A quarter of customers with workplace pensions, ISAs and/or life insurance products raised a complaint that was not dealt with to their satisfaction.
Areas that have caused concern among customers included not being updated during the complaints process (31%) and not being clearly signposted on how to raise a complaint in the first instance.
Further, timeliness has also proved to be a problem among the 100 customers surveyed by Simplify Consulting, with three-quarters of respondents saying the complaint took longer to resolve than anticipated.
When escalating their complaint, a quarter also said they felt discouraged to contact the Financial Conduct Authority (FCA) to resolve their issue.
‘Wealth industry hasn’t moved the dial on complaints’
Kate Monserrate, director and co-founder of Simplify Consulting, says the long-term trends “show an industry that still hasn’t managed to move the dial significantly on complaints”.
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Monserrate said: “We still see complaints across all Financial Conduct Authority (FCA)-regulated firms increasing over the last 10 years, even if they have come down from the PPI and Covid peaks. For wealth management firms, investments- and pension-related complaints have risen by 20% and 24% respectively between 2014 and 2023.”
In July last year, the FCA introduced Consumer Duty, a set of new rules for financial services in order to set higher standards in the industry.
It means firms now need to provide support to customers where needed and with communication that’s easy to understand, with important information not “buried in lengthy terms and conditions”.
The duty also includes an expectation that businesses will give proactive help to those in a vulnerable situation who may be struggling with health or financial complications.
Monserrate added: “It is vital that complaints are not just dealt with in a swift and satisfactory manner but that firms leverage the insight from complaints in the right way.
“That way, we’ll see how complaints can be transformed from a necessary but low-key must-have for most firms into a vital mechanism to understand where, and why, things have gone wrong for customers.
“It is crucial that firms make it easy for the customer to be able to raise a complaint, via their preferred channel of choice, as customers will likely become even more frustrated – reducing customer loyalty as well as leading to reputational damage.”
In February, the regulator checked in on what changes financial services had made since the rules came into place, but Monserrate believes wealth firms are lagging behind.
“In a world more driven by data than ever before, complaints are often undervalued and companies do not always sufficiently investigate the true reason and underlying cause of customer dissatisfaction. Wealth firms are facing a very real risk of losing out to competitors if they don’t”, she added.
