New guidelines adopted by the Financial Services Board (FSB) will ensure that customer complaints are recorded and taken seriously by businesses. The FSB has adopted the Treating Customers Fairly (TCF) framework as a basis of how financial institutes should conduct business with customers. Through it the FSB wants to ensure that “customers do not face unreasonable post-sale barriers imposed by firms to change product, switch providers, submit a claim or make a complaint.”.
The framework, which is called Outcome 6, is expecting firms to use customer complaint information as an important source of management information. This is so that the FSB can measure the financial institutions delivery of the full set of TCF Outcomes.
“To demonstrate commitment to TCF Outcome 6, it would be necessary for any firm to develop, implement, monitor and internally report on an appropriate and effective internal process to manage customer complaints,” said the FSB in a statement.
The FSB went on to say that the current financial services regulatory framework in relation to complaints management is inconsistent, with different levels of responsibility placed on different types of entities.
This proposal is born out of discussions spanning back to December 2013, which resulted in the Twin Peaks model. The Twin Peaks model, once passed, will result in having the financial services industry regulated by the South African Reserve Bank and another regulator that will replace the FSB and control market conduct.
Features of the proposal
“It is accepted that complaints handling requirements need to be proportional to the nature, scale and complexity of the business concerned, as well as sufficiently flexible to cater for different types of products, services and business models,” said the FSB.
The first aim of the proposal is to define what a complaint is. “A complaint is to be broadly defined, to include – with some limitations – expressions of dissatisfaction relating to products or services offered or provided by financial institutions, including a complaint of unfair treatment,” said the FSB.
Furthermore, financial institutions need to have an internal complaints management processes, which will keep records, monitor and analyse complaints by the public. There will also be requirements for categorising the complaints. This is in order to enable financial institutions and the regulator to better monitor the risks of different forms of unfair treatment. Financial institutions will also be required to report any complaints to the regulator.