The 2021 Global Regulator Report by global software company Nuix [1] interviewed 31 financial services and competition regulators in 18 countries and found that 42% of regulators commenced investigations after receiving consumer complaints or tip-offs. At the same time, the study surveyed over 1,500 customers to examine the complaints process to understand future preparedness.
A study of UK banking customers finds:
- Complaints made to banks increased during COVID-19
- Over a third (39%) didn't have a positive experience of their bank's complaints process
- More than a quarter (27%) of customers made an official complaint to their bank, the Ombudsman or both in the past 12 months. Incorrect charges or problems accessing their account appeared to be the most frequent complaints
- Bank fraud most common type of complaint
- Over 1 in 5 (21%) said bank fraud was the main reason for their complaint
- Almost a third (30%) of customers complained to their bank as a result of being charged incorrectly and having a problem accessing their bank account
- Over 1 in 10 banking customers complained due to email (18%), telephone (17%), or mobile text messaging (14%) scams
- Rising fears over financial fraud
- Customers are feeling more concerned about financial fraud (69%) after the pandemic
- Over 6 in 10 (61%) of banking customers were targeted with email scams during COVID-19
- Customers leaving due to complaints mishandling
- A quarter (25%) of UK banking customers who complained said they wouldn't use the same bank in future as a result of the company's handling of their issue
- Over a quarter (27%) complained to a combination of their bank and the Ombudsman, the latter of which can lead to fines and reputational issues
The research shows that banks are failing to address complaints adequately, leading to a loss of customers. A quarter (25%) of UK banking customers who complained said they wouldn't use the same bank in future as a result of the company's handling of their issue.
Meanwhile, over a quarter (27%) of customers had complained to their bank, the Ombudsman or both, increasing the likelihood of investigations and the potential for financial fines.
Among the banking customers surveyed, two-thirds (66%) have complained within the past 12 months, and almost a third (32%) of those who complained said their problem had not been resolved.
The most common type of complaint was bank fraud, with almost a third (30%) of customers complained to their bank as a result of being charged incorrectly and having a problem accessing their bank account. Over 1 in 10 banking customers complained due to email (18%), telephone (17%), or mobile text messaging (14%) scams.
The research also found that:
- Bank accounts, debit cards and credit cards were the most complained-about product or service by 3 in 5 (61%) banking customers
- 1 in 5 (18%) said they felt worse about their bank after lodging a complaint than before.
- Over a third (39%) didn't have a positive experience of their bank's complaints process
- Customers are feeling more concerned about financial fraud (69%) after the pandemic
- Over 6 in 10 (61%) of banking customers were targeted with email scams during COVID-19
- Over 1 in 5 (21%) said bank fraud was the main reason for their complaint
Commenting on the report, Andy Edler, Head of Corporate, Nuix said:
"Our research finds that UK banking customers are more concerned about financial fraud since the COVID-19 pandemic began, with 6 in 10 people targeted by financially relevant email scams. This type of cyber fraud has become a rising issue for businesses as well as consumers, especially with the move to remote working and the acceleration of digital transformation. Business email compromise (BEC) is a specialist type of phishing attack that remains one of the most common and effective cyber tactics for fraudsters. The simple method only requires one slip up to inflict devastating effects on both companies and individuals by gaining access to files or even demanding the transfer of funds.
"With banking customers saying that bank fraud was a key reason for their complaint, banks need improved data analysis and insight to truly understand the root cause of complaints and to identify patterns and behaviours as they emerge. This will help determine the right customer treatment strategies, improve confidence and deliver a better customer experience. In addition, it will identify operational deficiencies, optimise channel effectiveness, and help reduce cost. The impact of these systemic failings makes it imperative that organisations improve their processes, data analysis, and core systems to mitigate these issues and to maintain regulatory compliance. Failure to do this adequately not only impacts customer experience and reputation but exposes a greater enterprise risk. In today's digital age, it's not only essential for banks to improve technology to prevent fraud from occurring, but they must utilise the data at their disposal to address the customer feedback loop effectively and use this information to transform and future proof their business."