Have you noticed an improvement in the way your bank deals with complaints? This should be the case if your bank is heeding the recommendations in the Financial Sector Conduct Authority’s recently published Banking Sector Complaints Management Review Report, which found significant shortcomings in banks’ complaints management procedures.
The Financial Sector Conduct Authority (FSCA) is the market conduct regulator of financial institutions in South Africa. A key part of its mandate is to ensure the fair treatment of consumers by financial institutions, including banks.
Banks came under the FSCA’s regulatory ambit relatively recently – on 1 April 2018, when the FSCA officially replaced the Financial Services Board. In 2020, it issued a Conduct Standard (No. 3 of 2020) for Banks, which required banks to prioritise fair treatment of financial customers and act “honestly, fairly, with due skill, care, and diligence”, and take remedial action in cases where customers had been treated unfairly.
In 2022, the FSCA undertook a review to assess banks’ ability to treat customers fairly in recording and handling complaints and how closely they adhered to the principles in the Conduct Standard. The report, released in February this year, presents the findings of the survey, which was conducted between 18 July and 17 November 2022, and the consequent recommendations.
Twenty-three banks were asked to submit their registers of complaints data and documentary evidence on how selected complaints were handled. The submitted registers contained 316 133 complaints. Random samples, capped at 100 complaints per bank, were selected and assessed in accordance with the principles outlined in the Conduct Standard.and given a satisfactory or unsatisfactory rating.
According to the FSCA report, the review revealed that the majority of banks exhibited unsatisfactory complaints management processes across the assessed requirements, as follows:
• Categorisation of complaints: 60% of banks failed to meet the requirement that they accurately classify complaints according to specified minimum categories. Only 40% of banks demonstrated adequate and accurate categorisation practices, the report says.
• Complaints records and data management: 85% of banks were assigned an unsatisfactory rating with respect to the accurate, efficient, and secure recording of complaints-related information. Most banks failed to keep copies of pertinent documents, communications and decisions, and did not indicate whether the status of the complaint was within or outside set timelines.
• Communication with customers: 92% of banks failed to keep complainants adequately informed of the progress of their complaints, according to the report. All banks fell short of ensuring that their complaints management processes incorporated effective communication strategies to ensure that complainants were kept informed of progress and the outcome of their complaint as well as the contact details of the relevant ombud services. Banks did not provide clear and adequate reasons for rejecting complaints nor details of any applicable escalation or review processes.
Banks’ moves to improve
In response to the results of the review and on the intervention of the FSCA, banks began improving and streamlining their complaints management practices, the report says.
It came to light that one of the “four major banks” (the banks in question have not been named in the report) had 11 different systems for handling complaints, “which led to the customer experience being inconsistent”. The bank has subsequently rationalised its systems and converted to one system, the report says. Other measures adopted by banks include appointing teams to monitor complaints, improving employee training, enhancing complaints procedure manuals, and implementing automated and real-time tracking of complaints.
The FSCA concludes the report by saying it will continue to monitor the conduct of banks in addressing all the shortcomings.
