UK regulator, the Financial Services Authority
(FSA), is to take “tough action” after finding weaknesses in the
way five banks handle customer complaints, with two banks referred
for further investigation by the FSA’s enforcement team.

The FSA declined to name the banks in
question, but in March the Financial Services Ombudsman Service
reported that Lloyds TSB received the largest number of customer
complaints in 2009 followed by Barclays in second place (see RBI 627).

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Following a review of UK lenders’ complaints
handling, the FSA 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;
  • Poorly designed staff incentive schemes that made branch staff
    reluctant to pay redress to customers, even in situations where the
    bank was at fault;
  • 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 that 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, and
  • A failure of banks to learn from previous complaints and to
    make changes to prevent similar complaints arising in the
    future.

“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, their complaint will be deal with in a
reasonable way and that they will get a fair outcome,” said FSA
director of conduct risk Dan Waters

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