HUNTSWOOD: FREEZE FRAME – EXTENDED FINANCIAL RELIEF, A CONTINUING TEST

Features | 23/07/20

Extended Coronavius financial relief will continue to test customer contact, complaints and collections functions.

The global pandemic has caused operational challenges for many businesses, but the continuity of a firm’s complaints handling operation has never been more important. The latest guidance published by the Financial Conduct Authority (FCA) reminds consumer credit firms of the significance of complaints resolution at this time and confirms that it expects normal service to resume. The message is clear, prioritise vulnerable customers and take all reasonable steps to ensure complaint handling is fulfilled throughout the next stages of the pandemic.

While customers were initially understanding of delays in the complaints process due to the lockdown, as the economy starts to get moving again, their sympathy and tolerance is starting to falter. We are already starting to witness expectations return to, and even surpass, pre-COVID-19 levels, as customers face increasing personal financial pressures.

Given the tough economic environment, consumer credit firms are now witnessing somewhat of an uptick in lending and borrowing requests. Almost a quarter of 18-24-year-olds told comparethemarket.com they’re likely to use non-traditional forms of credit to spread the cost of purchases during lockdown.

As we witness an eventual shift to economic recovery, it is likely that the FCA will be keeping a close eye on the sector. Thankfully, there are measures that lenders can take to ensure that they are acting in line with the regulator. Firms should be identifying customers in financial difficulty at the earliest opportunity, ultimately aiming to achieve the right outcome for all customers quickly and efficiently.

Vulnerable customers

Consumer vulnerability has never been more relevant and important to manage. Vulnerability is a fluid concept and in the last few months, many individual customers will have faced some form of it. This may be due to income shock, handling the effects of bereavement, or trying to look after their mental or physical health given the new environment.

Ensuring all frontline staff have had the adequate training to have difficult and sensitive conversations with those in the most challenging circumstances will be a priority which many firms are currently addressing. As customers transition in and out of vulnerability throughout the pandemic and its aftermath, firms should embrace data-led insights. New advances mean it is now easier than ever to spot loss of income and take proactive measures to intervene.

Reduce the escalation of minor issues

We are also starting to see claims management activity ramp up since the start of the pandemic, targeting firms in relation to their handling of COVID-19 responses.
Given the operational challenges COVID-19 has presented firms, with many employees now working from home, it’s important for firms to think about how minor issues can be prevented from turning into a complaint. Given this, firms may wish to consider ensuring:

• adequate resource is available on the front line to deal with customer service calls
• relevant operational systems changes are made in line with the recent payment holiday and payment deferral plans outlined by the FCA
• fair customer outcomes are delivered, taking into account individual circumstances
• customer complaint handling is in line with the evolving COVID-19 guidance issued by the FCA.

The quickest route to resolution

It goes without saying, the quicker a resolution can be found, the happier the customer. In Huntswood’s Complaints Outlook 2019, firms reported that 46% of cases were typically resolved at ‘first point of contact’ (FPOC), despite customers reporting that this was only the case 20% of the time. With 76% of customers wanting a resolution at FPOC, it seems that these expectations aren’t being met. However, the benefits of getting the right outcome within the right timeframe are demonstrated by the increased retention and advocacy levels, as shown within the research. Those firms that continue to miss this mark will likely struggle to retain customers and gain advocacy.

The importance of empathy

When a mistake is made, many customers simply want an apology and reassurance that the issue will not happen again. By ensuring that training for frontline staff focuses on both knowledge and empathy, customers continue to feel valued and prioritised during this difficult and challenging time.

Additionally, unless customers are explicit about their personal circumstances, an effective complaint outcome cannot be achieved without some form of dialogue with the consumer. Through empathy, understanding and having the ability to gain a customer’s trust, complaint teams will be able to gain a better and broader understanding of customers’ circumstances and the right solution for them.

Keeping up with the changing outcomes desired

As we have all experienced, individual circumstances are now changing on a day-to-day basis and it may be hard for firms to keep track. For example, sending redress by cheque, may no longer be the preferred option for customers who have had to move properties or for those who cannot deposit the cheque. To ensure that firms meet desired consumer outcomes, close communication is vital. Firms may wish to consider sending more regular communications during this time to keep the consumer fully informed, whilst acknowledging receipt of complaints promptly. If there are any delays, again this should be clearly communicated with estimated resolution times given and updated regularly.

Fair outcomes for individuals are of paramount importance. They keep customers and the regulator happy and reduce the likelihood of customers choosing to escalate their complaint to the Ombudsman. Quality assurance pays dividends and is an important role in evidencing outcomes and learning from mistakes.

Operational efficiency and resilience

To make the complaints process more efficient, firms must embrace the digitalisation of their customer offering. Only one in three customers believe that firms are embracing digital technology to better manage and resolve complaints. 70% of customers whose complaints were not resolved at FPOC interacted with their provider through at least two different channels during their complaints journey, such as via phone and an online chatbot. Therefore, offering a omni-channel approach allows customers to contact their provider in a variety of different ways, suiting all. A single holistic view of each customer through data management will also help to reduce customer frustration and identify vulnerable individuals at the earliest possible opportunity.

The next chapter

Prioritising the most vulnerable and finding the right outcome for customers are high on the regulator’s agenda. As consumer credit firms look to find a ‘new normal’, it will be imperative to be prepared and adequately equipped to deal with an uptick in both enquiries and complaints.

This is not just a box-ticking exercise in regulatory compliance. Taking small, simple steps to provide effective customer servicing and complaints handling and learning from the past can save businesses money and resource in the long-run, improving both customer advocacy and business resilience. As part of this, firms should regularly be conducting root case analysis to prevent future reoccurrence of easily addressable issues.

Firms should continue to focus on ensuring that customer service differentiates them from their peers and that they are always transparent and fair when it comes to dealing with their customers. In an era where customers have multiple provider options, firms should take stock of delivering the best outcome for customers, taking into account individual circumstances and the need for a timely resolution, which will ultimately drive customer loyalty and repeat business for the long term.

Matthew Drage
Director of Consumer Finance
Huntswood