/ Money

Complaints can make a business better

A build your own bank kit

Banks have paid a heavy price for their bad behaviour. Now they need to learn why complaints can be good news and focus on good service and quality products to attract and retain customers.

The Financial Ombudsman Service (FOS) has been one of the most empowering creations in financial services over the past decade or so. It was launched in 2001, alongside the now-defunct Financial Services Authority, to give consumers a single place to elevate their complaints about financial companies.

This was a radical step forward considering that, pre-2001, there were six – yes, six – different complaints bodies for you to choose from. These were the Banking Ombudsman, the Building Societies Ombudsman, the Insurance Ombudsman, the Investment Ombudsman, the Personal Investment Authority Ombudsman and the Securities and Futures Authority Complaints Bureau. With such an exhaustive list of advocates, you might have been put off taking your complaint to the next level altogether.

Problematic PPI payouts

As the FOS’ remit has grown and evolved, so too have the types of complaints it receives. Payment protection insurance (PPI) has been by far its biggest challenge – the Ombudsman has now dealt with an incredible 1.2m PPI complaints, dwarfing the 317,000 it received on mortgage endowments. In its latest published figures, the FOS stated that it was still getting 5,000 PPI complaints a week – down from the peak of 12,000 a week last year – but enough to suggest that the fallout from this £24bn mis-selling scandal will rumble on for longer than anyone anticipated.

Every complaint that comes through to a bank is an opportunity – feedback from complaints is a valuable resource for banks to ascertain where potential issues lie (be it in the way it sells products, or how products are designed) and helps improve customer service. They offer a powerful insight into where a business can do better for its customers.

Good service and quality products

If financial companies get the basics right, such as dealing properly with complaints, it fosters greater trust and leads to more engaged consumers. This, in turn, results in greater genuine competition as engaged customers compare products and providers, and make quality switching decisions.

Firms that focus on good service and quality products to attract and retain customers should ultimately enjoy a stronger, more sustainable business model, and higher profits as a by-product.

Banks have paid a high price for poor conduct, such as PPI mis-selling, and you’d hope that the £1.9bn dent in HSBC’s balance sheet caused by PPI would lead to complaints handling getting better, not worse. If the bank’s response to these figures is robust and wide-reaching, it will be a worthwhile investment. Over the long term, it won’t just be customers that benefit – the business and shareholders will be winners, too.

Derek Bolton says:
20 November 2015

For the last three weeks I have been trying to get Lloyds Bank to remove a 2nd charge from my Deeds which is holding up the sale of my house. The 2nd charge was regarding an overdraft facility on my business which was sold over 10 years ago. Since then I have settled my mortgage in 2007 and have had no communication from Lloyds since 2004. Nationwide Building Society retained my Deeds for a nominal £1 until last year and I was not aware that the 2nd charge had not been removed until recently when informed by my solicitor. Neither he or I have had any communication from Lloyds as of todays date. They appear to be incompetent, and I have now complained to Lloyds Complaints Department who are currently dealing with this, as after my phone call today, November 20th.