Complaints – The changing landscape and commercial pressures

Wed 06 Nov 2019

By Anthea Coulter, Account Director

In our complex and diverse market place where a great deal of work is being undertaken by firms to provide consumer lending products and services that are appropriate for many different customers, the FCA are working to ensure our adherence to regulation.

This work brings with it greater scrutiny and consumer empowerment, and as a result the number of consumer complaints is rising, and support from Claims Management Companies increasing.

FCA Complaints Data To H1 2019

The total number of complaints received by firms in 2018 increased by 9% (193,360) from 2017 H2, and looks set to increase again based on the record numbers received in H1 of 2019. With PPI drawing to a close this year, these numbers will reduce in 2020 but the floodgates are now open and there are multiple areas where customers will continue to seek redress and compensation from their financial service providers.  

Over the last few years consultations papers, speeches and outlook documents have illustrated how FCA attention is turning to activities within the Consumer Credit market specifically; Home Finance, Rent to Own, High-Cost Credit and Motor Finance.

Industry shortcomings, highlighted by the FCA’s increased attention, is resulting in more consumers looking for redress, in relation to regulatory processes failings, lack of evidence to defend a firms position and Claims Management Companies ‘CMCs’ looking to help them. 

Claims Management Companies (CMCs)

Increased CMC activity is evident in the Claims Management Regulation annual report 2017/18. The report highlighted a reduction of CMCs from 1,610 companies in 2015/16 to 1,238 in 2017/18, the ongoing reduction is further illustrated by only 900 CMCs applying for FCA permissions in April of this year. The reduction in CMCs is most likely a reduction back to the core CMC firms that have been in existence for more than 5 years, prior to PPI claims activity.

CMC Chart For Article

However, the reduction in numbers has not translated into a reduction in turnover in the area of financial products and services which increased by over 12%, 532.1m in 2015/16 to 600.3m in 2017/18.

Some believe that the introduction in FCA regulation will curb CMC activity, although it could be argued unlikely, given the FCA is looking to focus on the following areas in relation to CMCs:

  • Customers - to be empowered and confident in choosing a value-for-money service which is appropriate for their needs
  • CMCs - to help customers get redress in a way that complies with FCA rules
  • Regulation - that prioritises high standards of conduct protects consumers and improves public confidence

As pointed out by Jonathan Davies, the Director of Supervision at the FCA in a speech the consumer credit sector needs to think ‘strategically about the issues facing your customers’ and to consider whether ‘this is the right thing to do’, not only for you customers but for the future of your business.

Financial Ombudsman Service (FOS)

A necessary support for customers in the customer complaint process is the FOS, however with FOS involvement comes with the need for greater administrative activity and a £550 for every complaint, after the first 25 complaints in any given year.

Firms can reduce customer dissatisfaction and therefore lesson FOS involvement through robust investigation processes, effective customer interaction and the clear communication of outcomes to both consumers and where involved CMCs.

Under the heading 'Vulnerability: a fine line' the FOS 2017/18 annual review reported a 64% increase in payday lending, a 146% increase in home credit and that 1 in 4 new complaints, other than PPI, involved Consumer Credit.

Accompanying these figures is a quote that the clearly indicates the kind of complaints being referred to the FOS.

'We’ve noticed that some lenders aren’t being thorough enough with the affordability checks they’re carrying out right at the start. And if they’d taken more care at this stage, their customer might not have ended up in difficulty.

— Mark Collins, Ombudsman Manager.

Although FOS only upheld 31% of complaints, other than the first 25 for each firm, their £550 fee was charged on each case.


It is clear from the FCAs activity in the consumer credit space, that there is a continued focus on the handling of complaints and with closer regulatory scrutiny, rule changes are to come. It is important to learn from other financial services sectors and recognise how closer scrutiny and rule changes can, without adequate information and preparation, be extremely costly to reputations and the financial wellbeing of the firm.

How can firms react

Experience of good and poor practice from within the industry is invaluable when looking to understand how the principles of regulation and the rules that accompany them can be applied and adapted to a firm, its chosen market place and consumer base.

In every case, irrespective of the firm there are key defense strategies that can be applied:

  • Regular structured, knowledgeable and informed CMC interaction
  • Clear, robust, well documented and compliant Complaint administration
  • Accurate and compliant complaint recognition and triage
  • Appropriate levels of customer interaction through the complaints process
  • Well structured, accurate and consistent Complaint investigations frameworks
  • Compliant, clear, accurate, consistent and succinct Final Response Letter addressing each complaint point
  • Appropriate and organised FOS interaction, with lessons learned fed back into processes

Equiniti Hazell Carr has 20 years experience in supporting financial services organisations. To find out more, call us on 0118 951 3971.