When people think of companies and organisations which have been busy during lockdown, the Financial Ombudsman Service (FOS) might not be the first name that comes to mind. It has, however, been very busy indeed. In fact, it estimates that during Q2 (April to June) it handled more than 3,500 complaints related to COVID19. This was out of a total of 57,509 handled during that time. Here is a quick guide to their figures.
Insurers have left a lot of customers very irate
It probably won’t come as a surprise that around 23% of complaints related to insurance companies refusing to pay out on claims related to COVID19. This is on top of the complaints progressed by its sister organisation, the Financial Conduct Authority, which recently brought a court case on this very topic.
Additionally, complaints were raised about insurance companies failing to progress other claims made during the pandemic, such as standard motor or property claims. This might, initially, seem harsh given that insurers would have been forced to work out how to keep their operating during COVID19. It is, however, worth noting that the FOS only gets involved when a company’s internal complaints-resolution process has failed to find a way to satisfy the customer.
In other words, insurers not only failed to meet customer’s expectations initially, but they also failed to resolve a subsequent complaint. Admittedly, not all complaints to the FOS are upheld. The FOS estimates that, overall, it upheld about 32% of the cases it closed during Q2. Interestingly the approval rates for complaints relating to guarantee loans and doorstep loans were 85% and 86% respectively.
The leisure and entertainment industry left people fuming
This is also unlikely to be a surprise, especially not if you pay attention to the “money advice” section of the media. Hotels, airlines and holiday operators have all come in for criticism over the way they have handled requests for refunds as has the weddings industry. This could make for an interesting situation if any of these sectors goes on to appeal to the government for support.
Even if they don’t the sort of behaviour reported in the media, if true, could be a classic example of short-term thinking. In other words, these companies offer services which are largely discretionary. If they get a widespread reputation for failing to deliver either a service or a refund, then they may find that people simply decline to use them.
Lenders were below par
Another common theme was lenders not being as supportive as their customers felt they should have been. Again, this could have been due, at least in part, to issues with staffing caused by the coronavirus, although, of course, that would not have helped their customers.
The points for investors to take away
Going forward, companies are going to need to learn to balance financial prudence with the sort of customer service which keeps people coming back. In the context of the ever-changing COVID19 landscape, this means thinking about potential challenges and setting clear expectations about what it will and won’t do should they occur. That way, the customer can make an informed choice about whether or not they wish to proceed with the transaction and will know what to expect if they do.
The companies which do the best job of this are likely to be in the best position to maintain and develop customer loyalty. This could prove, literally, invaluable both during and after the pandemic. Investors may, therefore, want to consider paying close attention to the (social) media coverage of their (potential) investments and to think carefully about what it could mean for their future prospects.