyond the complaints team and information being sent to people who can act on it. | Focusing only on feedback to staff and training rather than considering whether other action would be appropriate (e.g. improvements to processes or proactive redress to customers). |
| Evaluation | Adopting a granular technique to determining root causes (e.g. the ‘Five Whys’ problem-solving technique). | N/A |
| Governance | ||
| Governance and challenge | Evidence of clear escalation routes and accountability, meaning everyone across the business know where to send information, and who is responsible for driving forward action and/or change. | Organisational charts not clearly confirming who is responsible for complaints and where someone is named, no evidence that substantive issues relating to complaints are fed back to them. |
Evidence of challenge and scrutiny at committee and board meetings where dashboards or data packs are presented.
| Lack of discussion and engagement on complaints data by decision-makers and treating the sending of complaints data to committees as a tick-box exercise rather than an opportunity to engage and drive change. | |
| Minutes not evidencing detailed discussion on complaints data, challenge/scrutiny and what actions had been taken. | ||
| Collaboration within the firm | Changes to ensure teams work more closely together to understand what complaints data is telling them, and where and how to take action. | N/A |
| Taking action on insight | Having the Consumer Duty as a standing agenda item at committee meetings where any new material issues, potential harm or notable complaints can be raised. | N/A |
| Capturing any systemic complaint issues in a weekly MI email sent to firm’s risk committee members and executive-level management, allowing for real-time oversight and timely action. | ||
| Considering the severity of an issue when deciding if it should be escalated and to whom. | ||
| Policies and procedures | Policy documents which are interactive, engaging and informative, giving examples of common situations to equip staff to know how to handle a situation or process. | N/A |
| Having working groups in place to discuss issues faced by customers with characteristics of vulnerability. | ||
| Having monthly meetings to review existing governance documents and update policies to help address issues raised. | ||
| Training | Mandatory and assessed training for staff, with refresher courses available. | N/A |
| Including practical examples or scenarios in the training. | ||
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