From Grievance to Growth: Mastering Root Cause Analysis and Effective Complaints Management
Let's begin with a reality check. Can you answer these critical questions about your firm's Root Cause Analysis (RCA) practices?
When was the last time you reviewed the themes from the latest Dear CEO letter against the findings from your RCA, and what insights did you gain from the comparison?
How recently has your RCA driven meaningful changes in your policies, procedures, or systems and controls, and what impact did those changes have?
Who in your firm, is responsible for oversight of RCA?
When did senior leadership last discuss the outcomes of RCA and what was the outcome of this discussion?
How is RCA helping you understand consumer duty outcomes across different customer segments, including customers in vulnerable circumstances?
The FCA has recently published a thematic review on RCA which can be found on their consumer duty pages. These questions provide a valuable starting point to assess whether your firm meets the FCA’s expectations and effectively leverages available information to drive meaningful change and positive customer outcomes.
Firms often struggle to pinpoint exactly what the FCA expects—while the DISP rulebook is highly detailed, RCA guidance is limited to just a few lines. This presents an opportunity to ensure your approach is aligned and that you are doing the right thing.
The FCA has highlighted complaints management and RCA in its recent thematic review for a reason. In our experience, complaints teams are often overlooked, seen as a support function and cost rather than a strategic asset. However, firms taking this approach are missing a crucial opportunity.
More than ever, complaints data and processes are essential to meeting regulatory expectations and avoiding further scrutiny. The FCA continues to request complaints data in thematic reviews, using it to assess whether firms require additional supervision.
Key takeaways
Recently, we participated as panellists in a webinar with Elephants Don’t Forget, discussing complaints, root cause analysis and meeting the FCA’s expectations. We’ve found that firms are eager to understand what more they can do with complaints and how to make sure root cause analysis is effective. Building on our five questions above, below we have set out the key takeaways from the thematic review that senior managers should take note of:
Responsibility and governance: Identify who is responsible for RCA and ensure they have the right skills and knowledge. Clear governance structures are essential to ensure that RCA results are reviewed by decision-makers who can provide sufficient challenge and scrutiny and implement necessary changes. Additionally, there must be effective tracking, management, and ongoing oversight to ensure that changes are being made and that they lead to better outcomes.
Policies and procedures: Focus RCA policies and procedures on identifying and addressing customer harm rather than strictly following the prescribed process of RCA. Develop clear, interactive, and scenario-based policies that are easy to apply and enable staff to effectively determine and action RCA.
Management Information (MI): Ensure MI includes commentary that promotes 'Insight to Action' by developing metrics and reporting mechanisms to evaluate the effectiveness of corrective actions. Set specific, measurable targets to assess the impact, such as reductions in complaints, improved resolution times, and higher customer satisfaction scores.
Data: Ensure your data is sufficiently granular and robust. RCA should make use of both internal and external data sources. For example, cross-referencing outcomes from RCA with the latest Dear CEO letters to ensure analysis addresses current regulatory compliance priorities. It should also be detailed enough to determine outcomes for different groups of customers. As the regulator becomes more data-driven, it’s crucial that your firm not only provides accurate data to the FCA but also uses it effectively to conduct RCA.
Consumer Duty: Firms should use RCA to evidence that they are identifying potential harms and delivering good customer outcomes through their data and act quickly to address areas of customer harm. We’ve covered key areas where Firms often fall short in a previous blog here.
Culture: It’s important for staff to understand the importance of RCA and how it can help achieve customer treatment objectives. A strong culture of accountability and continuous improvement encourages staff to contribute towards identifying root causes of complaints.
Leveraging RCA data within a well-oiled feedback loop is a straightforward win. Since you already need to collect complaints data, ensure that you are using it to its fullest potential. RCA should drive Consumer Duty programming and be used as a road map for addressing foreseeable harm.
Reflecting on the questions posed at the beginning of this blog, do you feel there’s more your firm could be doing?
How can we help?
Avyse can offer an independent review of your RCA framework and outputs. We have a highly skilled team who specialise in complaints, conduct, culture and governance, who can help you enhance your RCA processes and complaints management.
Get in touch with us at contact@avyse.co.uk to request an independent review.