What is a Complaint?
Customers should feel encouraged to provide feedback if they aren't satisfied. According to the definition outlined in the Financial Conduct Authority's (FCA) Handbook, a complaint is 'any oral or written expression of dissatisfaction, whether justified or not, from, or on behalf of, a person about the provision of, or failure to provide, a financial service'. The FCA is the independent body responsible for monitoring businesses' compliance with their Principles for Businesses and Consumer Outcomes. Part of their objective to protect consumers from unfair treatment includes their regulation of how effectively organisations deal with complaints.
According to the FCA's regulations, 'effective and transparent procedures for the reasonable and prompt handling of complaints must be established, implemented and maintained'. It's essential that these processes are specific to the business' scale and complexity and that complaints can be made free of charge. Requirements regarding complaints are mentioned throughout the FCA Handbook, however, the correct procedure is outlined in most detail in Principle 6:Customers' interests. According to the FCA, a firm must pay due regard to the interests of its customers and treat them fairly. This means that customers should find it easy to report complaints, and they should be handled impartially, fairly and on time. The two main responsibilities a business has to comply with this principle include:
- To ascertain the scope and severity of the consumer detriment that might have arisen.
- To consider whether it is fair and reasonable for the firm to undertake proactively a redress or remediation exercise.
How can complaints be received?
According to Consumer Outcome 6 in the FCA Handbook, businesses must ensure that it is not difficult for consumers to make claims or complaints. You might consider implementing a feedback survey. Although, these can be costly and time-consuming. The most effective and efficient way to obtain customer feedback is by endorsing in open complaints and compliments policy. This can be achieved by informing consumers that they can leave complaints by phone, in person, in writing, through the company's website or by email.
Many social media sites, including Facebook, have options for customers to leave reviews. Businesses should consider utilising these platforms, as they're an efficient and accessible way to receive complaints and compliments. Due to exposure to social media, businesses can use negative reviews as a valuable PR opportunity. If potential customers see a company responding personally to a complaint and taking measures to remedy the issue, they're likely to trust that the organisation behaves with integrity and within the consumers' best interests.
It's important to check these various systems regularly, to ensure that they're reliable and easy for customers to understand. The FCA also stipulates that, where a phone is used to make a complaint, the complainant must not be bound to pay more than the basic rate.
How can complaints impact your company?
Complaints can help to flag up if an employee is frequently failing to perform to the standard requirements, or if there is an issue with your business' current procedures. Therefore, dealing with complaints properly can have a very positive impact on your company. Not only can you use the feedback to gauge what customers perceive as quality standards, but you can also use their complaints to evaluate and improve existing systems and services. If customers see you actively engaging with their feedback, they're also more likely to feel appreciated and valued by the business, which increases customer loyalty. This might fuel word-of-mouth recommendations, which contributes to a positive brand image.
Failure to respond to complaints properly can have a detrimental effect on a business' productivity and reputation. If customers notice that their feedback has not been responded to, they're extremely likely to turn to a competitor. In some severe cases, the customer might even report your business for misconduct. If an organisation is found guilty of failing to comply with their regulations, the FCA has criminal, civil and regulatory enforcement powers to protect consumers. For example, they can withdraw a firm's authorisation, issue fines and impose criminal prosecutions. Therefore, to maintain customers' confidence in your business and avoid fines and prosecution, organisations must know how to properly respond to complaints.