Banks, wake up - complaints cost more than money
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Outlook The way banks handle complaints has been a running sore with their consumers for many years. No wonder, when the man in charge of dealing with them at Lloyds seemed terribly proud of the fact that 30 per cent of those it rejected were subsequently upheld by the Financial Ombudsman Service (FOS). It’s more like 70 per cent when PPI cases are included. “We are the market leader,” declared Martin Dodd, customer services director of Lloyds while testifying before the Treasury Select Committee yesterday. If you’re the market leader by dint of having nearly a third (sorry, more than two thirds) of the complaints you throw out kicked back to you, that’s a bad market you’re in.
The crux of the problem was neatly summed up by the committee’s chairman, Andrew Tyrie: he worries that complaints are in effect viewed as a business expense.
Here’s why: there is a balance to be struck between the cost of investing in systems, employees and service generally, and the cost of complaints if you don’t.
The volume of complaints the industry is currently receiving suggests that it doesn’t view their cost as sufficiently expensive to tackle the root causes behind them. And the number of cases in which the FOS ruled in favour of the complainants suggests that complaints handlers still see their role as telling consumers why they were wrong to complain.
The committee appears to hope the emergence of challenger banks such as TSB, Virgin Money and Santander might change this by offering consumers a better experience. And the Payments Council has made it easier to switch. But, when push comes to shove, will these challengers be any different? After all, Santander UK hardly has a spotless record of handling complaints.
There is, of course, an answer: increase the cost of complaints. In addition to a levy, banks currently pay £550 for each complaint that goes to the Ombudsman after the first 25. Consumers pay nothing.
If that were doubled, and a sliding scale introduced so banks, and other financial institutions, pay still more if their complaints breach certain benchmark levels, it might just serve to concentrate minds.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments