Read the findings of our review into firms’ approaches to complaints and root cause analysis.
10 July 2026: We've updated our examples of good and poor practice with extra insight on how smaller firms can meet our requirements.
1. Summary
The Consumer Duty[2] (the Duty) sets high and clear standards of protection for retail customers across financial services.
The Duty came into force on 31 July 2023 for open products, and 31 July 2024 for closed products.
To support effective embedding and implementation of the Duty, firms have asked us to more regularly publish thematic best practice and areas for improvement. This report is being published so that everyone can learn and improve.
We set out the results of a targeted and thematic review that we carried out on complaints and root cause analysis, based on a review of practices in 40 firms across a range of sectors.
This includes examples to help smaller firms consider how they might comply with their obligations under the Duty, which also builds on good practice.
We set out the results of a targeted and thematic review that we carried out on complaints and root cause analysis, based on a review of practices in 40 firms across a range of sectors.
The insights have been informed by data provided by firms through an information request and a sample of board reports together with a range of other data sources.
This report does not repeat the detailed standards expected under the Duty – albeit where appropriate, we have referenced existing Guidance documents for ease of reference.
Key findings
For firms sampled, we identified a key area of good practice:
We also identified 3 key areas for improvement:
2. What we did
We used internal and external data to inform our selection of firms to include as part of our sample. This data included:
- Financial Ombudsman Service (FOS) uphold rates for each firm.
- Firms' current uphold rates.
- Time taken for the firm to deal with complaints.
- Total number of complaints received by the firm in the last 12 months.
The baseline for inclusion in our sample was that firms had at least 90 complaints to the FOS in the last three years. This gave us a statistically meaningful dataset to determine if complaint volumes were improving or getting worse over time at the firm.
In terms of the sample size of 40 firms, we wanted this to be proportionate and sufficient for the insights needed for our review. On the one hand, we needed a big enough sample to allow us to draw inferences and spot cross sector trends to share. On the other hand, we were conscious of firms’ regulatory burden and other Consumer Duty-focused information requests.
For our final sample of 40 firms, we captured retail sectors including banking, insurance, payments, consumer investments and consumer finance.
Smaller firms
We deliberately included different sized firms to help us understand their differing experiences. This included firms that may have fewer resources due to the size of the firm and/or the complexity of the products or services they offer.
We know that smaller firms face different challenges. Where relevant, we have set out suggestions for how smaller firms might proportionately consider complaints and root cause analysis, and are open to considering more targeted work where that would be beneficial. We will continue to engage with our Smaller Business Practitioner Panel and other smaller firm stakeholders in our work.
Our work included an information request which went out to firms in January 2024. We reviewed firms’ complaints policies, procedural documents and guides. We recognise that documents may not always provide evidence of the outcomes that are being achieved. To avoid overly focusing on the process firms follow, and to maintain an outcomes focus to this work, we asked each firm to tell us how it identifies harm, to provide evidence of governance and senior oversight, and for examples of the changes they have made following analysis of root causes.
3. What we found
3.1. Complaints data / Management information
Requirements
Understanding and monitoring the outcomes customers are experiencing – and acting where there are problems – is an essential part of meeting the requirements of the Duty. It allows firms to track patterns over time and look at outcomes for different customer cohorts.
Complaints data is one type of data firms can use to understand the outcomes their customers are experiencing. Chapter 11 of our Finalised Guidance (FG22/5)[3] sets out further detail on our expectations on monitoring outcomes.
Findings
Our review showed that all firms captured data to understand the harms their customers were experiencing, but data quality was varied.
Use of internal data against all Consumer Duty outcomes
Good practice
Some firms had developed dashboards which set out the firm’s management information (MI) to help them track outcomes and identify harm.
For example, one firm developed an enhanced complaints MI dashboard which linked data, including complaint volumes, complaint outcomes, FOS complaints, quality assurance and complaints from customers with characteristics of vulnerability outcomes, back to the Consumer Duty outcomes. This allowed the firm to carry out deeper analysis of complaints’ root causes related to products and develop heatmaps to highlight priority areas of focus.
Good practice
We found some firms prepared data packs which included a range of data points and set out the root causes of complaints and actions the firm was taking. Our review indicated that this was more likely to lead to meaningful discussion and actions taken in relevant board and committee meetings.
One firm said it looked at Financial Ombudsman complaints that weren’t upheld so it could understand what drove complaints even when the outcome to the complaint was judged to be fair.
Areas for improvement
We saw examples where complaints metrics and data were not sufficiently granular to capture outcomes for different groups of customers, including consumers with characteristics of vulnerability. Firms may have diverse target markets for their products and without sufficiently granular data, it is difficult for firms to monitor whether any groups of customers are receiving worse outcomes than others.
Smaller firms
Smaller firms may receive relatively few formal complaints, and some customer issues may be resolved informally before they become complaints. This can potentially make complaints data an incomplete indicator of whether customers are experiencing recurring problems.
Smaller firms might consider using checks to test whether issues are being missed. For example, they could listen to a sample of customer calls, review a small number of completed customer journeys, or ask customer-facing staff to discuss recent examples where customers appeared confused, dissatisfied, vulnerable or at risk of harm.
These checks might help to identify patterns that formal complaints data alone may not show. For example, a firm may find that customers regularly misunderstand a product feature, struggle to provide required information, or need additional support at a particular point in the process. Where this is identified, firms may wish to consider whether changes are needed to communications, staff guidance, product processes or escalation arrangements. We have seen that stronger firms often do not rely solely on formally logged complaints where other customer interactions may show that something has gone wrong.
Triangulation with external sources
Good practice
One firm built on complaints MI and used social media feedback alongside its own data to see if there were common themes.
Smaller firms
One smaller firm that received fewer complaints also used external insights such as Financial Ombudsman decisions, FCA letters and industry news to identify potential harm.
We recognise that smaller firms with fewer complaints may have less complaints MI. They may therefore wish to consider enriching their insights by considering other proportionate sources of insight, such as Financial Ombudsman decisions, FCA communications and relevant industry information, to help identify potential harms and whether changes may be needed.
Where smaller firms use alternative sources of insight, it may be beneficial to be clear about what information has been reviewed, how often it is considered, any limitations in the information, and how issues are escalated where potential harm is identified.
3.2. Root cause analysis
Requirements
Firms should have appropriate management controls in place to analyse individual complaints and identify the root causes of systemic or recurring problems. Firms should take appropriate action where they find failings as per PRIN 2A.9.9R.
Findings
Most firms sampled had a framework for carrying out root cause analysis (RCA), and this was set out clearly in policy/process documents.
Actions focus
Good practice
Following their analysis, some firms would create an action plan with clearly designated owners, deadlines and remediation actions. Actions such as putting in place staff training or making a change to a process were more likely to be taken forward because expectations were clear.
Overall, where firms carried out RCA this typically led to the implementation of appropriate action to prevent the issue from recurring such as fixing a system fault to prevent incorrect information being sent to customers.
Some firms then subsequently reviewed the effectiveness of the solutions also.
Area for improvement
It was not always evident from the material that was reviewed that firms were taking action after identifying harm. Where firms did make changes, many didn’t say what the impact of these changes had been, or have monitoring systems in place. It appeared that some firms saw the completion of RCA as the goal, rather than whether they needed to take further action to deliver good customer outcomes. Firms with good practice had monitoring systems in place, and could evidence the changes made as a result of identifying harms through RCAs.
We saw examples of firms whose RCA process was high-level and didn’t effectively identify trends and systemic issues. The lack of this data will clearly limit the ability of executives and boards to review implementation of this aspect of the Duty.
Some complaints data reports appeared to be prepared for operational discussions, for example to ensure the organisation had the right resource to answer complaints, rather than also considering how the data can help inform where the firm can improve customer outcomes. Limited or no analysis had been done to draw out themes or symptoms of complaints, root causes or preventative actions.
Smaller firms
Smaller firms may have fewer formal governance layers, but this can be an advantage if the right people are involved quickly. Root cause analysis can better support meaningful change where the person who owns the process, system, communication or customer journey is involved in understanding the issue and agreeing the fix, though this is not mandatory.
Some firms strengthened root cause analysis by involving operational leads, specialists or journey owners where complaints pointed to recurring issues, rather than leaving the issue solely with the complaints team. For smaller firms, this could be a short discussion between the complaint handler and the person responsible for the relevant process or customer journey.
In stronger examples, root cause analysis involved the person best placed to prevent the issue recurring. They considered the issue, agreed what needed to change, and checked whether the change had addressed the problem. This helped turn complaints insight into practical improvement.
Measuring impact
Good practice
Some firms set out how they measured whether the actions they had taken were effective. For example, one firm made a change to how it carries out verification checks after customer feedback said the current manual process was not meeting customer expectations. The firm introduced an electronic verification process. It then measured the impact of this change by reviewing customer feedback and tracking the take-up rates of the new process.
Smaller firms
Smaller firms may not have large datasets or sophisticated MI tools, but they can still test whether action taken after root cause analysis appears to be working.
A proportionate approach may involve greater focus on recurring issues or risks and compare what happens before and after changes are implemented. This coupled with other mechanisms could support better monitoring. For example, if a firm changes a customer communication because customers were misunderstanding it, the firm could review a small sample of later customer interactions, listen to relevant calls, or ask staff whether customers are still raising the same issue.
This is a scalable approach that can help firms of all sizes, taking in to account business model, customer base and risk profile. It may be particularly helpful for smaller firms to assess whether action taken is improving customer outcomes, without requiring complex reporting or sophisticated MI tools.
Area for improvement
Many firms that detailed actions they had taken did not set out whether they had checked whether this was the right change and if more needed to be done – or if the change had delivered the desired impact. We expect firms to conduct ongoing monitoring of customer outcomes, including assessing the impact of changes to their processes.
Cross firm action
Good practice
We saw some firms had expanded responsibility of RCA beyond the complaints team and information was sent to people who could act on it. For example, one firm ensured insights were sent to front-line agents and the risk team.
Area for improvement
Some firms focused on feedback to staff and on training rather than considering whether other action would be appropriate. For example, one firm showed it had offered support to its staff when they discovered human error as the driver of an increase in complaints, but it did not consider whether it should improve other processes and controls or proactively provide redress to customers, as appropriate.
Evaluation
Good practice
One firm adopted the ‘Five Whys’ problem-solving technique. This technique encourages deeper thinking and challenges assumptions about the root cause of a problem. This method involves asking 'why' five times in a row, with each question building on the previous answer. The firm started with the question 'why did the customer complain' and challenged itself on the drivers of the complaint and underlying issues. This helped the firm gain a better understanding of how to address issues effectively.
An example of this in practice related to a consumer being declined a loan might be:
- Why was the loan application declined?
The consumer’s credit score didn’t match the lender’s requirements. - Why did the customer think they were eligible?
The lender’s marketing materials suggested a customer would qualify based on other factors such as income. - Why were marketing materials misleading?
Because they didn’t clearly explain that credit scores were a factor in deciding whether to give a loan. - Why didn’t the marketing materials set out the importance of credit scores?
Because the lender didn’t test the materials with customers to make sure they were clear - Why didn’t the lender test the materials?
Because they didn’t have a formal process in place to test customer-facing communications to ensure they are clear.
Smaller firms
In practice we recognise smaller firms may have fewer complaints to carry out root cause analysis on. In the section above we set out that smaller firms can look for opportunities to capture insight from other sources. These insights should be recorded and be robust enough to inform decisions and identify risks of customer harm. A firm should have in place at minimum a simple action plan to demonstrate continual improvement on outcomes.
Smaller firms could apply this type of questioning proportionately. This does not necessarily need to result in a lengthy root cause analysis document. Proactive firms may test whether a complaint, or other source of insight, indicates a wider weakness in a process, communication or control.
For example, where a complaint appears to have been caused by a misunderstanding, the firm could ask whether the relevant communication was clear, whether staff applied the process consistently, and whether any change is needed to prevent the issue recurring.
This type of questioning can help smaller firms look beyond the immediate complaint and consider whether wider change is needed to reduce the risk of the issue recurring.
3.3. Governance
Requirements
Our rules require firms to ensure the Consumer Duty is reflected in firms’ strategies, governance, leadership and people policies, including incentives at all levels.
In chapter 10 of our Finalised Guidance[3] we note that firms’ controls and key processes should be set up so they can identify where they are not delivering good outcomes for customers. They should also have a strategy in place to understand and tackle the root causes and manage and mitigate poor outcomes.
A culture of healthy challenge is essential under the Duty. We expect a firm’s Board or equivalent governing body to ensure that the Duty is being considered in all relevant contexts, and that the firm takes appropriate action to rectify the situation, including providing redress where appropriate. We have set out further examples of good practice and areas for improvement in our review of a sample of firms’ board and governing body reports[4].
We introduced the Board Champion role to help firms with this objective. This person is someone appropriately senior who can challenge and prompt consideration of whether decisions need to be made to help improve outcomes for customers.
Additionally, we set out in DISP 1.3.3R that firms must have appropriate management controls in place to ensure there is adequate oversight of complaints management, and decision-making relating to complaints and redress.
Findings
Of the firms sampled, most had clear organisational structures and clear overall responsibility for complaints.
Governance and challenge
Good practice
We saw evidence of clear escalation routes and accountability, meaning everyone across the business knew where to send information, and who was responsible for driving forward action and/or change.
Data dashboards or data packs were often presented at committee and Board meetings where there was some evidence of challenge and scrutiny observed.
Areas for improvement
It wasn’t always clear from the organisational charts who was responsible for complaints.
In cases where this person was named, we could not always see from the documents reviewed how substantive issues relating to complaints were fed back to them. Firms should ensure those responsible for complaints are receiving the right information or insights to enable effective decision-making, including making appropriate changes to processes or systems to reduce the likelihood of complaints and improve outcomes for customers.
In some cases, firms appeared to be sending data to committees as a tick-box exercise rather than an opportunity to engage and drive change. In these cases, we saw no evidence of discussion and engagement on the data by decision-makers in the firm.
Where we did see complaints discussed at Board or executive committee meetings, it was not always clear whether there had been detailed discussion on the data, and what actions would be taken. There too often appeared to be a lack of challenge. In one firm’s minutes of discussions at a governance forum, reasons for complaints were identified, for example as a result of delays, but no action was taken to remedy and there was no evidence of scrutiny observed.
We recognise the limitation of a documentary review means discussions may not be recorded well, but they are happening. We encourage firms to ensure that where discussion is happening in practice, it is recorded sufficiently.
Collaboration within the firm
Good practice
In our review of sampled firms, we saw examples where firms had made changes so teams worked more closely together to understand what complaints data was telling them and where and how to take action. One firm was able to demonstrate how its complaints-handling team was better integrated with its compliance team, enhancing its risk, compliance and governance frameworks.
Taking action on insight
Good practice
One firm had the Consumer Duty as a standing agenda item at committee meetings where any new material issues, potential harm or notable complaints were raised. They were typically escalated to senior management and would be escalated again to compliance/risk teams or the Board if further decision making was required.
One firm captured any systemic complaint issues in a weekly MI email sent to its risk committee members and executive-level management, allowing for real time oversight and timely action.
Most firms had an appropriate threshold approach to reporting lines, where they would consider the severity of an issue when deciding if they needed to escalate and to whom they would need to escalate.
Smaller firms
Smaller firms may not need or have committees to consider complaint insights. But they may find it beneficial to keep records demonstrating that significant complaint issues are not only noted, but challenged.
Firms may wish to consider who should be told when a complaint issue suggests potential harm, such as repeat issues, financial loss, operational failure or customer vulnerability. This could help support wider efforts to avoid issues remaining solely with the complaint handler where action is needed by someone else, such as a process owner, compliance lead or senior manager.
Policies and procedures
Generally, firms sampled had good policies and procedures which had been updated to reflect the enhanced expectations under the Consumer Duty.
Good practice
Good policy documents were interactive, engaging and informative, giving examples of common situations to equip staff to know how to handle a situation or process.
Some firms had working groups to discuss issues faced by customers with characteristics of vulnerability, and one firm in particular held monthly meetings to review existing governance documents and update policies to help address issues raised.
Training
Good practice
For all the firms we reviewed, training would often be mandatory and assessed, and, in some cases, there would be refresher courses available.
The more detailed staff training we reviewed seemed to contribute to better communication between complaint handlers and consumers as this tended to include practical examples. For example, we saw some firms provide interactive examples of common scenarios such as how to help a consumer with different needs. One firm listed scenarios including bereavement, domestic abuse or financial difficulty and set out advice for how staff can spot these circumstances, suggestions for how staff could respond, and suggestions for how to provide ongoing support including signposting where appropriate.