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Operational Horizon: Performing Complaints Root Cause Analysis

Written by Tom Jeffery, Operations & Remediation Director - Square 4

Root Cause Analysis – demystifying it all!

Reading the latest FCA Complaints data report, we can see internal uphold rates remained steady over the past 12 months at c.60% and coupled with a 25% decrease (304M to 228M) in redress being awarded, we can see identifying key actions to address root causes of complaints remains a key challenge for many businesses.

Performing Complaints Root Cause Analysis is a critical task that’s laced throughout the FCA’s DISP sourcebook; because of its relationship with DISP, it’s often common to assume Complaint Handlers should be performing the dominant share of it. I’ve often seen this very differently.

Typically, Complaint Handlers and often Complaint Managers are suitably placed to deal with service-related issues – very much focused on returning a customer to a position had the error not occurred in the first place and pushing brand loyalty and advocacy. This is often a different mindset to that needed to perform root cause.

My experience has often shown me those who have a ‘process mind’ are the most effective at performing root cause. It’s true, occasionally, you’ll come across a unicorn Complaint Handler who gets process and customer engagement, but this certainly isn’t the norm… (NB: hold on to those individuals tightly!). Essentially, root cause as the regulator would expect it should be carried out by a dedicated Root Cause Analyst suitably qualified to carry out the task.

Root Cause ‘Target Operating Model’

A good Complaints Management system is key, and certainly, one where you can effectively capture the 3 core data aspects of the ‘root cause’. These 3 aspects should be captured by a Complaint Handler post-investigation.

The areas are:

  1. The Area responsible for creating the Complaint e.g., Collections, Customer Service, Sales, IT, Product.

  2. The Process that failed to lead to the Complaint e.g., Income & Expenditure capture, changing payment dates.

  3. The Nature of error that contributed to the Complaint e.g., People/Policy/Process/Training.

To capture the above data, you need a Matrix list of business areas and processes. Linking complaints outcomes to existing areas and processes can really narrow down the root of issues but isn’t the complete story. For example, there could be a technical system issue that has occurred, and the Complaint Handler would have no idea this has happened – however, it’s important to capture the most accurate data available at the time the complaint was resolved. It’s also important that you protect this list and stay away from using phrases like ‘other’ or that are ‘generic’ in nature – watering down your ability to get to the nub of the issue(s).

Whilst creating your Matrix, it’s key to link the area and processes to the accountable SMF role holder; this will help drive clear channels of accountability, process improvement and getting those corporate cogs moving!

This ‘Matrix’ of areas, processes and accountable SMF’s is gold, so controlling it is super important – meaning that your existing QA frameworks should include the accurate capture of root cause and there should be a control in place for Complaint Handlers to escalate should an option not exist – what you’re wanting to avoid is Complaint Handlers shoe-horning options and derailing your corporate data.

Effectively, this “core data” should then feed into a dedicated root cause analyst – this could be either a team or an individual based on business size. This team/individual should be suitably qualified to perform root cause analysis – it’s common to invest in SIX SIGMA techniques – often the 5 Whys, Fishbone, DMAIC etc. If utilised effectively these can be powerful tools to perform and record your analysis.

Be sure to use other data sources too, such as customer survey results as well as learning from FOS overturned decisions related to the same issues you’re analysing to build a complete picture. It’s not uncommon too to include the customer or a cohort of customers in the process by seeking their feedback on a solution prior to implementation – this is particularly powerful when looking at customer touch points/experiences and vulnerability inclusivity.

What’s also key is the team/individual performing ‘business interviews’ with the areas where the problem(s) occurred – it’s important that the process includes ‘rolling your sleeves up’ to build credibility and engender a culture of learning from complaints. You’ll also want to be drawing some conclusions and corrective action suggestions that can be fed into the Root Cause Forum to decide on the next steps ultimately

Be careful to ensure that a key objective of the forum is to challenge itself on whether the issue being complained of and indeed the corrective solution being sought impacts a wider population of customers who have not complained. It’s important their voice is heard through this process – the decision to widen the corrective action can then be captured as part of the session itself and serve as powerful evidence that the root cause is at the heart of your business.

Root Cause Analysis Forum – Bringing it all together

The purpose of a Root Cause Analysis forum is to discuss the key reoccurring themes (informed by the core data capture and root cause analysis noted above) causing customers to complain and assign actions to address them. Once the corrective action has been taken, the forum should monitor for an agreed period (typically 90 days) that the action has indeed reduced complaints – at which point the issue can be formally closed.

The complexity of your business and product offering will inform the frequency at which you should hold a Root Cause Analysis Forum. For example, if you offer one or two consumer finance-related products, you may choose to hold a forum every 2–3 months, vs a more complex bank that offers a wide range of products may choose to meet more frequently i.e., monthly.

It’s important the Root Cause Analysis forum is attended by SMF’s and/or deputy Certified. Fixing the issues causing complaints is a shared responsibility as part of the SMCR framework and real long-term change will be driven from the top. These fora are most effective when chaired by the most senior Operations representative – typically the Chief Operating Officer. They should be suitably supported by the Director/Head of Complaints/Root Cause.

A culture of continuous improvement right across your business focussed on fixing issues and preventing them from arising in the future - in turn, driving down complaints is a core tenet of Consumer Duty (CD) and in my view, will be a very visible indicator of how embedded, or otherwise, the Consumer Duty is. I’ve worked with several clients with regard to their RCA Framework, core data and fora - should you find this of interest, please do get in touch.

About Square 4

Square 4 was founded with the vision to support people and businesses to grow and thrive.

​Across the team, we have extensive experience incorporating the ‘big four’ professional service firms, industry regulators, leadership roles within regulated firms and other outsourced learning, resourcing and consultancy providers. We combine this expertise with best-in-class technology across an evolving spectrum of conduct, financial crime and operational risk.

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