High street banks’ complaints handling criticised

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The FSA is making five banks undertake major chances to their complaints handling, while two of the five banks have been referred to enforcement for further investigation.

A review by the regulator looked at several banking groups responsible for over 70% of the complaints firms receive and report to the FSA and over 60% of those resolved by the Financial Ombudsman Service (FOS).

It found poor standards of complaint handling within most of the banks assessed, including a lack of senior management engagement and accountability for the delivery of fair complaint handling, as well as poorly designed staff incentive schemes that made branch staff reluctant to pay redress to customers, even in situations where the bank was at fault.

The review also established poor quality complaint handling by staff in branches and general call-centres leading to inadequate investigations, poor decision making as to the outcome of the complaint and unsatisfactory correspondence with customers.

Complaint handling procedures were also discovered, which led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank.

The regulator also noted a failure of banks to learn from previous complaints and to make changes to prevent similar complaints arising in the future.

However, the FSA did find examples of good and compliant practices in parts of some of the banking groups assessed. This demonstrates it is possible for banks to handle high volumes of complaints and deliver fair outcomes for consumers, the regulator said.

Dan Waters, the FSA’s director of conduct risk, said: “A culture of fair complaint handling is an important indicator of whether a firm is committed to treating its customers fairly. It is vital that customers know that if something goes wrong

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