Complaints to financial firms fell by 4.3%, with some industry experts attributing the decline to the impact of the FCA’s Consumer Duty.
Complaints to financial services firms in the UK dropped by 4.3% in the second half of 2024 compared to the first half, according to data released by the Financial Conduct Authority (FCA). The total number of complaints received across the industry in the latter half of the year stood at 1.78 million, with £236 million paid out in redress to customers.
This figure represents a 3.0% decrease in redress payments compared to the first half of the year, suggesting a continued trend of reducing complaints, which financial services firms have worked to address. Despite the drop, the percentage of complaints upheld by firms remained consistent at around 57% throughout 2024, indicating that just over half of the complaints were found to be valid by the companies involved.
The three sectors most frequently involved in complaints during the second half of 2024 were current accounts, motor and transport insurance, and credit cards. However, all three categories saw a reduction in the volume of complaints compared with the first half of the year, suggesting an overall improvement in customer satisfaction across these areas.
Hugh Fairclough, partner and head of financial services at RSM UK, commented on the results, noting that the reduction in complaints could be a sign of the positive impacts of the Financial Conduct Authority’s (FCA) Consumer Duty regulations. Introduced in 2023, the Consumer Duty requires financial firms to place customers at the core of their operations, particularly when it comes to designing products, offering services, and communicating with clients.
Fairclough stated, “Many firms have improved their customer service practices in response to the FCA’s Consumer Duty, and we may now be seeing the results of these efforts in the 2024 complaints data. Firms are becoming more proactive in addressing customer concerns, which is reflected in the fall of complaints across key sectors.”
The FCA’s Consumer Duty has had a profound effect on the way financial services firms operate, requiring them to consider the long-term impacts of their products on customers and to ensure that their services meet high standards of customer care. This change in approach is believed to have led to better service delivery, which, in turn, could be contributing to the reduced volume of complaints.
While the reduction in complaints is a positive indicator, industry experts caution that the decline in complaints may also be partially due to changes in consumer behaviour and the increasing complexity of complaints resolution. Some financial services companies may have streamlined their complaint processes or reduced their reliance on formal complaint mechanisms, thereby lowering the number of recorded complaints.
The reduction in complaints could also indicate a shift in the way consumers engage with financial services firms. With increased awareness of consumer rights and more accessible routes for seeking redress, many customers may be resolving issues directly with firms before formal complaints are lodged. As a result, the volume of complaints recorded by the FCA may not fully reflect the true extent of consumer dissatisfaction across the sector.
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Looking ahead, experts anticipate that complaints will continue to decline as firms adapt to the ongoing requirements of the Consumer Duty and as the wider financial services industry focuses on maintaining high standards of customer service. However, the challenges of the current economic climate, including inflation and rising living costs, may continue to place pressure on both consumers and firms, potentially leading to new areas of concern that could affect customer satisfaction.
In the meantime, the FCA remains focused on ensuring that financial services firms meet their regulatory obligations and provide fair outcomes for customers. While the reduction in complaints is a step in the right direction, the regulator will continue to monitor firms’ practices to ensure that they adhere to the principles of transparency, fairness, and customer-centricity.
As the year progresses, the financial services sector is expected to further adapt to the evolving regulatory landscape, with an emphasis on improving customer experiences and reducing the likelihood of complaints.
