The FCA has updated its good and poor practice webpages with further detail on how smaller firms can meet its requirements.
For complaints and root cause analysis:
- Smaller firms may receive relatively few formal complaints, so they might consider using checks to test whether issues are being missed. This could be done by reference to a sample of customer calls, completed customer journeys or feedback from customer-facing staff.
- Due to lower complaint volume, smaller firms will understandably have less complaints MI, and may thereofre consider enriching their insights with other proportionate sources, such as FOS decisions, FCA communications and relevant industry information. Where alternative information has been used, it will be beneficial for smaller firms to be clear about what was used, how often it is considered, any limitations in the information, and how issues are escalated where potential harm is identified.
- Smaller firms may have fewer formal governance layers, but this equally can mean that responses can be quick.
- While they may not have large datasets or sophisticated MI tools. smaller firms can still test whether action taken after root cause analysis has been effective. A proportionate approach might involve greater focus on recurring issues.
- While they may not need or have committees to consider complaint insights, smaller firms may find it beneficial to keep records demonstrating that significant complaint issues are not only noted, but challenged.
For the price and fair value outcome:
- Smaller firms may use less complex processes and more readily available information when assessing fair value.
- However, where a firm’s products, pricing structures or business model are more complex, the FCA expects this to be reflected in the depth and sophisticated of the fair value assessment, regardless of the size of the firm.
For the consumer support outcome:
- Smaller firms may benefit from flexibility in responding to customers whose financial circumstances have changed, for example by allowing additional time and alternative payment options.
- Smaller firms can benefit from their stronger understanding of individual customers. Certain firms may keep in contact with customers on an ongoing, personalised basis in order to gain confidence that customers continue to receive support aligned with their financial objectives and circumstances.
- While it might be reasonable for firms with less resources to offer fewer support channels, these channels should work well for their customers. For example, if firms rely mainly on telephone or email support rather than digital tools, they should ensure staff are accessible, response times are reasonable and customers can raise issues or request assistance easily.
- Smaller firms may have less detailed monitoring strategies, but they can consider information they already have (such as sales data, complaints, repeat contacts or customer feedback) to help monitor customer outcomes.