What can we learn from the latest product miss-selling scandal?
Last month the The Financial Services Authority announced that it is reviewing the practices of the U.K.’s big retail banks after finding serious problems with miss-selling interest rate hedging products to small and medium sized businesses.
This new scandal will put even greater pressure on banks’ complaints handling processes which are already straining to cope with PPI among other issues. However, while the size of the swaps miss-selling compensation is financially similar to PPI, the settlement
of the cases will be much more costly and the cases will be more complicated. Therefore banks must streamline internal complaints handling processes and ensure financial products sold by advisors match customers’ needs.
The risk is that these complaints will be handled manually, slowing up the resolution of the case, increasing the likelihood of errors derailing the process and ramping up the final cost. As a result, the complaints process can itself trigger complaints
and regulatory censure.
Resolving these operational issues and regulatory challenges should be the impetus for systems change. This change should enable transformational efficiencies across all complaints handling systems without incurring intolerably high operational costs.
Therefore a single, centralised system is key to ensuring consistency of enforcing professional standards and compliance requirements across the organisation. This system needs to be outcome driven and focused on the customer. By leveraging situational
analytics and automated rules that drive best practices, financial organisations will be able to apply the compliance restrictions needed for selling financial products, while improving customer experience. A rules-driven system that captures complaints through
all communication channels and drives the next-best-action required to resolve the case most effectively will significantly improve resolution and responsive time, while ensuring a better customer experience.
What’s equally important is that this approach will enable banks to prevent product mis-selling by providing customer facing staff with smart recommendations about the most suitable products for each customer based on existing compliance requirements. This
will drive better professional practices, while improving auditability and compliance. Banks can use this knowledge to turn complaints handling into an opportunity to retain existing customers, while boosting upselling and offering unrivalled customer experience.