Yesterday the UK financial regulator released complaints data for the second half of 2016. While this happens every six months, yesterday was meant to be different. This data was meant to arm consumers with information to make more informed decisions, and ultimately empower people to make the financial world better. Sadly, it turned out to be a lost opportunity.
So what did change? As a result of Policy Statement 19/15, the Financial Conduct Authority (FCA) has released more information than ever before. From 30 June 2016 all complaints handled by a regulated firm became reportable (previously it was just complaints dealt with by the close of the next working day). To enable fairer comparison between businesses, complaint volumes have also been set in the context of the size of the business.
The FCA stated that it wanted this new data be more informative. In its own words: ‘Greater transparency of complaints information will enable consumers looking to invest or buy products to be better informed about the products that have caused concern for other consumers.’ But the data released is as useful to consumers as an ice pick on the Titanic.
To help demonstrate this, I plotted the results of the FCA’s Banking and Credit Card complaints per 1,000 accounts against some of the data held on the website I run, Smart Money People, for some of the UK’s leading banks. What I found was a strong correlation between information already in the public domain, and what the FCA has just revealed, four months after the fact.
While it’s rather comforting to see a familiar picture – I’ll admit, I still get a warm feeling when the Coca-Cola Christmas trucks drive across the TV screen in December – the fact that this data is not furthering our understanding makes it a real lost opportunity.
Issues with the FCA’s complaints data include a format that makes it daunting for most consumers to absorb, the omission of consumer credit firms (which aren’t yet included), and other firms like Nationwide Building Society who haven’t reported their H2 2016 complaints in the new format given their financial year end. Groupings such as ‘Banking and Credit Cards’ and ‘Insurance and Pure Protection’ also make it hard to see which products are driving the most complaints within a given firm.
And there are some pretty big risks. Wide variations across firms in how they define a complaint may impact the fairness of any conclusions drawn from the data, and reporting all complaints could drive poor behaviour in some firms as some staff may use a narrower definition to avoid reporting a complaint, keeping reported numbers down.
But leaving all this aside, the fatal flaw is that the FCA has maintained the requirement for a given firm to receive 500 or more complaints per half year in order to be included in the published data. By keeping the threshold at 500 reported complaints, lots of new FinTech firms – from new challenger banks like Atom Bank, money transfer firms like Azimo, and Robo-Advisors like Wealthify – aren’t included. It also means that smaller banks like Triodos Bank, which yesterday launched its current account, are skipped over, as is the UK’s largest peer lender, Zopa.
But it’s precisely these types of financial firms that consumers need more trusted information about. Many of us feel we know enough about big banks such as Halifax or NatWest, or won’t be shocked to see HSBC at the bottom of another customer satisfaction league table. The really useful (and really hard to obtain) information is about firms that aren’t household names.
Likewise, small and regional building societies who compete for mortgage and savings business with their bigger banking rivals aren’t able to use this data to help them prove that they deliver better outcomes for their members and local communities.
There’s an admirable objective behind the revamped complaints data, and it’s fair to say that the regulator has taken positive steps to encourage more competition and innovation. But if publication of this data was intended to help more consumers act as co-regulators, it’s far too flawed to deliver this. The FCA must go further and give consumers data about all financial firms.
Mike Fotis is the founder of Smart Money People and a former financial services consultant