As regulators increasingly focus on treating customers fairly, it is important to treat clients fairly in all aspects of your business, including if they complain.
Dealing with client complaints is already part of regulatory compliance for FSPs. The objective of TCF Outcome 6 is that clients should not face unreasonable post-sale barriers to change a product, switch provider, submit a claim or lodge a complaint. The Outcome implies that you need to follow a proper process when dealing with client complaints to ensure clients are treated fairly.
The General Code of Conduct for Authorised FSPs and Representatives (GCOC) requires you to try to resolve all customer complaints and to document the resolution process as proof of the process that was followed.
Section 17 states:
A provider, excluding a representative, must maintain an internal complaint resolution system and procedures based on the following:
(a) Maintenance of a comprehensive complaints policy outlining the provider’s commitment to, and system and procedures for, internal resolution of complaints;
(b) transparency and visibility: ensuring that clients have full knowledge of the procedures for resolution of their complaints;
(c) accessibility of facilities: ensuring the existence of easy access to such procedures at any office or branch of the provider open to clients, or through ancillary postal, fax, telephone or electronic helpdesk support; and
(d) fairness: ensuring resolution of a complaint can during and by means of the resolution process be effected which is fair to both clients and the provider and its staff.
The Rules on Proceedings of the Office of the Ombud for Financial Services Providers, published in 2003, also seek a fair outcome for both complainants and respondents.
Section 19(1)(d)(iii) of the GCOC states that a provider’s internal complaint resolution system and procedures must have arrangements to forward complaints to the relevant staff to consider a resolution and to inform clients of the results. If an outcome is not favourable to a client, he or she should be given written reasons for the outcome and be advised that he or she may pursue the complaint with the Ombud within six months.
Direct approach to the Ombud
In many instances, clients complain directly to the Ombud without informing their FSP of their intention to lodge a complaint. The Ombud acknowledges receipt of a complaint within 7 days and a case manager is appointed to the case for preliminary assessment. The Ombud evaluates if a complaint has merit before informing an FSP, which usually has 30 days to respond from receipt of the complaint.
Your complaints manager or Key Individual should deal with official complaints such as these. While the complaints manager or Key Individual is ultimately responsible for compiling the response to the Ombud, he or she may nominate a suitable senior person to investigate, draft a response and collate attachments.
Rule 6(d) states that a respondent may submit any fact, information or documentation in relation to the complaint and must disclose relevant information or documentation to the Ombud. Responses must be submitted within the stipulated turn-around time.
The Ombud will reply with a recommendation letter in terms of Section 27(4), and your complaints manager or Key Individual has two weeks to respond. The case manager then has another 30 days to consider your response.
If you are notified of a complaint, you should inform your Professional Indemnity Cover provider, as non-disclosure of a complaint could result in cancellation of your cover or dismissal of a claim relating to the complaint. In many instances, Professional Indemnity Cover providers also assist and support FSPs during the complaints process.
Proposed regulatory amendments
To align FSPs’ complaints management and recordkeeping requirements with the desired outcomes of the TCF framework, the FSB has proposed amendments to the GCOC and the Code of Conduct for authorised FSPs and Representatives conducting Short-term Deposits Business.
The proposed amendments seek to improve the current requirements and aim to ensure that FSPs’ complaint processes are straightforward, transparent and fair to consumers. They also aim to give effect to some of the RDR proposals.
Significant changes are proposed to Part XI of the General Code, which relates to complaints management. New definitions have been proposed for the concepts ‘client query’, ‘compensation payment’, ‘goodwill payment’, ‘member’, ‘rejected’, ‘reportable complaint’ and ‘upheld’ in Section 16. Revised definitions have also been proposed for the terms ‘complainant’ and ‘complaint’.
Proposed changes to Section 17 prescribe the procedures to establish a Complaints Management Framework and its requirements, allocation of responsibilities, categorisation of complaints, complaints escalation and review process, decisions relating to complaints, recordkeeping, monitoring and analysis of complaints, and communication with complainants.
Section 18 proposes changes that govern engagement with the Ombud and reporting, while Section 19 focuses on reporting complaints information.
When you embrace fairness in all aspects of your business, you will more easily reduce the risk of the dispute escalating. Your client will feel engaged and it will be easier to convert those negative moments into positive experiences.