If life hands you lemons, make lemonade

As a provider of an online client feedback solution I get asked a lot about the impact proactively asking for client feedback can have on PI Insurance. There’s a common misconception that asking for feedback is effectively ‘inviting complaints’. In truth the FSA does not necessarily consider negative feedback as a formal complaint but it is their definition of a complaint, and it’s literal interpretation, that seems to be causing some confusion amongst the IFA community and PI Insurers.

The FSA handbook defines a complaint as “any oral or written expression of dissatisfaction, whether justified or not, from, or on behalf of, a person about the provision of, or failure to provide, a financial service, which alleges that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience.”

It’s a fairly far reaching definition which, taken literally, may suggest that negative client feedback from solicited surveys and questionnaires could constitute a complaint. In fact the FSA have provided this wide definition for a specific reason. Having referred the issue to the FSA’s Policy department, they confirmed that “The Handbook definition of a "complaint" aims to ensure that firms are unable to justify a failure to deal with complaints on the grounds that the complainant did not present his grievance in a prescribed format (say, filling out a form), or did not explicitly say he was making a complaint; hence the definition is drafted quite widely. That is, if a customer contacts a firm to express his dissatisfaction, the firm should investigate the matter regardless of how it was communicated (email, letter, telephone etc) and regardless of whether the customer specifically refers to his concerns as a "complaint". However, this does not necessarily mean that any negative feedback should be regarded as, and dealt with, as a complaint."

It seems that the FSA are simply trying to prevent firms from wriggling out of their obligations to deal with a complaint by suggesting that the complaint did not reach them through a formal procedure, hence their rather broad definition. This ensures that firms must deal with complaints in whatever format they arrive in. As far as client questionnaires are concerned, what the FSA are in fact saying is that negative feedback should be taken as seriously as if it were a complaint and acted upon or investigated accordingly. What they are not saying is that every negative response to a client feedback questionnaire should be formally dealt with under a firm’s complaints procedure. It comes down to common sense as “Customer satisfaction questionnaires tend to ask the individual about his or her experience with the firm in generic terms, often with a focus on customer services. We need to consider whether the customer would reasonably expect an individualised response, or any response at all, to his or her feedback. In most cases, they probably would not - certainly not where the feedback is anonymous.”

Proactively asking for client feedback can bring huge rewards to a firm. Of course you should not simply ignore negative feedback, after all it helps you to continually improve what you do and everyone knows that if you can turn around a client who has expressed dissatisfaction with your service by dealing with their comments quickly and fairly then you will gain one of your most loyal clients. Any feedback provided by your clients should be monitored, understood and most importantly acted upon where necessary; whether it’s from a formal questionnaire process or indeed more informal ad hoc comments that are received.

It’s good business practice to find out what your clients think about what you do. Implementing a client feedback process where feedback is requests after each interaction with a client can help mitigate risks, ensuring that firms can quickly act upon any negative feedback before it escalates to a complaint and this is something that PI Insurers should look favourably upon.

According to the FSA, “Only in unusual circumstances would feedback on customer satisfaction questionnaires constitute a potential complaint - say, if the questionnaire specifically asks if the client would like the firm to look into a particular point of dissatisfaction and provide a response, or provides any other indication that it is a vehicle for airing specific grievances on which the firm is expected to act.”

So don’t be afraid to ask for feedback, it makes good business sense. Always notify your PI Insurer but challenge them if they suggest that you could be inviting complaints. This is not the case and in fact from a PI perspective client feedback can help mitigate risk, especially if you can be alerted to negative feedback as it is received so that you can deal with it immediately. This means that for a client feedback process to really work you need to ensure that you can manage it and monitor feedback effectively, and most importantly you can take action where it is needed. This way you can deal with any negative comments or concerns as they arise; you can be responsive to your clients; you can make use of positive feedback for testimonials and referrals; you can confirm your client proposition.

Client feedback is a fantastic business development tool, manage it properly and you will satisfy the requirements of your business, the requirements of your PI Insurer and the requirements of the regulator.