Banks may be forced to reveal the number of customer complaints they receive to the public, under new proposals outlined by the financial watchdog.
The Financial Services Authority (FSA) says that it wants to improve how “transparent” financial firms are to their customers, and suggests one way to do this would be to publish information relating to customer complaints and how they were handled.
It notes that there is an argument for consumers having “a right to know if firms do not treat them fairly” as they could use information relating to complaints to make informed decisions about their finances. However, there is a fear that “naming and shaming” banks could lead to disparaging press comment and “unintended consequences”.
Another risk is that banks might manipulate their complaints data.
Currently, banks and other financial firms are required to disclose their complaint figures every six months. They must inform the FSA how many complaints they have received, how quickly they were handled, the outcomes and redress.
However, this information is not made available to the public despite calls for more transparency from consumer groups.
The National Consumer Council, for example, criticises the limited information currently available to the public. It says that current practice is “at odds” with other aspects of consumer life, and that many people might be shocked to learn the truth about how banks and other firms deal with complaints.
Steve Brooker, from the National Consumer Council, says making firms’ complaint records public would encourage them to improve the way they deal with customers.
“Companies will be encouraged to compete on quality and not just price,” he adds. “Publishing the results of [the FSA’s] mystery shopper exercises and details of firms who have breached FSA financial promotion rules would [also] help consumers make more informed choices.”
It is not yet clear whether the FSA will press ahead and force firms to publish their complaints data. However, Hector Sants, chief executive of the FSA, says it is “committed to being open and transparent.”