05 April 2023

Here’s why complaints are really 'moments of truth'

image of Clare Bolingford, Director of Banking and Insurance at the FMA

Clare Bolingford, FMA Executive Director Regulatory Delivery

Kiwis aren’t big on complaining to businesses. They’re far more likely to tell friends and family about poor experiences than they are to formally complain to the organisation that has frustrated or disappointed them in some way.

Our recent consumer experience survey showed us that many more customers have considered making a complaint than actually go through the process.

And it could be said the feeling is mutual – with some New Zealand companies not keen on making it as easy as it should be for customers to make a complaint, intentionally creating digital friction, like burying details and processes deep on their websites, or requiring details a customer may not immediately have to hand. And once complaints are made, many of us have experienced occasions when companies can be defensive and dismissive.

We think New Zealand’s financial services companies have an opportunity to change the way they think about complaints. Not just so customers get a better deal, but also as a valuable metric to enhance business performance.

Complaints are what we call ‘moments of truth’ in a customer relationship. If they’re handled well, they can deepen trust and enhance customer experience and customer advocacy. But when handled badly they are ticking time bombs for customers and business reputation.

Customer confidence in the quality of complaint resolution is an important part of a strong consumer protection regime. That is why the FMA is very keen to find out how all our financial services firms support their customers to resolve matters when things go wrong.

It’s important to adopt a genuinely open mindset to customer complaints - see them as the gold they are, an opportunity to not only deepen trust within a customer relationship but also to help identify any systemic issues within an organisation.

Complaints are the best opportunity for a business to put things right, before losing that customer. Instead of being thought of as an annoyance, complaints are a rich source of data, intelligence and insight, often proving to be useful indicators on where friction points are consistently occurring.

When complaints reach an impasse, as they sometimes do, the work of good dispute resolution schemes becomes important.

These schemes provide a way to work through issues and complaints that cannot otherwise be resolved and give customers the forum of an independent third-party if they have reached deadlock. It’s essential that customers understand that is an option they can pursue.

We are encouraging a genuinely open, non-defensive, mindset to complaints – surface them, don’t minimise them. This means not just having a process in place, but also being bold and proactive about showing customers how and where they can resolve issues. Put information about how customers can complain front and centre, making it clearly available.

As a regulator, the FMA won’t hold it against firms that seek to surface and deal responsibly with a higher proportion of customer issues. Quite the opposite. Our interest is in how firms deal with the complaints.

We want to see that you can point to how you are well set up to resolve complaints swiftly and fairly, so that customers feel listened to and are ‘made good’ if things have gone wrong.

We also want to see financial services businesses looking at the bigger picture of the complaints data being collated. Is it being analysed for systemic issues or re-occurring pain points with your customers and how is that fed back into your firm’s decision making?

Complaints can be gold for improving customer experience. Make sure you’re regularly analysing the data for trends and identifying recurring themes that indicate a need to address a process issue.

It might take some time before Kiwi customers feel bold enough to complain in greater numbers, but in the meantime, our financial services businesses can get started mining for that gold we know is buried in complaints files.

This article is based in part on a keynote speech given by FMA chief executive Samantha Barrass at the IFSO Conference on Fair Conduct at 4 Points by Sheraton, Auckland on Wednesday, 22 March 2023.