Banks ordered to improve complaints handling

Emma Woollacott
B0A3J6 How can I help you?. Image shot 2007. Exact date unknown.
B0A3J6 How can I help you?. Image shot 2007. Exact date unknown.

Fifteen of Britain's biggest financial institutions have been told to improve their complaints handling, ditching expensive phone lines and making their letters easier to understand.

The Financial Conduct Authority (FCA) has reviewed practices at seven high street banks, two building societies, three general insurers and three life insurers, all unnamed, which have now agreed to make changes.

In its review, the FCA found that the companies don't always consider how their internal procedures affect customers, and said that letters to people who had complained were "unnecessarily long and confusing".

It also found that there were inconsistencies in the amount of compensation offered to customers, particularly when this related to distress and inconvenience.

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The FCA has also advised the firms to make sure that calls to dedicated complaints phone lines don't cost any more than the basic rate, and is considering making changes to its rules accordingly. Firms that use freephone 0800 and local rate 0845 numbers have also been told to provide an alternative 03 number for customers using a mobile phone.

"It's in everyone's interest to consider how to make complaints handling more effective; that's why it was important to us to work collaboratively with industry on this project and I would like to thank the firms for participating," says Clive Adamson, director of supervision at the FCA.

"Together we have identified improvements that should be made and firms will act on these findings. I hope those firms who weren't part of the review will consider the recommendations and take appropriate steps to deliver consistent outcomes for consumers."

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A survey by TSB earlier this year found that more than four out of five people avoid calling banks and other service providers because of high call charges. But while the use of premium rate numbers for customer service was banned in June, many companies have failed to comply.

Customers will also cheer at the news that "unnecessarily long" letters may be on their way out. Banks are notorious for confusing customers with reams of small print - indeed, it was recently pointed out that the terms and conditions for an HSBC bank account come in at over 34,000 words, more than in Animal Farm.

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"Straightforward and effective complaints handling is an important aspect of how firms treat their customers," says Adamson.

"Correctly handled, they can help firms quickly deal with problems and keep their customers happy. Moreover, understanding the underlying reasons for complaints can help head off future problems."

Read more on AOL Money:

Firms still ripping off consumers with premium rate phone charges

Small print longer than Animal Farm

Customers won't call rip-off 0845 banks