How effective governance aids complaints handling

All regulated firms must have a process for handling complaints. Its purpose is to ensure that customer complaints are dealt with effectively, expediently and appropriately. Firms were reminded of this fact in the FCA’s Business Plan and Strategy documents.

Regulatory expectations have been set with the FCA’s focus firmly upon improving the redress system. The aim is to reduce harm to consumers and to ensure those firms creating the redress burden bear the cost. Success will be measured by a firm's ability to resolve complaints in a timely manner.

Whilst timeliness is important, how well a firm investigates and reaches a fair conclusion is also crucial in demonstrating good client outcomes.

FOS view:

In a similar vein, the Financial Ombudsman Service (FOS) is keen to remind firms that complaints handling is not just about correcting a mistake, but also taking care of the client. When investigating a complaint, a firm needs to ensure that this is undertaken independently and holistically. Consideration should be given to the overall impact of any financial, practical and emotional issues affecting the client.

Under the FCA’s rules, eligible complainants can raise issues with the FOS if they are unhappy with a firm’s final response. Once the FOS has reviewed a complainant’s concerns it then contacts the firm and shares some basic information provided by the complainant that outlines:

  • Complainant’s details

  • Nature of the complaint

  • Complainant’s description of how the firm might put things right

As part of its review, the FOS will request copies of any relevant records and details of a firm’s investigation within a specified timeframe.

Providing information to FOS:

The FOS reviews everything that took place including the timeframe within which events occurred. This helps to form an overall picture of who did what, when and how. That information may include:

  • Initial disclosure documents

  • Marketing materials

  • Copy of advice provided

  • Risk warnings

  • Call recordings

  • Meeting notes

  • Details of the firm’s own investigation

The exact information required will depend on the nature of the complaint, whether it is mis-selling, unsuitable investment advice, failure to provide services or another issue. What’s important here is having a full picture of what happened during the contact with the client. To aid the investigation, it's helpful to pull together a precise timeframe of events that helps to identify the sequence of steps taken and when any information was communicated to the client. The timeline also helps to confirm the timeliness of any responses to the client. Firms also need to ensure that the information provided was the version in operation at the time of the complaint.

Appropriate systems and controls:

Complaints have a broad definition; whilst firms should aim to avoid them, they are likely to occur. This is where implementing and maintaining appropriate systems and controls throughout a business is vital.

A complaint could be raised at any point during a customer’s journey, so it’s crucial that firms have embedded the basic cornerstones of compliance.

Creating the right culture within a firm by communicating the firm’s stance via policies & procedures and implementing controls to mitigate risk is critical.

As part of the regulatory authorisation process, firms are asked to confirm that they have documented procedures in place. These serve a number of purposes such as:

  • Demonstrating that the firm understands what it needs to do to comply

  • Providing a standard process for all to follow for consistency

  • Implementing controls to mitigate any risks in the process

  • Enabling everyone to understand their responsibilities, what action needs to be taken, when and how it is to be completed

  • Having clear escalation processes for issues

In addition, these procedures, if embedded correctly, help the firm demonstrate how it has fulfilled its duties. Evidence is equally important and might include meeting notes, client correspondence and perhaps client reports.

The evidence demonstrates that the firm didn’t just say it was doing something, but has an audit trail of what took place between the firm and the client. For the evidence to provide a good audit trail, the firm must be able to demonstrate version control over its procedures and other documents. Firms need version control over key documents to easily identify key changes to processes and implementation dates. This is particularly important for marketing materials or templates where disclosures may be made.

Additionally, whilst the firm has all of these documents, it needs to demonstrate that it has shared this information with its staff and where necessary, provided appropriate training.

All of the above steps require that the firm has robust recordkeeping in place.

Overview of the complaints process:

Firms should note that the onus is upon them to demonstrate why they might decline or refute a complaint. This means that firms need to have the following in place:

  • Complaint handling system to identify, log, investigate and resolve issues

  • Regular training to staff to enable identification and logging of complaints

  • Impartial investigation process to reach fair and good outcomes

  • Root cause analysis and feedback loop to improve processes

  • Management information and trend analysis to enable board decision making

The above process should assist a firm in readily identifying issues and resolving them quickly, but the firm’s recordkeeping process and audit trail is crucial.

How Axiom HQ can help you:

AxiomHQ is an industry-leading software platform designed to help regulated firms manage the burden of evidencing and monitoring compliance. It has a range of tools to help firms fulfil their obligations across the UK, Europe and APAC regions.

The Axiom Issue management module is a dedicated software solution for raising and managing compliance risk incidents. The solution allows firms to:

  • Create incidents, checklists and attestations

  • Enter details such as discovery, reporting and resolution dates along with a full description of each item

  • Specify where a rule has been broken, if necessary specify a breach has occurred

Axiom’s powerful rules-mapping system allows firms to link issues directly to the relevant regulation. It is also possible to link risks, controls, and business processes.

Please contact us for further information on 020 3965 2166 or


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Contact the author

Priscilla Gaudoin

Head of Client Regulation| Axiom HQ