Institutions have had to close branches and enable staff, including head office staff, to work remotely. With branches closed and customers opting to use online services instead, institutions have been forced to consider whether servers can cope with the increased volumes of online traffic. Institutions may also be experiencing increased absenteeism due to illness or staff taking time off to care for family members. These factors, alongside the challenges of delivering a service remotely, are bound to have some impact on the level of service provided to customers.
Bad debt provision
Institutions that deal in the foreign exchange markets may be relishing the increased trading volumes triggered by the current FX volatility inevitable during a macroeconomic event such as this. However, the same institutions will need to set aside sufficient bad debt provision to cover the likely increase in defaulted margin calls. Further, where customers default on margin calls, they are more likely to complain about products being mis-sold, claiming that the product was unsuitable or the margin requirements were unaffordable.
Timeframes for dealing with complaints
The obligation to deal with complaints within the regulatory timeframes remains in place. For DISP complaints, institutions are required to resolve complaints within 8 weeks and for PSD/EMD complaints, institutions must provide a full written response within 15 business days, or 35 business days in exceptional circumstances. Customers must be informed of how they can bring about a complaint against an institution, and they must be informed of the institution’s complaint handling procedures and the applicable timeframes for dealing with complaints.
FCA’s expectations of consumer protection and complaints handling
At the beginning of March, the FCA clearly set out their expectations of firms in anticipation of a move to remote working to combat further spread of the virus.
“We expect firms to take all reasonable steps to meet their regulatory obligations. For example, we would expect firms to be able to enter orders and transactions promptly into the relevant systems, use recorded lines when trading and give staff access to the compliance support they need. If firms are able to meet these standards and undertake these activities from backup sites or with staff working from home, we have no objection to this.”[1]
The FCA further reiterated their expectations of firms to continue to protect consumers, irrespective of any internal disruption, as detailed in Jamie Cooke’s earlier blog. The importance of consumer protection is evident throughout the FCA’s communications and when it comes to complaints handling, consumer protection remains paramount. Speaking specifically to complaints, the FCA stated:
“We still expect firms to deal with complaints promptly. However, where the pandemic prevents this, firms should contact us, we understand the pressures firms will be under. Firms are reminded that they should aim to resolve any complaint within 8 weeks (15 days for payments firms). If they cannot, they should write to the customer explaining why they have not met the deadline.”[2]
Vulnerable Customers
Alongside complaints, institutions should consider how they will continue to meet their TCF obligations despite the internal disruption.
In the current economic uncertainty, institutions and customers alike will be carefully monitoring their cashflows. Individual consumers may have concerns surrounding reduced income if they have been placed on furlough or made redundant, and loss of employment may result in a customer being considered “vulnerable”.
The FCA defines a vulnerable customer as “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”.[3]
However vulnerability is not static, as explained by the FCA in their Guidance for firms on the fair treatment of vulnerable customers:
“vulnerability can be permanent but is often transient because consumers’ circumstances constantly change. This can cause consumers who had not previously been vulnerable to become so at some stage of their life.”
Some of the drivers identified by the FCA as contributing to vulnerability include:
- health issues – “health conditions or illnesses that affect the ability to carry out day to day tasks”; and
- resilience – “the ability to withstand financial or emotional shocks”.
The COVID-19 pandemic therefore seriously increases the likelihood of customers who haven’t previously presented as vulnerable being considered vulnerable customers. Institutions should have knowledgeable and experienced staff who are able to identify vulnerable customers and ensure fair treatment. Customer facing staff, including complaints handling teams, should be properly trained on how to deal with vulnerable customers appropriately.
There are also practical matters, such as difficulty in accessing services, to consider. Lack of access to a decent broadband service is more common in rural areas: 12% of rural premises cannot get access to such a connection, compared to 1% of urban premises. Older people may struggle to use digital communication channels due to a lack of skills or access.[4]
TCF and Vulnerable Customers Procedures
Further, this time of crisis is reported to be generating stress throughout the population and likely to lead to increased mental health problems. Whilst institutions have always been required to have appropriately trained staff who are able to handle difficult issues with sensitivity, now is perhaps a good time to review TCF and vulnerable customer procedures.
At this time, institutions should be asking themselves the following questions.
- Do complaints handling teams have capacity to handle increased volumes of complaints, particularly under the current remote working conditions and increased levels of absenteeism due to illness?
- Do complaint handling procedures need to be adapted to ensure that customers are still able contact the business to make a complaint?
- If complaints handling procedures have been adapted, has this been appropriately communicated to customers? For example, have new complaint contact details been listed on the company website?
- Are all complaints being recorded appropriately by staff working remotely?
- Are complaints being escalated appropriately with staff and line managers working from separate locations?
- Are staff appropriately trained on their TCF obligations and how to deal with vulnerable customers?
If you require any assistance or advice regarding the outsourcing your complaints handling service, delivering staff training or reviewing existing policies and procedures in dealing with vulnerable customers or meeting your TCF obligations generally, please do not hesitate to contact me or one of my colleagues.
[1] https://www.fca.org.uk/news/statements/covid-19-coronavirus
[2] https://www.fca.org.uk/firms/information-firms-coronavirus-covid-19-response#impact-on-consumers
[3] https://www.fca.org.uk/publication/occasional-papers/occasional-paper-8.pdf
[4] https://www.fca.org.uk/publication/guidance-consultation/gc19-03.pdf
This post contains a general summary of advice and is not a complete or definitive statement of the law. Specific advice should be obtained where appropriate.
