Wealth firms lose 19% of clients from poor complaints procedures

Simply Consulting's white paper, Complaints: Going for Gold surveyed more than 100 consumers of wealth products including workplace pensions, ISAs and life insurance products, to find out how complaints are dealt with.

It found a quarter of complaints raised were not dealt with to the customer’s satisfaction, with 31 per cent saying they were not kept up to date throughout the complaints process. 

Some 44 per cent said it was not clear who they had to contact or how to even make their complaint. 

Three quarters of respondents revealed their complaints took longer to resolve than anticipated with some waiting up to eight weeks after a complaint was raised to be told the investigation was ongoing.

Kate Monserrate, co-founder and director of Simplify Consulting, said the long-term trends showed an industry that still hadn’t been able to “significantly move the dial” on complaints. 

"We still see complaints across all FCA-regulated firms increasing over the last 10 years, even if they have come down from the PPI and Covid peaks," said Monserrate.

"For wealth management firms, investments and pension related complaints have risen by 20 per cent and 24 per cent respectively between 2014 and 2023.

“It is vital that complaints are not just dealt with in a swift and satisfactory manner but that firms leverage the insight from complaints in the right way. That way, we’ll see how complaints can be transformed from a necessary, but low-key must-have for most firms, into a vital mechanism to understand where, and why things have gone wrong for customers,” she added.

Simplify Consulting claims the introduction of consumer duty has put increased pressure on wealth firms to have robust processes in place when dealing with complaints.

FCA complaints data showed in the last half of 2023 financial services firms received 1.87mn complaints. 

The white paper lays out five key areas for firms to assess how to shape and deliver a ‘gold standard’ complaints service. 

These are complaint strategies, investigating and embedding root cause, process design, people and culture as well as technology.

It has also issued a call to action for firms to improve their processes which include:

• Deciding on a complaints strategy and embedding it across the organisation
• Carrying out a root cause analysis throughout the process to drive change and continuous improvement
• Creating an optimised and value add process
• Ensuring employees are effectively trained in the skills required 
• Leveraging technology and AI in particular, in preventing complaints

Monserrate added: “It is crucial that firms make it easy for the customer to be able to raise a complaint, via their preferred channel of choice, as customers will likely become even more frustrated, reducing customer loyalty as well as leading to reputational damage.

"In a world more driven by data than ever before, complaints are often undervalued and companies do not always sufficiently investigate the true reason and underlying cause of customer dissatisfaction. Wealth firms are facing a very real risk of losing out to competitors if they don’t.”

alina.khan@ft.com

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