FSA slams banks over poor service
Some of the big names in the banking industry have had their knuckles rapped by the regulator about the way they handle customer complaints.
The Financial Services Authority (FSA) is taking action against five high street banks over the way they deal with complaints. Two of the five will face further investigations and may face large fines.
The FSA review 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). Although it refused to name the banks concerned, the five biggest banks are Lloyds Banking Group, Barclays, RBS/NatWest, Santander and HSBC so it’s likely that some, if not all, of these banks are the culprits.
RBS is the only big name to have published data of customer complaints. Earlier this month it revealed that it gets more than 1,600 complaints every day. Under new FSA rules, from August all banks will have to reveal how many complaints they receive.
In the report the FSA blamed lack of senior management interest and accountability, poorly designed staff incentive schemes, bad decision making and poor complaints handling processes. Worryingly, bonus schemes in two banks encouraged staff not to deal with complaints or pay redress to customers.
Dan Waters, the FSA's director of conduct risk, says: "A culture of fair complaints handling is an important indicator of whether a firm is committed to treating its customers fairly. It’s vital that customers know that if something goes wrong, their complaint will be deal with in a reasonable way and that they will get a fair outcome.
"While we found some good practice, there is clearly evidence of unacceptable standards of complaints handling in banks. Delivering change in this area is a major priority and we are determined to use all the tools available to us to ensure that banks comply with our rules."
The banking industry receives about three million complaints each year and the FSA report is not the first to suggest that many complaints are not handled well. A report by the FOS last year found that in many cases customer complaints were “fobbed off”. More than half of banking complaints referred to the FOS were upheld.
The Financial Services Consumer Panel says the FSA report made “dismal reading” and it was “disgraceful” that senior staff were not taking complaints handling seriously.
"It is no wonder that the banks have objected to recent FSA moves to publish complaints data. This FSA report shows that the way banks are handling complaints is lamentable, and can cause real suffering to consumers,” says Financial Services Consumer Panel chairman Adam Phillips.
How to complain to your bank:
• It sounds obvious but contact your bank and tell it what the problem is. Either visit a branch face-to-face and speak to someone, call or write a letter clearly labeled “complaint”. Make a note of the name of everyone you speak to.
• Banks have their own internal complaints procedure they must follow but they have eight weeks to resolve your complaint. However they should acknowledge your complaint much earlier than this.
• When speaking to your bank or writing a letter of complaint, stay calm. Make sure you know what you want to say and do so in a clear, polite manner. Swearing or losing your temper won’t help. Be clear about what you want the bank to do to rectify the situation such as offer compensation.
• If the bank hasn’t resolved your complaint in eight weeks, or you don’t agree with its decision, you can take your case to the FOS. It will look at your case independently and the service is free. Visit fos.org.uk for more details of the Ombudsman’s complaints process.
Each year Moneywise rewards outstanding service in the Moneywise Customer Service Awards, which are based on the results of a survey of more than 10,000 users. This year’s awards will be presented in June. Check out which banks are in the running for an award.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.