In our work within the insurance and financial services sector, we are still aware of firms resting on the notion that complaints handling expectations have not significantly changed because of Consumer Duty. Although all organisations should already have had robust complaint handling processes in place, the implementation of Consumer Duty should certainly have triggered a review and assessment of the ongoing suitability of those systems and controls.
In a similar way to how the Duty now requires firms to take a view of their operations from the perspective of the service user and customer, our advice has been for firms to consider their complaints handling processes and approach to Root Cause Analysis (RCA) as separate services. This includes considering the need to enlist their own set of drivers and demands when considering compliance with the Duty.
In this blog, we will examine how firms can best utilise RCA as a tool to identify the 5 Ws of Root Cause Analysis (who, what, when, where, and why) and assist with delivering the right outcomes to inform a more complete Consumer Duty Board Report.
It is all too easy to think that simply handling a complaint fairly and within the rules fulfils your obligations. But work shouldn’t end with the Final Response Letter. There’s more that needs to be done and more value to be realised from using the insight gleaned from your customer complaints for tangible gain.
The challenge
Complaints RCA has been a key requirement detailed in the FCA’s Dispute Resolution Complaints Sourcebook (DISP) for a long time now. It is crucial for overseeing, managing and evidencing RCA as part of a firm’s overall approach. But, before conducting this, it’s crucial firms are considering whether their complaints team are actually best positioned to manage RCA and are not simply being assigned the responsibility because they’re at the centre of managing the existing dispute resolution processes.
In general, complaint handling teams and complaint managers are suitably placed to deal with service-related issues, albeit efficiently and effectively – but team members typically demonstrate mindsets which focus on customer service, long-term customer relationships and prioritising customer satisfaction. And while there’s no doubt these are skilled individuals, there’s concern that they’refocused primarily on the immediate outcomes for the customer.
The challenge?… This is often a different mindset to that needed to perform RCA.
Our experience suggests people who have a process mindset, those more focused on the journey and placing emphasis on the steps, policies and the strategies involved, are the most effective at performing RCA. Obviously, we occasionally see individuals who truly ‘get’ both process and customer engagement, but dare I say this isn’t the norm.
Essentially, RCA as the regulator would expect, is probably best carried out by a dedicated RCA function – a team or individual who are suitably qualified and skilled to carry out the task in hand.
Invest in the process
As it is typically regarded as a back-office process that isn’t income generating, it is common for firms to neglect the importance of investing in the systems and controls used for managing complaints. However, a good complaints management system is key to effective management of the end-to-end process – often best serviced through purpose-designed third-party solutions. Certainly, solutions that allow for the effective capture and analysis of the three core data aspects of the root cause are key to success in the context of this topic. The ability to flag and categorise the root cause of a complain underpins the value and benefit in running the process as well as providing the core evidence for adequately completing the RCA loop.
The 3 core data aspects of root cause are:
- The area responsible for creating the complaint e.g., Collections, Customer Service, Sales, IT, Product.
- The process that failed which then lead to the complaint e.g., income & expenditure capture, changing payment dates.
- The nature of error that contributed to the complaint e.g., people/policy/process/training.
Linking complaints outcomes to existing areas and processes can indeed narrow down the root of issues, but this in itself doesn’t necessarily provide the complete story. For example, inadequate complaints management information (MI) is often compounded by a lack of appropriate escalation and analysis through the right governance forums. And far too often, firms overlook things like discussing complaints results at too high a level (e.g. number of FOS decisions). They are also often guilty of looking at results in operational silos, or without joining the dots on trends that might be occurring across the product lifecycle and the customer journey. For example, a high number of service level complaints about things like call waiting times could be an indicator that price and value requires review.
So, it is also important to understand the links and dependencies. To both capture and utilise this data for best effect requires employing a complete matrix of business areas and related processes.
Nonetheless, it is still vital to ensure the capture of the most accurate data available at the time the complaint was resolved. It’s also important to curate and safeguard these core data capture lists against phrases like ‘other’ or terms that are generic in nature – this kind of thing inevitably leads to watering down on the ability to identify the essential root cause.
To help maximise the benefit and, crucially, evidence good governance, while creating your matrix, it is important to be able to link the area and processes to the accountable senior management function (SMF) too. This mature and meaningful approach will drive communications, transparency, channels of accountability, process improvement, and help with getting those corrective actions and remedial interventions underway.
This matrix of areas, processes and accountable SMFs is fundamental to the benefit that a firm is likely to realise, so controlling it is important. This means your existing quality assurance frameworks should include steps for checking the accuracy and integrity of the data being captured, and therefore the validity of the insight being produced and enabled.
Complaints handling management information in isolation, is often too focused on the obvious metrics and outputs such as ‘Upheld vs Rejected’, ‘redress paid’, ‘FOS referrals’ etc. While these measures are valuable performance indicators, more granular and relevant data points need to be defined and sourced to help senior management get greater insight into RCA. This will also enable them to dig deeper into the trends that are being unearthed, the quality of customer outcomes that are being delivered, and which areas and aspects of the operation might require remediation to address issues and concerns.
The key to better outcomes
Arguably the most important aspect of RCA and the most common omission is the failure of firms to use these insights for remediation, process and product improvement. Therefore, failing in facilitating and enhancing better customer outcomes—a core requirement right at the heart of Consumer Duty.
RCA is invaluable information that can help firms evidence compliance across all four customer outcomes: Products and Services, Price and Value, Consumer Understanding, and Consumer Support. This kind of approach is an opportunity to monitor and respond directly to the core goals of Consumer Duty, in helping to identify and mitigate issues and concerns connected with these outcomes.
So, the recommendation is to take the RCA data captured at source and feed it into a dedicated root cause analyst function—whether that’s a team or individual. This function should be suitably qualified to perform RCA and needs to be fully supported in their task for the firm to realise any real benefit. It is common, for example, to invest in methodologies and tools like those used to improve business processes by reducing defects and errors, minimising variation, and increasing quality and efficiency. And as a technology provider in this space, Davies Technology Solutions are already looking at the use of AI to help improve decision-making, assist with prioritisation, help apply some consistency across the process and utilise a broader range of inputs.
Using other data sources is likely to add significant value for the outputs and decision making. Things like customer survey results, as well as learning from industry returns (FOS decisions on related cases for example), all help to build a complete and holistic picture. It’s not uncommon to include the customer or a cohort of customers in the process by seeking feedback on a proposed solution prior to implementation for instance—and this is particularly powerful when looking at customer touch points, experiences and vulnerability.
To seek a further source of insight, it is important to give your employees and colleagues a voice also. Engaging with the relevant team(s) and individual(s) by investigating thoughts and feedback of staff within the areas where the problem occurred. This process speaks to the key objectives of Consumer Duty by helping build credibility and engendering a culture of learning from complaints and their root cause. You’ll also want to draw on people’s experience and detailed understanding to feed into deciding on appropriate remediation.
Root cause forums offer a sensible way to join the dots between data, analysis and action. Helping the different stakeholders come together to analyse the data, consider the feedback, and establish agreement on priorities, areas requiring focus and appropriate remediation.
It’s important the Root Cause Analysis forum is attended by the accountable individuals too. Fixing the issues causing complaints is a responsibility that spans your overarching governance framework, and real long-term change will ultimately be driven from the top. These forums are most effective when chaired by the most senior operations representative too. This is typically the Chief Operating Officer, and they should be suitably attended by those responsible for overseeing complaints and root cause.
This kind of approach helps drive a positive culture of continuous improvement right across your business and helps focus efforts on fixing issues and preventing them from arising in the future. Consequently, this will drive down future complaint volumes and in turn, demonstrate how seriously a firm has embraced the spirit of the Duty in line with the regulator’s intent and expectations.
About Davies Technology Solutions Limited
DTS are a specialist technology company, providing a range of regulatory technology (RegTech ) software solutions that maximise operational efficiency and strengthen our clients’ approach to processes like Regulated Complaints Management, VoC, QA and remediation. We typically work with companies who:
- are concerned about the operational costs and resource challenges concerned with managing regulatory processes.
- are troubled with a lack of transparency and consistency within their compliance procedures.
- are uneasy about the quality, accuracy and reliability of MI (reporting) and insight
Please feel free to book a meeting with me if you have any questions.