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Fair treatment of client complaints – Amended code now provides framework for FSPs

The 2003 version of the General Code of Conduct (GCoC) for authorised financial services providers and representatives captured the handling of complaints in three pages, only focussing on basic principles and procedures. The just released amendment of the GCoC dedicates nine pages to the complaints handling process as well as the commitment to the fair treatment of clients. Not only does the updated code clarify a few definitions, the amendments also introduce a complaints management framework, engagement with Ombud and reporting, as well as the reporting of complaints information. For those FSPs who failed to draw up a complaints management framework, the amended Code is going to demand a lot of work, both in terms of implementation and monitoring.

The amendment of the GCoC states that a “provider, excluding a representative, must establish, maintain and operate an adequate and effective complaints management framework to ensure the effective resolution of complaints and the fair treatment of complainants.”

But what are the requirements for a complaints management framework?

The GCoC provides FSPs with detail and clarity surrounding the establishment of such a framework. Some of the requirements include allocation of responsibilities, how to categorise complaints, the complaints escalation and review process, decisions relating to complaints, record keeping, monitoring and analysis of complaints, as well as how to communicate with complainants.

Let’s unpack a few of these requirements:

Categorisation of complaints

An FSP must categorise complaints. The following categories should be the used:

the design of a financial product, financial service or related service, including the fees, premiums or other charges related to that financial product or financial service;
information provided to clients;
advice;
financial product or financial service performance;
a service to clients, including complaints relating to premium or investment contribution collection or lapsing of a financial product;
financial product accessibility, changes or switches, including complaints relating to redemptions of Investments;
complaints handling;
insurance risk claims, including non -payment of claims; and
other complaints.

Record keeping, monitoring and analysis of complaints

The GCoC states that an FSP must ensure accurate, efficient and secure recording of complaints and complaints-related information. The following data needs to be recorded:

All relevant details of the complainant and the subject matter of the complaint
Copies of all relevant evidence, correspondence and decisions
The complaint categorisation (as above)
Progress and status of the complaint, including whether such progress Is within or outside any set timelines

Furthermore, it is important that FSPs keep statistics of various aspects of complaints:

number of complaints received
number of complaints upheld
number of rejected complaints and reasons for the rejection
number of complaints escalated by complainants to the Internal complaints escalation process
number of complaints referred to an ombud and its outcomes
number and amounts of compensation payments made
number and amounts of goodwill payments made
total number of complaints outstanding

These statistics and data should be “scrutinised and analysed by a provider on an ongoing basis and utilised to manage conduct risks and effect improved outcomes and processes for its clients, and to prevent recurrences of poor outcomes and errors.” In essence, improving the customer experience.

The amendments to the GCoC also provide detailed guidelines with regards to communication with the complainant during this process, thereby adhering to the demands of “treating customers fairly” outcomes and refining the key steps: “A provider must ensure that its complaint processes and procedures are transparent, visible and accessible through channels that are appropriate to the provider’s clients.”

“The true test of a business’s customer service fitness is not when things are going right, but rather what is done when things go wrong,” Steve Ferrante, a leadership consultant, said. The question is will you pass the test?

Click here to download the amendment to the GCoC – Sections 16-19.

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