In an online exclusive, CMS Cameron McKenna partner Alison McHaffie outlines best practice for insurance firms dealing with complaints from customers.
Customer complaints handling has always been of primary importance to the Financial Services Authority, and this will not change under the auspices of the Financial Conduct Authority.
The FSA introduced new rules in 2011 aimed at increasing the quality of complaints handling. It is clear that the quality of a firm's complaints handling will form a central part of the regulator's supervision of conduct risks.
The time given to complaints - and a company's commitment to take action where failings are found - is demonstrated by the significant fines imposed in the banking sector.
The publication of company-specific complaints data and the proposal to publish the Financial Ombudsman Service's final decisions, mean that how a firm handles its complaints will increasingly be seen as the public measure of the way it treats its customers.
The FSA experts firms to have written complaints-handling procedures, approved by management, and compliance-establishing consistent standards, to ensure that FOS guidance and decisions are fed back to complaints handlers and that details of complaints-handling procedures are published.
With this is mind the complaints-handling unit must make sure a senior person, holding a governing function, is responsible for complaints handling; that complaints are handled promptly by trained staff; and that management information is extracted and distributed to identify early warning signs of unsatisfactory business practices, systemic weaknesses or failings of individual employees.
Firms must ensure that a proper investigation of the complaint is carried out promptly and appropriately.
The subject matter of the complaint should be fully investigated by reviewing point-of-sale or other customer-facing material, taking a statement from those at the company who have been in contact with the customer and obtaining further information from the customer.
The response to the customer should be clear, informative and individual. It should be written in clear English, avoiding jargon and legalese, providing a clear overview of the basis of the complaint and explaining why it is being upheld or rejected.
The response should also set out clearly the rationale and figures involved in any redress calculation, explaining FOS referral rights and making it clear that it is the final decision, as not doing so can cause confusion and, therefore, unfairness to a complainant.
A firm that has a properly managed complaints-handling function will be well placed should the customer remain dissatisfied and refer the complaint to the FOS.
The file relating to the customer's complaint should be complete, and include paperwork specific to the complainant, all relevant standard documents in use at the time and copies of relevant marketing material.
The FOS expects a high standard of record keeping, and an inability to produce appropriate records and documents may count against a firm.
It is important that any points on jurisdiction and dismissal without consideration of the merits are made at this stage or the firm may be taken to have waived any right to object on these grounds.
If there is a conflict of oral evidence, the firm should also consider whether to ask the FOS to agree to a hearing.
There is no provision for a firm to appeal a final award, although there is the possibility that a firm may be able to challenge the FOS through judicial review. However, there have been relatively few successful court challenges to FOS, largely due to the breadth of the FOS' "fair and reasonable" jurisdiction.
It is essential to engage effectively with the FOS from the initial referral and ensure that its position is clearly expressed and all points have been raised before the FOS reaches its final decision.
Alison McHaffie, partner, CMS Cameron McKenna
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