Financial services complaints: managing customer expectations

By Matthew Drage, director of external engagement, Huntswood

12 November 2019

Last month, the FCA published complaints data revealing an increase in complaints from 3.91m in the second half of 2018 to 4.29m in the first half of 2019.

This can be attributed, mainly, to a 34 percent increase in the volume of PPI complaints received. This number rose from 1.58m to 2.12m.

While an early rush to meet the August 2019 PPI deadline inflated the overall figure for H1, encouragingly there was a six percent drop in the number of non-PPI complaints in the same period. This suggests the start of a real evolution in the financial services complaints landscape. Firms are now seemingly taking viewing regulatory compliance as the minimum when it comes to the fair and equitable treatment of customers’ complaints and starting to be more effective in their approach to root cause analysis to prevent complaint origination.

Alongside the release, the FCA also made the point that it expects many of the complaints that came in closer to the PPI deadline in H2 to take longer than the normal timeframe to resolve. The way in which the last, ‘spill-over’ PPI complaints are dealt with should now be the priority for all firms. No matter how long the process might take or the volume of customer contact faced, the FCA will expect all customers to be treated fairly and appropriately.

Excluding PPI, complaints volumes reach a record low

With PPI products taken out of the equation, the volume of complaints actually dropped by six percent. The figures reported by the FCA represent the lowest volume of complaints firms have received since new reporting rules came into effect in 2016.

The most complained about products are current accounts (14 percent), credit cards (eight percent) and motor and transport insurance (six percent). The average volume of complaints received per 1,000 accounts for banking and credit cards has decreased to 4.2, compared to 4.6 in the second half of 2018. This was the same for home finance, which decreased from 9.6 to 8.7 complaints per 1,000 mortgage accounts.

Managing customer expectations

This will be a huge challenge for banks going forward, irrespective of the complaint type.

Huntswood’s recently published Complaints Outlook 2019 shows that firms are still at odds with increasing customer expectations. The research revealed a widening perception gap between businesses and customers. 60 percent of firms believe that their customers are satisfied with the way their complaints are handled, while the reality is that only 22 percent of customers actually report being satisfied.

In an environment where customer expectations are being rapidly transformed by technology, there are several steps firms can take to improve their operational processes and meet customer expectations at all stages, regardless of the circumstance of the complainants:

Clear communication

78 percent of customers expect issues to be resolved immediately upon contacting their provider. During peak times of customer contact (the PPI deadline having been one of these periods), this will be a challenging ask for any provider. Where it is not possible to resolve complaints at the first point of contact, firms must focus on the other ways in which they can ensure customer satisfaction.

The Complaints Outlook report suggested that only 25 percent of financial services customers were satisfied with the speed of providers’ initial response of acknowledgement and only 24 percent were satisfied that they were being kept informed during their complaints experience.

Quick, efficient and regular contact with customers at the very beginning of a customer’s complaints journey, and regularly throughout the whole experience, can help boost satisfaction levels and reassure customers that their issue is being dealt with appropriately. Such clear communication will help to manage customer expectations, especially if the issue is complex or requires more time to resolve.

Training the right people

Arming departments on the frontline with specialist skills will be instrumental in future success. Front line staff should be confident in their ability to engage in difficult conversations with empathy and compassion.

Only 21 percent of those surveyed for the Complaints Outlook 2019 said they felt staff showed empathy when dealing with their complaint, and only 14 percent felt their provider was genuinely concerned about the issue.

Firms that are able to show real empathy are those that will stand out from competitors, drive deeper customer relationships, and make advocates of their existing customers, in turn, attracting new ones.

Operational efficiency and digitalisation

By reassessing operational processes, firms can find easy ways to make the complaints process more efficient.

The majority of customers whose complaints aren’t resolved at the first point of contact tend to interact with their provider through at least two channels during their complaints journey. Offering a multi-channel experience will put the power in the hands of the customer, as they can choose how and when they interact with their provider through their channel of choice.

Embracing digitalisation as part of a firm’s customer offering can also really help boost efficiency.

Only one in three customers believe that firms are currently embracing digital technology to better manage and resolve complaints. Perhaps surprisingly, half of customers don’t mind talking to an automated system, as long as it resolves their complaint quickly. This builds a case for firms to explore other digital solutions that will help increase the chances of resolving a complaint as quickly as possible.

By communicating clearly, training the right people and improving systems through automation and digital technology, firms will be able to better manage the customer experience and their expectations.

No-one likes being kept in the dark when it comes to their complaints, and prioritising these changes should help firms to exceed regulatory standards and set themselves apart from competitors, during even the busiest periods. This will help to drive retention and advocacy within the complainant population, supporting commercial and revenue objectives, as well as ensuring firms can differentiate themselves when it comes to customer experience and resolution.

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