Payment protection insurance has dominated the coverage of complaints against banks for some time now, but many observers think that it is just the beginning of a wave of grievances about to engulf the retail banking industry.

Complaints against banks are rising. Can complaints handling systems provide benefits beyond simple automation? If it’s approached correctly, yes, and some banks are already showing how to do it.

According to the UK Financial Ombudsman service, insurance-related complaints made up 70% of the new complaints it received last year, with payment protection responsible for 85% of that.

By comparison, other complaints look to be miniscule, but this is only a relative position, and while many of the remainder are about banking practices rather than things that are broken or otherwise fixable, complaints are complaints and all companies ought to take them seriously.

The Financial Ombudsman’s last annual figures cover March 2011-March 2012, and show a lot of issues that reflect the general economic situation, For instance, it reported that for the third year running it saw a substantial number of complaints from consumers who said their current account problems related to financial hardship they were experiencing – often also saying that charges applied to their current accounts had added to the problem.

Many consumers who refer complaints to the Ombudsman about these charges believe that current-account providers should limit the charges to the actual cost of the work charged for – for example, the cost of returning an unpaid direct debit.

“This means we have to spend time in many cases clarifying the legal position before we can start working on an outcome that the consumer can understand. From what we see, this problem is often caused when consumers (or their representatives) have looked at out-of-date or inaccurate information about bank charges on the internet,” it said.

Also on the rise were complaints about “packaged” accounts, where the consumer pays a monthly fee for a current account that includes some insurance products (such as travel insurance) and/or other special features (such as an automatic overdraft facility or a discounted borrowing rate).

The latest annual set of complaints data from the Ombudsman are due at the end of the current quarter. Interim figures suggest that PPI will still be at the top of the list, but stripping this out, it is likely there will be some other issues that are moving up the agenda, such as endowment mortgages and interbank money transfers.

With the recent Retail Distribution Review changing the way in which banks are allowed to give financial advice – and the subsequent withdrawal of several High Street banks from the advisory market – the trend towards more complaints about products and services can only continue.

The automation of complaints handling is not a new idea, and a number of vendors provide systems and services in this area.

With the rise in social media, much of the conversation in this area concerns the use of social media, and its integration into existing channels such as the call centre.

“The public perception of banks has been battered in recent years, but financial institutions have been working hard to repair the damage. A key tool in their strategy has been to improve customer service in a multichannel environment,” says Joe Doyle, vice-president of global marketing at customer care provider Sitel. “A comprehensive approach to improving customer service requires banks to look far beyond traditional call centre operations, as much of the interaction with banks is moving away from the telephone and towards digital channels. Nevertheless, call centres remain a priority as they expand to handle other kinds of contact, such as live chat, email and social media.”

 Doyle says that the most important element driving these channels is speed. Sitel recently conducted a survey of 1,000 people in the UK, aged 16–64, that found customers increasingly select channels that offer the fastest response. For example, the data showed a year-on-year increase of 6% in customers selecting live chat as their preferred method of communication, with figures for email (-3%) and phone (-1%) falling. Approximately 26% of respondents believe that companies could improve their customer experience if they responded quickly to questions on social media sites like Twitter.

Gathering the data in a cohesive manner means that firms stand a better chance of correcting problems in services. Using the complaints data as a feedback mechanism can have considerable benefits beyond simply appeasing angry customers and staying off the Financial Ombudsman’s list of most-complained about organisations.

Case study: Lloyds Banking Group

Charter UK has provided Lloyds Banking Group with the largest single platform complaint handling system of any major bank in Europe, replacing more than 40 disparate complaint handling systems that were in use across 30 different brands.

These systems included numerous internal databases, spreadsheets and third party applications that demanded high levels of support. The new system now provides Lloyds with a single web-based system for data gathering/analysis and front office complaint resolution in order to increase the speed at which problems can be identified, resolved and solutions presented to customers. In one case, the single source of 1,000 monthly complaints, paying bills over the telephone, was identified and resolved in less than 48 hours.

Martin Dodd, customer services director of Lloyds Banking Group says: “The real leading edge capability that Charter UK has given us is root cause understanding – the ability to understand why customers are complaining so that we can fix the problems straight away. As you can imagine, with an organisation our size, fixing these processes early on will allow us to reduce our expenditure substantially.”


“This something that some organisations are coming to recognise: a proactive approach to handling customer feedback is going to lead to significant returns,” says Paul Clark, chief executive of Charter UK, the company that worked with Lloyds Banking Group on the complaints handling project that was a finalist in the 2012 Banking Technology Awards (see panel).

“In the regulated case of the financial services industry, there are some clear individuals that stand out as having grasped this challenge, and Lloyds is pretty much at the top of the tree,” he says. “It is following the guidance of the FSA but going further in terms of the use it is making of the information. Our role is to enable then to get a single view of the organisation, and their role is to wrap around that with their staff and processes to ensure that they are taking advantage of the feedback.”

A key approach is what Charter UK calls Root Cause Analysis. “It enables a firm to analysis the feedback it is getting to understand what is at the root of the complaints they are receiving, and to address it – removing the root of the problem reduces the number of complaints,” says Clark.

Sometimes this can simply be a training need, or the need to have better information for both staff and customers – something that the Financial Ombudsman often finds to be behind the problem too.

“It is really about using the free advise that customers are giving, and the organisation taking the opportunity to review the services it thought the customer was going to receive and adjust it so that they are actually receiving it,” says Clark. “No organisation ever sets out to sell rubbish products.”