9th May 2025

Complaints - a business opportunity

When adviser firms think of complaints, it is often difficult to think of anything other than negative consequences. Minds immediately stray towards the Financial Ombudsman Service and some painful administration work. 

Last year, I went to help a firm that had dealt with them so badly for some months that it did not even have an accurate count of the amount outstanding. When we finally worked through various inboxes and spreadsheets, there were 89 outstanding. It took 3 people, working methodically through them to clear the whole list in 3 months. Due to the way that we worked, the firm ended up with paying out very little compensation other than a few good faith payments. How did we do that?  

Since most of the complaints were outside the normal 8 week limit, we simply did the research and our first correspondence was the final decision letter. If fault had occurred, we admitted the fault and looked to consider what resolution would satisfy the clients. Often, this was just an apology and an undertaking to put things right and ensure that the issues would not recur. If any kind of compensation was payable, we made small payments in the interest of goodwill. 

The most important element of the whole matter was to address the underlying issues that may have caused the complaints. But looking closely at the processes and training personnel, we put the firm into the position that complaints would be minimised going forward.

When looking at a complaint, the first thing to do is to work out what has happened to upset the clients. So, we need to check our understanding with the clients. What are they complaining about? By setting out our understanding clearly, we are then able to know the research that we need to do to identify the cause of the complaint.  This is important for us to be able to consider whether there has been fault.  

We need to be honest enough to admit fault. Admitting fault need not be a cause for concern. In fact, it is seen as positive by clients. We have all been in the frustrating position of dealing with people who simply will not admit fault. It may lead to a lot of negativity from the clients.  

As a matter of course, your PI insurers should be advised of any complaints that come in as they may lead to a claim. Many PI insurers are not good in this area because they want to minimise possible claims. What they do not realise is that if the firm is not honest, the chances of a claim are greatly increased if the clients do not feel that they have been treated fairly.  

The next step in the process is to consider what outcome will resolve the issue for the client. What are they expecting to happen? What will restore the relationship?  If we aachieve this, then the clients will be happy. Our reputation will be enhanced by resolving the matter to the satisfaction of the clients. 

Yesterday, I called the Financial Conduct Authority (FCA) as I wanted to make some changes on Connect for one of my client firms. The operative was quite friendly and the conversation was going along well until we needed to identify me. The questions should have been straightforward, I gave all correct answers, but was told that I had failed to identify myself within their system and we could not proceed with my queries.  

I was not happy when I was told that I would need to send in a copy of my passport and proof of my NI number.  When I sent them in by email, I made a complaint about the system that had caused me extra frustration and wasted time. It had put the ‘operative’ in a very awkward position when the problem was not their fault.

A little later in the afternoon, the FCA called me back and were very friendly. We worked through all the queries that I had wanted to raise and I was completely satisfied with the service that I received. Junayna had dealt with my complaint positively and I was back onside with the FCA.  A good experience overall.   

A bad example of dealing with complaints was in another firm. A complaint came in and the first response from the adviser was “I do not have complaints!” When I insisted that it needed to be dealt with under the formal procedure, the adviser was still holding out that the client was unreasonable, difficult to deal with and a b*tch.  I undertook my research and my conclusion was that the adviser had given bad advice and poor attention to detail and poor service. I did my calculation and found that the client had lost around £50,000. I referred through to the PI insurers and the owners of the firm. The owners advised that they could not afford to pay the compensation and were unwilling to pay more than the policy excess of £5,000. They did not want to claim on their PI Cover.  

The claim ended up going to the Financial Ombudsman Service (FOS) and it agreed with my conclusion about the case. The company could not afford to pay the claim and went into administration. The firm is now with the Financial Services Compensation Scheme with many more claims against it. 

A complaint is an opportunity to impress the clients. If it is dealt with honestly and resolved to the mutual satisfaction of the client and the firm, the relationship is strenghtened. Conversely, any complaint that goes to FOS is proof that the firm’s resolution process has not worked.

The scourge of many advisory firms is the practices of Claims Management Companies (CMCs). The CMCs have been easier to deal with since they are now regulated. I am much happier to deal with firms that are regulated by the FCA as the Solicitors Regulatory Authority (SRA) does not seem to feel that their practices are often quite poor. Last year, I dealt with a firm that avoided direct regulation by being registered as a Charitable Concern. I checked on their accounts and the only thing that I could see was that they offered employment to local people. Personally, I think of the CMCs as “fraudulent claims “r” us”. When I hear some of the adverts of these organisations, I think that there is very little tangible basis of many claims. People being encouraged to make claims for a quick buck. Many CMCs send in Subject Access Requests to generate the “evidence” to make their claims. I am delighted that FOS is now charging CMCs for making claims.   

When dealing with any clients who are dissatisfied, it is important to check our understanding of the issues and the outcome that the clients would like to ensure that our research and then our response is accurate and fair.  

All firms have complaint procedures, which give timescales up to 8 weeks. My view is to deal with them as quickly as possible. This is simply good customer service. 

Complaints do not need to be bad news. 

Tony Catt

Compliance Consultant 

The Catt’s Eye View

07899 847338

Business Development, FOS, Regulation