Firms face fines under new FSA complaints rules

Insurers and brokers could face severe fines and reputational damage if they do not comply with changing FSA complaints rules, technology company Managemycomplaints has warned.

From 1 July, the FSA will require financial firms to set up:

• A ‘one-stage’ process where a firm’s first response to a complaint will be its final response. The regulator hopes this will remove the need for consumers to keep pestering companies about their complaints
• Evidence of putting into practice the FSA’s treating customers fairly principles in a firm’s feedback management system.

Since last September the FSA has also required companies to have a nominated ‘head of complaints’ with accountability for complaints handling.

Research by Managemycomplaints has shown that nearly 94% of UK SMEs use spreadsheets or paper files to manage customer complaints and feedback, and that some have no system at all.

Using spreadsheets might not be enough to prove that every stage of a complaint has been recorded, Managemycomplaints head of marketing Andrew Aldred warned.

He said: “Sectors like insurance are already undergoing more reviews by the FSA and it’s having an impact on these businesses. When the FSA is reformed the scrutiny will get even closer and it’s going to cause some companies a problem.

“Nominated heads of complaints within firms must be confident that the technology they use is able to evidence an entire complaint’s audit trail, which is paramount in satisfying the FSA’s requirements.”