THE BEST PROTECTION FROM COMPLAINTS: RECORD EVERYTHING

The message driven home repeatedly at the Link Financial Group (LFG) conference was that advisers needed to record every step of the advice process with each client.

LFG national manager Kelly Brough warned that customers were more ready to complain these days, so keeping good records was an adviser's best first line of defence.

“Clients these days are more knowledgeable and they know how to complain. They know their rights.”

Customers complained for various reasons, but every complaint was an expression of dissatisfaction, Brough told the Christchurch gathering.

“Maybe their expectations have not been met. They may want to express frustration.

“Maybe they made a wrong decision and they're looking for someone to blame.”

Why don’t clients complain?

Not all dissatisfied clients complained – and it’s worth asking why.

“Why don't unhappy customers complain? It's not worth their time and effort, they think nobody will help them resolve it,” Brough said.

But there's a big payoff for an adviser when a customer is happy with their service.

“Happy customers tell at least six people that they're happy with your service. If you do a good job, they will refer.”

When an adviser did receive a complaint, he or she needed to listen carefully to what the client has to say.

“Don't interrupt them. If they're ringing you, don't tell them to calm down; you will only poke the bear.

“Empathise and apologise, even if you weren't in the wrong,” she said. Brough also encouraged advisers to avoid the blaming game.

“Don't claim the blame, unless it was your fault, but don't try to blame them either.

“Try to find a resolution. The longer we give it, the more it escalates,” she said.

Keep a complaints register

“What should you do when you receive a complaint? Record it, record it, record it. Everyone should have a complaints register.”

An adviser needed to keep “really robust records” throughout the application process - and Brough suggested summarising each conversation in an email to each client.

“Then you have evidence to back up any advice you've given. It takes more time to be an adviser now, but record keeping will save you.”

If a complaint came in a few months after the advice was given, the adviser might not remember it, so they needed to record everything, she said.

The bar has been raised

Consultant Karty Mayne, of Rosewill Consulting, who used to be supervision manager at the Financial Markets Authority (FMA), said she was seeing “a lot of noise in the industry - what I call 'the fear factor' - and hearsay about regulation.

“But some advisers have had to down tools. They haven't been able to meet the new standards.

“There's no doubt the world has changed; the bar has been raised.”

Up until now, the industry had been in the education phase, but the regulators were now going to be less tolerant when advisers missed the mark.

“They expect most of the industry to be willing compliers.”

Any guidance the Financial Markets Authority issued “should be like gold for you,” Mayne said.

She referred advisers to the guidance note the FMA issued in February on the suitability of advice.

This note, ‘Reasonable grounds for financial advice about financial products’, explained the FMA's approach to assessing the suitability of advice.

Normally, when new legislation comes into force, there's a grace period, but after a while that would change, she said.

One warning sign was that financial dispute resolution service FSCL had reported complaints were up about 30%.

If an adviser had a complaint which goes through a dispute resolution process, “it's going to be stressful for you. The more you can do to manage the complaint before it gets to that stage, you will sleep better.”

Use case studies

Mayne recommended advisers work through case studies with their teams, to gain insights into the dispute resolution process.

In one example, an adviser received an offer for a client late on a Friday but didn't pass it on to the client until the following Monday - and the client had to make a decision by the Tuesday.

“You need to give advice in a fair and timely manner; any time delays can come back to bite you.”

In another example, a client had taken out life insurance in 2006 and then in 2012 got advice to replace their cover with a different provider. The book was then sold to another financial advice provider (FAP), which did a review and found the client had been paying two sets of premiums because the first policy hadn't been cancelled.

The client claimed $17,000 for repayment of the extra premiums, claiming the adviser in 2012 had been negligent in not cancelling the original policy.

But the FAP had no control over that advice process.

The dispute resolution service recommended that the client discontinue the complaint.

Be sure clients understand

Mayne said advisers needed to ensure the client understood the advice and to tailor that advice to the client's particular circumstances; too many clients got standard emails from their advisers which often made them feel their adviser didn’t really know them.

“Really good client servicing” can prevent many complaints, she said.

“Document what you do to show what you do – it will take extra time in this environment to explain things.”

Advisers needed to test whether, if the client implemented their advice, the client's needs would have been met.

They also needed to be sure their advice fell within the scope of their expertise.

“If it's not, refer them to another adviser.” ✚