The FSA has introduced new rules for complaints handling
The FSA has introduced sweeping new changes to the rules governing complaints handling – and the Ministry of Justice is reviewing the way Claims Management Companies are regulated. What are the implications for the banking industry?
In late May this year, the Financial Services Authority (FSA) confirmed new rules for the handling of complaints made to banks in Britain. Chief among them was the abolition of the 'two-stage' complaints handling rule.
The two-stage rule was being abolished, the FSA said, to ensure firms resolve complaints fairly and do not dismiss them the first time a customer gets in touch. This, commented Paul Clark, CEO of Charter UK, has significant logistical implications for the industry.
"Some banks have systems in place that are predicated on the need for two stages," he said. "Others already have a one-stage process; and others again – many, in fact – have a mixture of both, a legacy of mergers and of different parts of organisations doing different things over the years. These systems will all now need to conform to the new requirement – and they'll need to be in line with other changes, too, because the FSA is also saying processes might need to be put in place to meet its requirements on root cause analysis."
In short, there is a great deal of change for banks to accommodate. But it doesn't stop there: in addition the FSA demanded that by 1st September this year they identify an individual at executive level who will be responsible for complaints handling. Meanwhile, the British Bankers' Association has been meeting to consider its response to the Ministry of Justice's review of Claims Management Companies (CMCs), who have occasionally been deemed not always to be open in the way they represent customers'interests. "A checklist is emerging here for banks," said Paul Clark.
"First, they'll need to streamline their systems, so they can provide a process that's single-stage, but with the detail needed for root cause analysis. Next, they need to designate a figurehead for complaints handling, and make sure he or she is equipped for the role.
And finally, they need to work together with the FSA and other parts of the industry to develop new ways of working with the CMCs." In response to these developments, Charter UK is working with a number of major banks on large-scale systems upgrade and replacement programmes. It is also creating a portal for CMCs to streamline the registration of claims they make to banks on behalf of customers.
In addition, the company will shortly be running a series of events for newly-designated 'bank complaints czars,' to run through the requirements the new regulations will be imposingand to look at how those requirements might best be met – see the back page of this newsletter for dates and details of how to book.
"There's an ancient Chinese curse," said Paul Clark. "It's this: 'May you live in interesting times.' Well, the times certainly are interesting – but approached in the right way, they needn't be a curse."
