2TODAY’S AGENDA The Here and Now, Stuart O’Sullivan (Huntswood) What’s on the Agenda in 2015, Stephen Humphreys (Huntswood)Respond: The Road-Map and Future, Duane George and Eric BrownThematic Review – Getting Ready for Change (group discussion)Respond User Group - Your Discussion SessionRespond Features and Functions, Eric BrownThematic Review – Getting Ready for Change, Initial ResultsPost User Group Debrief and Refreshments
3Complaint Handling – THE HERE AND NOW APTEAN USER GROUPPresentation by Stuart O’SullivanThursday 5th March 2015
4Design and implementation Our propositionsAdvisoryServicesDevelopment centresComplaint effectivenessTraining expertsLeadership skillsTCFDesign and implementationSenior Manager’s RegimeCompliance monitoringInvestment / mortgage suitabilityFinancial promotionsDelivery specialistsComplaint handlingPast business reviewCustomer remediationQuality assuranceOperational supportManagedClientdBusiness ImprovementOperational RiskComplianceLearning & DevelopmentRecruitmentParaplanningNew business checkingSales and serviceCultureTraining and competenceRDR/MMRRoot cause analysisSkilled persons
5AGENDA Summary of the complaint handling Thematic Review TR 14 / 18 Improving complaints handling Consultation Paper CP 14 / 30Practical implications of CP 14 / 30
61. SUMMARY OF THE COMPLAINT HANDLING THEMATIC REVIEW TR 14 / 18
7The regulator’s view“Firms have taken steps to improve their complaint handling – both as a result of previous regulatory work and as a result of firms’ own initiative… However, it is clear that firms could – and should – do more to deliver fair complaint handling and consistent outcomes for all consumers.”TR 14/18
8TR 14 / 18: The FCA’s Approach This is the first thematic review where the FCA has actively collaborated with target firms.AIM: to discover where common issues and barriers may exist that prevent effective complaint handling across the group, but also within individual firms.Methodology: (i) review operating model(s) and management information(ii) self assessment tasks including QA(iii) analysis of results (firm and collective level)(iv) working group created: discuss barriers, ideas for industry improvement15 major retail firms who handle 90% of all complaints, across all retail sectors took part as well as 5 trade bodiesActivity structured around five key stages of firms’ complaint handling:1. identifying a complaint 2. recording a complaint 3. internal reporting of a complaint4. provision of redress 5. carrying out root cause analysis
9TR 14 / 18: WORKING GROUP RECOMMENDATIONS Dedicated complaint telephone lines should not use numbers that charge consumers more than a basic rate (including mobile users)Reconsider the definition of a complaint (e.g. removing the more subjective element of ‘material’ distress or ‘material’ inconvenience)Extend the time frame of the ‘next business day’ rule (e.g. extend to one week)Remove the ‘non-reportable’ complaints element of the next business day rule so that firms would report all complaints receivedReview the biannual complaints return to include more consumer centric measuresRevise the FCA complaints publication (e.g. including more consumer centric measures and contextualised data)
10TR 14 / 18: ACTIONS FOR ALL FIRMS The FCA stated in TR 14 / 18 that all firms may like to focus on:Whether complaint handling policies and processes fully consider whether the interests of consumers are at their heart; avoid a tick-box approach to comply with the DISP rulesReviewing internal definition of ‘complaint’ and training staff where the definition is not properly understoodWhether systems and processes could inhibit accurate recording of complaints, and further consider how this impacts ability to conduct root cause analysis (RCA)The observations made about consistency of redress and distress and inconvenience paymentsConsidering their approach to RCA – focusing on the observations made in the thematic review paperWhether they can make any improvements to their MI (messaging, interpretation, quality metrics and use of targets
12The regulator’s view“Consumers are entitled to complain and to seek compensation from firms when things go wrong. We want to ensure that the process of complaining is straightforward, transparent and fair to consumers, while allowing firms to handle complaints as effectively as possible.”CP 14/30
13Improving complaints handling (Cp 14/30) Summary of the proposals within CP 14 / 30:Extend the time period for dealing with a complaintRequire firms to send a written communicationEnsure firms report and publish all complaintsMake general improvements to the ‘complaints return’Limits to the cost of calls to financial services firmsImplementing the Alternative Dispute Resolution DirectiveThe following slides explore 1-3 further
14Extend the time period for dealing with a complaint The basic proposal here is to move the current next business day timeframes to the end of three business daysThis should bring more customers into the informal process and should allow firms to deal with complaints more quickly and efficientlyThe thematic identified a number of problems with trying to force customers quickly through the non reportable routeNBD cut off is currently an 'artificial escalator’ for complaints that could have been dealt with relatively quicklySometimes difficult for firms to contact customers to confirm they are content with the resolution
15Require firms to send a written communication This communication would be sent to all customers whose complaint is handled by the end of the proposed three business day periodProvides customer with referral rights to FOS if not contentCustomers would be able to refer their complaint immediately after the firms response was received, rather than having to wait for 8 weeks to elapseWill provide important clarity and awareness about their right to refer complaints to the FOSThematic review found that customers were not always informed or clear about this escalation route
16ENSURE FIRMS report and publish all complaints Remove the distinction between reportable and non-reportable complaintsWill increase transparency around complaints handling – and provide greater comparisonBecomes increasingly important if more complaints are handled within the three business day periodSome serious issues do not surface through the reportable complaints just because they can be dealt with currently by NBDReporting changes anticipated by March 2016
17Working party recommendations vs cp proposals Dedicated complaint telephone lines should not use numbers that charge consumers more than a ‘basic rate’ (including mobile users)Taken forward in the new rules limiting the cost of calls to financial services firmsReconsider the definition of a complaint (e.g. removing the more subjective element of ‘material’ distress or ‘material’ inconvenienceNot taken forwardExtend the time frame of the ‘next business day’ rule (e.g. extend to one week)Taken forward in proposal to extend the time period for dealing with a complaint by three business daysRemove the ‘non-reportable’ complaints element of the next business day rule so that firms would report all complaints receivedTaken forward in proposal for firms to report and publish all complaintsReview the biannual complaints return to include more consumer centric measuresTaken forward in proposal to make general improvements to the ‘complaints return’Revise the FCA complaints publication (e.g. including more consumer centric measures and contextualised data)
19PRACTICAL IMPLICATIONS OF CP 14 / 30 The deadline for responding to the CP is 13 March 2015.FCA do take on board feedback and adapt if appropriateFirms feeling strongly about any of the proposals should respondThe CP mentions that the reporting requirements are due to be implemented in March This is therefore likely to be the implementation timetable for other proposals as they are all interrelated. Do firms feel this is a realistic time frame?Given the March 2016 implementation timeline, the Policy Statement is likely to be published following a relatively quick reflection period from CP responses
20PRACTICAL IMPLICATIONS OF CP 14 / 30 Policy intent of the CP proposals appears sound – however, the devil is always in the implementation!The CP does not propose any change to the definition of a complaint: specifically, “financial loss, material distress and material inconvenience” are to remain.The proposal appears to be aimed at firms with high volumes of complaints – does this work well for firms with lower volumes?The key change, i.e. lengthening NBD and requiring formal communication (and FOS rights) would seem to prompt a review of a firm’s target operating model where it seeks to accelerate ‘simple’ complaints
21PRACTICAL IMPLICATIONS OF CP 14 / 30 Some questions:Do firms have the right type of staff in the frontline to handle more complaints?Are firms confident that front line staff could perform additional responsibilities / handle more complaints?Will closing complaints with a ‘summary resolution letter’ encourage more customers to escalate their complaint to the FOS?Will raising awareness about the Ombudsman Service drive up FOS referral rates?Will firms records for complaints closed with a ‘summary resolution letter’ be able to support the decision made – i.e. do they currently capture enough info for NBD cases?
22PRACTICAL IMPLICATIONS OF CP 14 / 30 Some questions:The FCA is cost benefit analysis states that the cost of training for staff to implement the proposed changes is cost neutral – do firms think this will be the case?Will the changes in reporting requirements require changes to how data is captured by complaint handlers, i.e. changes in complaint categories, changes in IT?Do firms currently capture NBD complaints in the same way / system as reportables? What will the capture of all complaints mean for RCA going forward?How will the increased reporting requirements impact existing operational reporting, MI packs and IT systems? Will this require greater resource? What will the impact be on governance oversight?
23QUESTIONSPresentation by Stuart O’SullivanThursday 5th March 2015
24Thank youPresentation by Stuart O’SullivanThursday 5th March 2015
25Complaint Handling What’s on the agenda in 2015? Presentation by Stephen Humphreys5 March 2015
26THE 2015 COMPLAINTS OUTLOOK AGENDADiscussion on the future direction and considerations for complaint handling in 2015.THE 2015 COMPLAINTS OUTLOOK
27AgendaGovernance, Management Information MI and ensuring effective oversight - Senior Managers Regime (SMR) & ComplaintsComplaints, quality assurance and outcomes testing – how to demonstrate you’re delivering fair complaint outcomesVulnerable customers and complaints
281. Governance, MI and ensuring effective oversight SMR & Complaints
30Scope and reach FCA Required Functions: - Customer service Current Scope of APER/SUP10AProposed Scope of SMRFCA Required Functions:- Customer service- Customer complaints handlingPRA Approved PersonsExecutive Board (Plus wider Exco in large firms)ChairmanRelevant committee chairSMFHeads of key business areaIndividuals in Group CompaniesControl or conduct focused functionsSignificant Harm Functions/ Material Risk takers (CRR)Customer-facing roles that are subject to qualification requirementsAny other SIF roles under the current Approved Persons RegimeIndividuals who supervise or manage another Certified PersonConduct RulesCRFCA Approved PersonsAll other employees other than those ancillary staff who perform a role that is not specificto the financial services business of the firm.
31Governance, Culture and controls AccountabilityStructureRoles and responsibilitiesOversight forums, e.g. Treating Customers Fairly (TCF), product designMI & Business ReportingGOVERNANCE‘Tone at the top’Learning and Development(inc. Training)Corporate vision and valuesCULTUREIncentivesCommunicationsBusiness file checkingData capture e.g. MI & Key performance IndicatorsCONTROLSTraining & Competency (T&C)Mystery shoppingCustomer outcomes testingProduct governance
32Complaints MI “Don’t focus on what you can count… ...focus on what counts”
33What is “good” complaints MI? % of customers expressing dissatisfaction / FCA reportingPosition against appetite% of complainants receiving fair outcomes / Financial Ombudsman Service (FOS) overturn ratesOversight and challengeEscalationFocused management actionUnit time / double touch / FOS referrals / transaction failure ratesOperational effectivenessFocus on productivity and qualityOperational management
352. Complaints, quality assurance and outcomes testing How to demonstrate you’re delivering fair complaint outcomes
36The aim of Quality Assurance (QA) Identifies “unfair outcomes”Demonstrate consistent outcomesAssurance regarding the training & competence modelKey feed of MI into senior management
37Making QA Outcomes focused Firms should undertake risk-based outcomes testing to assess the quality of customer outcomes at each stage of the ‘customer journey’WHY?Provide assurance that complaints are handled fairly and consistently, delivering fair outcomes for customers – truly assess the ‘quality of complaint handling’HOW?risk weightedQA activity should consider:Was the outcome fair for the customer?Unfair outcomes – what retrospective / remedial action must you take?Any conduct breaches (SMR firms)Consider the underlying root cause and take corrective action
38An example end-to-end customer journey IdentificationInvestigationDecisionCommunicationFor each stage of the customer journey, we have a defined a ‘generic’ set of customer outcomes. These outcomes represent the key stages of a typical complaints lifecycleThey are aligned to the firm’s conduct risk strategyThe purpose of outcomes testing is to determine whether the firm has achieved a fair customer outcome at each stage of the customer journey38
40Martin wheatley – FCA Chief Executive consumer vulnerability has become a key test of conscience for the CityMartin wheatley – FCA Chief Executive
41Martin wheatley – FCA Chief Executive Many firms will, for example, have highly specialised teams to deal with issues related to consumer vulnerability. Yet if frontline staff do not have the expertise, or confidence, to handle those cases effectively, the consumer experience is still likely to be a frustrating oneMartin wheatley – FCA Chief Executive
42The scale of vulnerability in the UK Extracts from FCA Occasional paper 8
43Occasional Paper 8 – Impact on complaints Vulnerability is not an in or an out – it’s a scaleVulnerable customers are, by definition, less likely to complainFrontline staff, who represent the point of access for customer, is where investment is requiredObjection handling at point of complaint – vulnerable customers are much more likely to be closed down or experience objection handlingVulnerable customers are more likely to make poor choices (both at point of sale and complaint)When engaging with vulnerable customers, don’t just think of regulation, what about the law?
44Occasional Paper 8 – Impact on complaints Information asymmetry – increased for vulnerable customershistorical approachdisclosure (not sufficient for vulnerable customers)tick box / signature – side steps issueFCA now opening the debate about how behavioural economics applies to vulnerable customersSome personal examples:car Finance - fees complaintmajor Bank - package bank account complaintlife insurer – critical illness waiver of premium complaintgeneral banking complaint – customer perception “blacklisting”
45Questions for firms to consider Do we want to identify where customers have specific needs that aren’t addressed through our standard process? How do you consider and apply the differences between vulnerable and particularly vulnerable customers? Do your customers have a specific need, or are they generally at risk of vulnerability? What adjustments are reasonable to make for vulnerable customers? How empowered are complaint handlers? How do you take ‘emotion’ out of the decision, but still be empathetic and deliver fair customer outcomes? How are your telephone based staff trained to understand the points that customers are making? How do you give space for the customer to reflect? Do your front line staff currently view vulnerable customers as opportunities for next business day complaints?
46QuestionsPresentation by Stephen Humphreys5 March 2015
47Thank youPresentation by Stephen Humphreys5 March 2015
48Respond’S ROADMAP & THE FUTURE Please contact your Account Manager if you would like to discuss Road-Map content. These slides cannot be included in a public release.
49Director, Respond Product Line QuestionsDuane GeorgeDirector, Respond Product LineContact me with any questions about this presentation and the future of Respond
50Respond demonstration Please contact your Account Manager of you like to see a demonstration of Respond features. This can be offered virtually if you prefer, or on site.
51NEXT: THE FCA Thematic REVIEW Defining a complaintRecording ALL complaints and the 3 day ruleReporting changes (internally and to the FCA)Written responses (new 3 day rule)March 2016 … Change Management, are the people around you ready too?
52COMPLAINTS HANDING THEMATIC REVIEW & CONSULTATION PAPER 12:00-12:45
53ROUND TABLE DISCUSSIONS Each table has an Aptean Facilitator to lead and take notesThere are 5 key topics (following this slide)For each topic you have 5 minutes to share your thoughtsThen 2 minutes to establish the pointsThere will be a chime between slides as they auto-progress forwardAfter the 5 topics there will be closed questions for pollingAt the end of today’s sessions we will present the initial resultsAptean will author a more in depth set of results post-eventCHATHAM HOUSE RULE APPLIES
541/5 – GROUP DISCUSSION (INTRO) DEFINING A COMPLAINT“Any expression of dissatisfaction” is not the FCA’s definition. The FCA turned down a request to change the definition to this.FCA: “The complaint must allege that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience.”
551/5 – GROUP DISCUSSION (5 MINS) DEFINING A COMPLAINT“Any expression of dissatisfaction” is not the FCA’s definition. The FCA turned down a request to change the definition to this.FCA: “The complaint must allege that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience.”
572/5 – GROUP DISCUSSION (INTRO) RECORDING ALL COMPLAINTSAND THE 3 DAY RULEThe FCA proposes giving firms 72 hours instead of 24 hours to handle a complaint informally … but as a result every complaint becomes reportable.
582/5 – GROUP DISCUSSION (5 MINS) RECORDING ALL COMPLAINTSAND THE 3 DAY RULEThe FCA proposes giving firms 72 hours instead of 24 hours to handle a complaint informally … but as a result every complaint becomes reportable.
59RECORDING ALL COMPLAINTS 2/5 – WRAP UP (2 MINS)RECORDING ALL COMPLAINTSAND THE 3 DAY RULE
603/5 – GROUP DISCUSSION (INTRO) REPORTING CHANGES INTERNALLY AND TO THE FCAThe FCA plans to benchmark sales vs complaints and to publish 3 day complaints data too.Internally what also needs to be done differently to fully consider these 3 day complaints?
613/5 – GROUP DISCUSSION (5 MINS) REPORTING CHANGES INTERNALLY AND TO THE FCAThe FCA plans to benchmark sales vs complaints and to publish 3 day complaints data too.Internally what also needs to be done differently to fully consider these 3 day complaints?
62REPORTING CHANGES INTERNALLY AND TO THE FCA 3/5 – WRAP UP (2 MINS)REPORTING CHANGES INTERNALLY AND TO THE FCA
634/5 – GROUP DISCUSSION (INTRO) WRITTEN RESPONSESUNDER THE 3 DAY RULELetter – – Text3 day complaints will require a reply using stock text from the FCA (via any of the above) giving brief case outcomes, an acknowledgement and FOS referral rights.
644/5 – GROUP DISCUSSION (5 MINS) WRITTEN RESPONSESUNDER THE 3 DAY RULELetter – – Text3 day complaints will require a reply using stock text from the FCA (via any of the above) giving brief case outcomes, an acknowledgement and FOS referral rights.
65WRITTEN RESPONSES UNDER THE 3 DAY RULE 4/5 – WRAP UP (2 MINS)WRITTEN RESPONSESUNDER THE 3 DAY RULE
665/5 – GROUP DISCUSSION (INTRO) MARCH 2016 … 1 YEAR FROM NOWChange Management Plan – Are you gearing up for this? Do you have headcount in the right places? Can the frontline handle 3 day rules (including written replies)? Is Corporate ready for a 2-3x increase in published complaints data? Have you replied to the FCA’s Consultation Paper?
675/5 – GROUP DISCUSSION (INTRO) March 2015TodayMarch 2016Go-Live
685/5 – GROUP DISCUSSION (INTRO) March 2015ProcurementSystem ChangesCulture ChangeTrainingMarch 2016
695/5 – GROUP DISCUSSION (5 MINS) MARCH 2016 … 1 YEAR FROM NOWChange Management Plan – Are you gearing up for this? Do you have headcount in the right places? Can the frontline handle 3 day rules (including written replies)? Is Corporate ready for a 2-3x increase in published complaints data? Have you replied to the FCA’s Consultation Paper?
705/5 – WRAP UP (2 MINS)MARCH 2016 … 1 YEAR FROM NOW
78Over report vs risk of under reporting DEFINING A COMPLAINTOver report vs risk of under reportingConsistency of Capture and management of complaintTraining of Front Line Staff and others
79RECORDING ALL COMPLAINTS AND THE 3 DAY RULE “Just Like Starting Again”Clarification from FOS re ability toreview summary resolutionNeed to capture more information atFront line – poorer customer service?
80REPORTING CHANGES INTERNALLY AND TO THE FCA Getting Stakeholder buy inCase numbers increasing – perhapsover 500 casesPublication of cases – not allcompanies are the same
81WRITTEN RESPONSES UNDER THE 3 DAY RULE Will use channel of customercomplaint to replyCost burden of responding via letterClarification on level ofpersonalisation required
82Cost burden – double staff levels to manage Are FOS ready? MARCH 2016 … 1 YEAR FROM NOWNOT STARTED YET!Cost burden – double staff levels tomanageAre FOS ready?