It’s important to take complaints seriously, argues Bob Young, managing director of Capital Home Loans

Transparency is an oft-used word in financial services and, if one is being perfectly honest, it is a concept to which a certain amount of lip service has been paid over the years. One area which has certainly benefited from greater transparency is that of customer complaints, in particular the depth of focus all regulated entities must now give to complaints and the scrutiny given to handling them correctly and the results of those complaints. The regulatory system has certainly dissuaded many firms from burying complaints within their system and the introduction of the Financial Ombudsman Service (FOS) has meant that if consumers are dissatisfied with how the firm has handled their concerns, they can now move on to an independent body to seek redress.

Some might argue that we now have a ‘complaint culture’ society and too little responsibility falls on the complainant’s shoulders which allows them to complain ‘willy-nilly’ knowing that the cost of dealing with it will lie with the firm not themselves. However, it is important to focus on the positives and that means recognising that service and product quality should not fall below a certain level, and that customers are fully entitled to complain if they believe they have suffered at the hands of the firm.

In today’s marketplace there is no shying away from your complaints record, particularly if you are a mortgage lender. Transparency in how we deal with customer complaints comes in the form of the FOS complaint data published twice a year which includes the number of complaints the Ombudsman has received about the business and the percentage of complaints upheld by it in favour of consumers. I am pleased to say that the latest figures (H2 2009) showed CHL to have only 10 new cases lodged with FOS over the six-month period and of the four that were resolved during that time period all four were found in our favour. A quick perusal of some of the biggest banks and lenders in the UK will reveal that most others would be fortunate to have two-thirds resolved with a similar outcome.

Of course, many firms will often feel angry that the number of complaints they have received is out there in the public domain and the natural course of action when one receives a complaint is to go into ultra-defensive mode. We have learnt that there is little to be achieved by this instead without complaints highlighting areas which may not be up to scratch if can be difficult to recognise where there are problems and where service/product levels, etc can be improved.

This is why FOS’s recent annual report which looks in greater depth at the actual mortgage complaints themselves can be of use to all firms in the sector. Interestingly and perhaps surprisingly given the economic environment we are currently in, mortgage-related complaints were actually slightly down on the previous year. About 4.5% of all new complaints received by FOS in the March 2009-March 2010 period were about mortgages compared with 30% about PPI, 15.5% about current accounts and 11% about credit cards.

However, the complaints received by FOS do truly reflect the times we have lived through with a particular emphasis on the scarcity of mortgage finance and how lenders have reacted to it. For example, FOS received a number of complaints concerning mortgage offers which had been withdrawn or not renewed which resulted in property transactions not completing. Other areas which were highlighted included how flexible mortgage facilities were operated by lenders with some borrowers complaining that money which had already been paid and which they believed would be still accessible was no available.

A further and perhaps telling series of complaints came with regard to the actual product rates themselves particularly with regard to standard variable rate (SVR) mortgages. It would seem that in a particularly low Bank Base Rate (BBR) environment some borrowers have been confused as to why they are paying rates much greater than 0.5%. Others complained that their products were not tracking BBR and there was also disgruntlement at the speed some lenders changed their variable rate finally, the issue of the removal of rate collars due to ‘exceptional economic circumstances’ was also a major concern for some borrowers.

Brokers and in-house lender advisers will also be intrigued to read that a number of complainants felt that they were on the wrong product – a fixed rate – when they felt they should have had a tracker or variable option instead. No doubt this was exacerbated again by low BBR with many perhaps feeling that they had missed out on considerable savings because they were fixed in to their mortgage. One wonders what next year’s ‘top complaints’ will be should we see fairly rapid increases in BBR over the next 12 months?

No complaint can be truly welcome however it is still vitally important that it is handled correctly and that fundamentally it is appreciated and learnt from. Clearly, financial services firms do make mistakes which result in complaints but it is important that the mistake is not compounded by treating it incorrectly instead it should be understood and dealt with transparently. Dealing with a complainant in the right and proper manner can mean the difference between keeping the customer and gaining referrals, or losing them completely and having a lifetime’s worth of negative advertising through their word of mouth. It is that important and therefore having the right complaints process in place should always be a top priority for every firm.