Firms to reveal complaints data

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Financial firms will have to publish figures about the complaints made against them, under new proposals from the Financial Services Authority (FSA).

It said that the publicity would put pressure on the firms to deal with the complaints more effectively.

Until now there has been no obligation on firms to reveal the number of complaints they receive, nor what they did about them.

Wednesday's White Paper on financial regulation called for improvements.

In the paper the government said the financial services industry needed to reform the way it handled customers' complaints.

"Publishing complaints data will mean that people can learn more about how firms handle complaints and the frequency with which they arise," said Dan Waters, an FSA director.

"We also consider that publishing this information will incentivise firms to deal more effectively with complaints and help to raise industry standards in this important area," he added.

Big change

The financial services industry has been the source of a number of huge scandals in the past two decades.

It is essential that the information is meaningful and genuinely brings benefits by enhancing customers' experiences of the firms they deal with Dan Waters, FSA

These have involved millions of people complaining about issues such as the mis-selling of endowment polices, personal pensions, payment protection insurance, and split-capital investment trusts.

More than a million people have complained to their banks about the still-unresolved issue of their bank overdraft charges.

The FSA's proposals are a big change from the present practice and are likely to be opposed by some firms.

Financial firms such as banks and insurance companies already collect the information and supply it to the FSA, but so far the details have always been kept confidential.

Next year

From July 2010 the figures will be published, with individual firms publishing the data about complaints they have received on their own websites every six months, and with the FSA publishing consolidated industry-wide data.

The firms will have to publicise:

• how many complaints they have opened and closed

• the percentage closed within eight weeks

• the percentage of complaints upheld

• and the number of complaints per 1000 customers.

The data will be published for different categories of firms such as banking, insurance, pensions and investments.

"It is essential that the information is meaningful and genuinely brings benefits by enhancing customers' experiences of the firms they deal with," said Mr Waters.

The FSA has been gathering views on its plan since May 2008 and is now putting its proposals out to formal consultation until the end of October this year.