Constructive criticism


December 15, 2014

Godfrey Blight is a director at Capita Mortgage Services

The Financial Conduct Authority (FCA) last month released its thematic review of complaint handling and it makes for interesting reading. 

As financial service providers, the way we deal with customers and their complaints is vitally important, so we should take note of the review’s findings.

While I’m certain that the feedback from this review will have a positive impact on our industry, perhaps the most valuable thing to have emerged from the exercise is the way in which the FCA has tackled it.

Adopting a new approach, the FCA decided to directly involve representatives from the industry, in a process of collaborative self-assessment. The review focuses firmly on identifying areas that can be strengthened, and puts forward proposals to make relevant changes.

Lenders, brokers and service providers alike can sometimes complain that regulatory intervention is made without their full involvement or buy-in, but this model helps do away with those concerns. The FCA’s decision to involve industry experts from the start is an excellent way of getting them onside, making them central to the creation of a better marketplace.

On preliminary analysis, this different model seems to have worked well. There is no sense from the review that the findings have been diluted by the self-interest of the participants – on the contrary, the findings go straight to the heart of the matter, and the suggestions made by the FCA cover quite substantial changes to the current system.

They include making all complaints reportable, whether settled before the next business day or not, and extending the time period that a complaint can be settled within without requiring a formal final response to one week.

This in itself is not surprising. I suspect that no one comes to work to do a bad job, so directly involving the mortgage community in the creation and refinement of regulation can only be a good thing. As an industry we are constantly looking to make positive alterations to our business practices, as proven by the multiple forums and events that the CML and other organisations have created for driving change.

So, the thought naturally arises, what other areas are prime targets for this kind of treatment? High on the list would likely be arrears management. The FCA has already produced a very useful document on this subject – which it published in February – but we could investigate this area further.

The long history of our trade means that we are overflowing with experienced, knowledgeable individuals whose contribution to the debate should not be ignored. There are vast reservoirs of talent in our offices and branches which, if tapped, could produce the sort of evolutionary uplift to best practice procedures that will benefit both us and our customers.

Other topics like the Mortgage Market Review and regulation of second charge mortgages would also doubtless benefit from early involvement of direct participants. The FCA’s role as the ultimate mediator, guide and decision maker for the process would still provide the independence central to all such interventions. 

The FCA is not alone in adopting this strategy. Recently we heard that RBS agreed to provide the City of London Police with advice and training on financial crime.

While some have raised concerns about this kind of close working, it is entirely logical that the police utilise the skills of professionals.

They are, after all, trained to spot the sort of irregularities that, if undetected, could lead to massive losses for both financiers and the general public so we should be grateful of any opportunity to deny criminals the chance to benefit from these activities. .

In the meantime, we can contribute to the ongoing transformation of our industry by keeping the communication flowing, both within and between our organisations.

At Capita Mortgage Services we have always found that sharing knowledge is central to any successful business relationship. If we can adopt this same attitude as an industry, we can make sure our voices help shape the nature of our commercial environment for the better.

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