In the first of our series of guest blogs on key issues for complaints handling, Sarah Lawrence, former Technical Manager at Financial Ombudsman Service takes a look at what we can anticipate from the Regulator in 2020
You may remember that way back in 2019 the Financial Conduct Authority (FCA) published its Business Plan and we commented on the small paragraph on page 15, that seemed to give a huge signpost to the way the FCA would be pushing its regulatory agenda in the future. You can find the whole report here , but just to refresh your memories it said:
‘Our long-term aim is to transform culture in financial services firms…In the long term, we can measure this through upheld complaints levels, consumer redress levels and feedback from consumers’.
This might seem like old news, given that we’re now in 2020, but in complaints handling we’re all about learning lessons. So, with the new year here and a whole new decade, it seems apt to look forward using this lens, because it focuses the mind. And, not just in terms of the FCA’s overall future plans for the industry, but also the impact on businesses and complaints in general.
One of the first consultation papers that springs to mind in terms of impact on the whole industry and the FCA’s goal to reduce the ‘harm to consumers’, which looks at building operational resilience. This isn’t just preventing and reducing the impact of tech failures, such as cyber-attacks, it’s also about protecting customers, the industry and economy from the impact when things go wrong.
What this will look like when the final rules are published (estimated early 2021) remains to be seen, but clearly the FCA wants individual businesses to ensure that they are ready for when things go wrong. You might very well be questioning the impact in terms of complaints, but there were a series of spikes in terms of these issues being referred to the Ombudsman Service last year. Customers are quite rightly quick to complain when access to their money and products are restricted or removed entirely with no backup plan, so this is one to watch out for.
And talking about consumers, it’s been a long time coming but we should be hearing from the FCA later in 2020 about its expectations around the treatment of vulnerable consumers. The FCA has said itself that this ties in with its plans for ‘improvements for the industry’, but last year it was also something of a hot topic for the Ombudsman Service. It’s clearly an area that generates complaints when it comes to treating people with vulnerabilities fairly, and so any guidance from the regulator is very much needed in order that the industry can prevent easily avoidable complaints in future.
Now, I could sit here and give a blow-by-blow list of everything that’s coming up in each product sector, but there simply isn’t the word count for that. So, I’d like to talk about what’s coming up in 2020 in terms of innovation, because often this is the area that sees complaints very quickly gain momentum.
The FCA is keen to be at the front end of any innovation in the industry that will help them drive home their goal of transforming culture, and one concept that seems to have reinvigorated banking is Open Banking. The FCA wants to see what it can do for the rest of the industry and is forging ahead with plans for Open Finance, so that customers have readily available access to the whole market of options that suit their needs.
In terms of complaints, it’s hard to know how many complaints this area has created or will generate, because the information isn’t readily available from the Ombudsman Service. However, it's likely that this is as a result of the relative newness of the area, rather than an absence of dissatisfaction. But one thing’s for sure, where there is innovation, new regulation will likely follow. This also means that there will be work to be done, getting to grips with these new types of complaint.
All in all, it’s looking as though it’s going to be a busy year for us all in terms of regulation, as the FCA pushes forward on its plans for transforming the culture in financial services . And that’s without even considering the work that will be caused by other innovations or Brexit.
In any case, it’s looking as though whatever happens there’ll be more responsibility on businesses to make sure they’re focused on changing their own culture. That means focusing on customer experience, feedback and reaching the right complaint outcomes, so that the industry really starts delivering the cultural changes the FCA wants to see.