FCA data underlines need for flexible resourcing

Matthew Drage, head of regulatory development, Huntswood

6 November 2018

For those who’ve seen it, complaints data published by the FCA for H1 2018 doesn’t make pleasant reading for banks and other financial providers. The total number of complaints reached a record level of 4.13 million, a 10% increase on the previous six months. This was the fourth successive half year increase.

Once again, PPI was a significant driver, accounting for 42% of complaints. Standing at 1.72 million, PPI complaints rose to their highest level for four years – fuelled by next year’s deadline for complaints and the FCA’s PPI media campaign earlier this year.

Taking PPI out, complaints numbers still rose by 9%. Current accounts led the way (15% of all complaints), followed by credit cards (8%) and motor insurance (6%).

Complaints about current accounts in particular totaled 600,358, an 18% increase from H2 2017.  When citing the reasons behind the dissatisfaction attributed to current accounts, the FCA noted “several high-profile cases of disruption to retail banking services” contributed to the spike in complaints. Various banks have suffered well-publicised IT or systems glitches that have led to high numbers of complaints and rising customer frustration.

Analysis of the data further reveals that the proportion on non-PPI complaints resolved within three business days has remained steady, down from 59% in the previous period to 58% for the first half of this year. Meanwhile, the proportion of complaints upheld against banks and building societies has risen from 52% to 56%.

The net effect of all this was that the cost of service issues for banks has risen too – customer redress increased by 9% from £2.36bn in the second half of 2017 to £2.57bn in the first six months of 2018.

There are several key takeaways from the latest data. Firstly, despite banks’ best efforts, complaints continued on an upward curve. Continuing root cause analysis of what lies behind dissatisfaction is essential, to monitor the trends as they develop and assess whether any procedural or policy changes are needed that could help address the issues.

Secondly, complaints are volatile. They may be on an upward curve overall, but the topline figures mask some considerable spikes for certain banks prompted by some very specific issues. Planning for the unknown is not easy, but the data underlines the need for banks to have contingency plans in place for a range of service scenarios (IT problems, service unavailability) to mitigate the effects as far as possible.

Technical faults stem from a range of issues, but recent challenges have predominantly arisen during the implementation of change programmes that were introducing new technology systems and platforms. Such transitions have failed to be executed smoothly, often due to a lack of prior testing, coupled with a lack of adequate understanding and training in new process guidelines.

In the wake of technical failings, banks should ensure that they have a service recovery plan in place with trusted partners on hand to provide expertise and capacity ahead of systems migration and major changes, during downtime and following recovery.

When such issues do arise, banks can be inundated with messages and complaints from their customers through a variety of channels – increasingly, via social media as much as through email or phone. Adequate staffing in the customer service team is essential to stay responsive and let customers know that everything possible is being done to restore service.

This means that a flexible resourcing approach is critical, to enable capacity planning such that customer support can be scaled up at times of the most urgent need, and that resulting complaints can be investigated and responded to promptly.

The risks in not doing so, particularly for the largest high street banks, is clear. Take up so far through the Current Account Switch Service (CASS) may have been relatively low to date, but with increasing efforts from regulators to remove barriers to switching current accounts, the number of customers prepared to move their business may soon start to grow. Reforms such as the Payment Services Directive and Open Banking have been designed to give customers more choice, better protection and drive forward innovative product offerings.

Having an effective strategy to minimise and then deal with customers complaints effectively is key to successful business in an increasingly competitive retail banking market.

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