Complaints are often viewed as a regulatory necessity and an operational cost, but in today’s landscape, shaped by Consumer Duty and an increased focus on outcomes by regulators (and consumers, who are more aware of their needs than ever), that mindset is no longer an option.
When handled well, complaints are one of the most powerful sources of operational insight a firm has. They demonstrate how your products, processes, systems and controls are performing for customers; they reveal where friction or bottlenecks exist and where outcomes fall short.
Why complaints matter more than ever
Complaint handling is a key component of Consumer Duty, particularly under the Consumer Support outcome. Regulators are not just interested in whether complaints are closed on time, but how they are handled and what firms learn from them.
We continue to see scrutiny around:
- Timeliness of responses and resolution
- Complaint uphold rates and consistency of decisioning
- Evidence of learning, including outcome-based root cause analysis
- How insight from complaints feeds back into business change
In short, complaints are no longer just about fixing individual issues. They are about demonstrating ownership, accountability and continuous improvement at scale.
From compliance to capability
A best practice Complaints Target Operating Model (TOM) is designed to do three things well:
- Deliver fair, timely and understandable outcomes for customers
- Identify and correct systemic issues before they escalate
- Provide meaningful insight to senior leaders and the board
When effective, a complaints function becomes a control, an early warning system and a driver of better customer experiences.
The 10 ingredients of an effective complaints operating model
Our white paper sets out ten core components that underpin a high-performing complaints TOM. While the regulatory environment continues to evolve, these ingredients remain highly relevant across all parts of financial services.
At a high level, they focus on:
Strong governance and leadership
- Complaints excellence starts at the top. Boards and executives must actively engage with complaints data, trends and outcomes — not just as MI, but as insight they can challenge and act on.
A clear, customer-centric complaint handling process
- From triage and frontline empowerment through to investigation, escalation and resolution, the process should be transparent, proportionate and designed around customer needs — including vulnerable customers.
Robust assurance and monitoring
- Firms need confidence that complaints are delivering good outcomes. That means effective first line outcomes testing, second line oversight and, where applicable, third line audit — all aligned to Consumer Duty expectations.
Fit-for-purpose systems and technology
- A well-designed complaints operating model is enabled by technology. Centralised complaint management systems, workflow automation and data analytics are essential for visibility, efficiency and insight.
The right people, properly supported
- Complaint handling is a skilled role. Recruitment, training, competency frameworks and colleague wellbeing all play a critical part in ensuring complaints are handled consistently and empathetically.
Feedback and continuous improvement
- Complaints only add value if firms learn from them. Structured root cause analysis, feedback loops and cross-functional engagement are key to preventing repeat issues and improving outcomes for non-complainants too.
Effective engagement with regulators and external bodies
- Proactive, transparent engagement with the FCA and FOS helps build trust and avoids surprises. Ombudsman decisions, in particular, are a rich source of learning.
Customer feedback and reputation management
- Online reviews and social channels often signal emerging issues before complaint volumes spike. Monitoring these channels supports better forecasting, risk management and early intervention.
Executive-level escalation capability
- High-priority and sensitive complaints require senior ownership. An effective Executive Office escalation process provides rapid resolution and valuable insight into real customer experience.
Tailored processes for vulnerable customers
- Identifying vulnerability and adapting both process and decisioning is critical to ensuring fair outcomes — and remains a key regulatory focus area.
Turning complaints into insight
The most mature firms treat complaints as operational intelligence. They use data to:
- Identify upstream product or process failures
- Improve controls and customer journeys
- Inform training, resourcing and investment decisions
- Evidence good outcomes to regulators
This shift from reactive handling to proactive learning is what differentiates a compliant complaints function from an effective one.
Final thoughts
Consumer Duty has sharpened the focus on outcomes, but the fundamentals of good complaint handling remain the same. Firms that invest strategically in their complaints operating model are better placed to protect customers, strengthen trust and improve performance across the business.
Complaints, when handled well, don’t just resolve issues. They help firms grow, improve and thrive.
If you’d like to explore how your complaints function measures up against best practice, or how to turn complaint insight into meaningful business change, download our white paper today.
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