New FSA complaint handling rules

New FSA complaint handling rules will require major IT changes

08.07.2011

Charter UK, a provider of enterprise complaint and feedback management software, today warned financial institutions that it will be difficult comply with new rules announced by the FSA and Financial Ombudsman Service (FOS) to streamline customer compliant handling unless they are prepared to undertake a significant investment in their current approach to complaints handling systems.

The change from a 'two stage' to a 'one stage' complaints process is the latest step in the FSA's strategy for delivering credible deterrence for financial services firms as well as prompt and effective redress for customers. This will present a significant IT challenge as well as a big burden on resources.

Paul Clark, Charter UK's Chief Executive, comments:

"The major problem here are the amount of disparate systems and approaches are going to make if very difficult for larger firms to comply, and increases the likelihood of stiff penalties. And if financial institutions don't change their complaint handling processes to reflect these new FSA/FOS rules, they are going to face serious challenges in terms of their IT resources, since disparate legacy systems will make it impossible to move from a two-stage to a one-stage process effectively."

Because of the changes, and due to consumers having much quicker access to the FOS, it is inevitable that there will be a marked increase in complaints coming through its doors whilst financial institutions adjust to the new regulation.

Paul Clark adds:

"The risk here is non-compliance. Because most financial institution's IT systems are currently set up to service a two-stage complaints process, banks need to prepare for a significant change in the way that they manage complaints. At the moment, many institutions are still using multiple complaints systems – sometimes as many as 60 in a single organisation – which is clearly not sustainable under these new rules."