The Financial Sector Conduct Authority (FSCA), South Africa’s market conduct regulator for financial institutions, recently conducted a desktop review to evaluate whether banks are consistently delivering fair customer outcomes in complaints handling.
The review, which took place between July 18, 2022, and November 17, 2022, assessed 23 banks for regulatory compliance and adherence to principles outlined in section 8 of the Conduct Standard for Banks.
The findings revealed significant gaps in complaints management processes, raising concerns about customer treatment and regulatory compliance.
Key findings of the FSCA Review
The review highlighted widespread deficiencies in banks’ complaints handling processes.
Key areas of non-compliance included:
- Categorisation of complaints:
60% of banks failed to accurately classify complaints according to the minimum categories specified in section 8(7) of the Conduct Standard. Only 40% of banks demonstrated adequate categorisation practices. - Recordkeeping and data management:
85% of banks were rated unsatisfactory for failing to maintain accurate, efficient, and secure records of complaints-related information. Additionally, 70% did not comply with section 8(15), which requires banks to maintain data on reportable complaints. - Communication with complainants:
92% of banks failed to keep customers informed about the progress of their complaints, as required by section 22 of the Conduct Standard. Furthermore, 92% did not provide clear reasons for rejecting complaints or details of escalation processes, as mandated by section 8(13). - Oversight and statistics:
The review found a general lack of oversight in managing complaints statistics, which could hinder effective complaints resolution. Only 15% of banks ensured the accuracy and security of complaint-related information.
Recommendations for improvement
The FSCA identified several areas where banks need to improve their complaints handling processes to align with regulatory requirements and enhance customer experience.
Key recommendations include:
- Accurate categorisation: Banks must correctly classify complaints to enable robust root cause analysis and prevent recurrence.
- Comprehensive recordkeeping: Banks should maintain detailed records of evidence, correspondence, and decisions related to complaints.
- Timely communication: Customers should be regularly updated on the status, progress, and resolution of their complaints, including any unforeseen delays.
- Alignment of customer data: Ensure consistency between customer details on complaints registers and those in the bank’s database.
- Clear escalation processes: Banks must communicate internal escalation processes and provide details of relevant ombud services at all stages of the customer relationship.
- Accurate statistics: Maintain precise records of complaints statistics to improve oversight and management.
Progress and future monitoring
Following the review, the FSCA noted that some banks have begun implementing improved complaints management practices.
However, the regulator emphasised the need for continued monitoring to ensure sustained compliance and fair customer outcomes.
The FSCA will remain vigilant in overseeing the banking sector’s conduct and complaints handling processes.
The FSCA’s desktop review emphasises the need for South African banks to prioritise fair customer outcomes and adhere to regulatory standards in complaints handling.
While some progress has been made, significant improvements are still required to ensure transparency, accountability, and customer satisfaction.
By addressing these gaps, banks can build trust and enhance their reputation in the financial sector.
