Banks rapped for poor complaint handlingFSA clamps down on complaint handling at 5 banks

28 April 2010

The Financial Services Authority (FSA) is clamping down on five banks after finding poor complaint handling

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The FSA's review found poor standards of complaints handling within most of the banks it assessed. As a result of the review, five banks are undertaking major changes to the way they deal with complaints and two of the five have been referred to enforcement for further investigation.

Areas of concern

The FSA hasn't named the five banks who have undertaken to make changes. The review looked at several banking groups which between them are responsible for over 70% of the complaints firms report to the FSA and over 60% of those referred to the Financial Ombudsman Service (FOS).In 2009, the FOS received most complaints about Barclays, Bank of Scotland, Lloyds TSB, Abbey (Santander) and NatWest.

Key areas of concern in the review included:

  • A lack of senior management engagement and accountability 
  • Branch staff reluctant to pay redress to customers, even where the bank was at fault
  • Poor complaint handling, leading to inadequate investigations, poor decision-making about the outcome of the complaint and unsatisfactory correspondence with customers
  • Procedures which led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times
  • A failure of banks to learn from previous complaints.

Customers need a fair deal

The FSA has called on companies to make complaints procedures clearer for consumers. Dan Waters, the FSA's director of conduct risk, said: '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 dealt with in a reasonable way and that they will get a fair outcome.

Responding to the review's findings, Which? chief executive Peter Vicary-Smith said:

'This is another damning indictment of the banking industry, many of whose members consistently put sales before customer service and reflects the evidence consumers presented to the Future of Banking Commission.

'Bonuses should be linked to treating customers fairly and the resolution of complaints, not to sales. What’s more, consumers have the right to know which banks the FSA is referring to its enforcement division.

'If the UK’s banks want to win back the public’s trust, then they must fundamentally change they way they treat their customers.'

If you have a beef with your bank, use our guide to complaining to your bank to make your voice heard.

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