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UK FSA Confirms will Require Firms to Publish Consolidated Complaints Data

As part of its drive to compel financial services firms to provide more transparency into their data, the Financial Services Authority (FSA) has confirmed this week that it will require UK firms to publish information on how they handle complaints. According to the regulator, this will help people see how firms are performing in this area and to drive up complaints handling standards across the industry. It will also pose another data challenge for firms already facing new requirements around risk data reporting and single customer view (SCV) reforms.

The FSA indicates that firms that receive 500 or more complaints in a six month period will have to publish the following information twice a year: how many complaints they have opened and closed; the percentage closed within eight weeks; and the percentage of complaints upheld. These firms will need to present this information categorised into five distinct product areas: banking, home finance, general insurance and pure protection, life and pensions, and investments. The FSA will then use this information to publish a consolidated list of complaints data covering all affected firms twice a year.

Sheila Nicoll, the FSA’s director of conduct policy, explains: “For the first time, people will be able to see how many complaints particular firms receive and how they handle them. We believe that this will help improve how firms treat their customers and provide incentives for firms to deal more effectively with complaints when they are received. Our more intensive approach to supervision places a greater focus on assessing how firms deal with their customers – and how firms handle complaints is a key part of this.”

The timescales, as usual, are fairly tight: the new rules come into force on 6 April 2010. All affected firms will have published their first figures by 31 August 2010, which is the deadline by which firms must publish their summary complaints data (and notify the FSA) if they have reported 500 or more complaints in a complaints return covering a period ending on or after 1 January 2010. According to the regulator, for most firms, this will be their complaints return ending 30 June 2010, but for some firms with different accounting reference dates, this will be a return ending on an earlier date. The FSA indicates it will then publish its first set of consolidated data in September 2010 and these arrangements will then continue to operate every six months.

The challenge for most firms will be in collating this complaints data in order for it to be converted into the FSA’s required reporting format. As this data is not something usually dealt with in such a structured format, some firms may have to invest significantly more to be able to monitor and gather it together in the timescales required.

The level of granularity and cross referencing required within this data will also prove to be significant task to implement. The FSA is likely to be fairly strict about ensuring the data is put into context and has provided guidance about what is reckons these metrics should be. “We expect firms to use the best data available to them and not to publish data that gives a misleading impression to readers,” it warns.

According to the policy statement (which can be downloaded here), the FSA has received feedback from firms concerned about the tight deadlines in which they are being required to alter their data systems. “Two respondents suggested delaying publication until two sets of data in the same format could be published together. Others suggested that the data publication should be delayed to allow us to share the first round of data with firms on an anonymised basis so that they could check for consistency with the rest of the industry before being required to publish their data,” says the paper.

The regulator indicates that this feedback inspired it to push the deadline back from the original date of 6 February to 6 April. However, a month’s grace is unlikely to satisfy these concerns fully.

The FSA estimates that the that number of firms affected directly by the new requirements will be around 175 firms, although it notes that the precise number affected will likely change over time.

This regulation adds yet another data ‘to do’ item on the list for financial services firms already being challenged to tighten up their data quality in order to provide a slew of new reports to the regulator. It will therefore likely add another reason to the list for firms to introduce an enterprise data management (EDM) framework to support this and all the other reporting requirements on the cards for 2010.

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