Handling a complaint in a regulated practice before it escalates

Aug 27
3 min read

Updated: Aug 29

Introduction

A complaint in a regulated profession is not simply a dissatisfied client. It is the start of a process that may involve your regulator, your insurer and a public record, and how the first week goes largely determines which of those becomes relevant.

Most complaints that escalate do so because of how they were handled rather than because of the underlying issue. That is uncomfortable and it is also encouraging, because handling is entirely within the firm's control.

1. Handling a complaint in a regulated practice starts with acknowledging it quickly

Silence is what converts a grievance into an escalation.

Acknowledge receipt within a short defined period, confirm that it is being looked into, and say when the client will hear substantively. Most regulators expect this and clients frequently escalate purely because nothing happened.

2. Know and follow your own complaints procedure

Every regulated firm is required to have one and many treat it as a document rather than a process.

Read it, make sure staff know it exists and where it is, and follow it precisely. A firm that deviates from its own published procedure has created a second problem alongside the original complaint.

3. Take it out of the hands of the person complained about

The fee earner whose work is being criticised is the worst-placed person to investigate it.

Route it to a designated complaints handler or a partner not involved in the matter. This protects both the objectivity of the response and the fee earner, who should not be defending themselves to their own client.

4. Investigate properly before responding

A quick defensive reply is worse than a slower considered one.

Read the file, understand what actually happened, and establish whether the complaint has merit — in whole or in part. Many complaints are partly justified, and a response that acknowledges the valid portion is far more effective than a blanket rebuttal.

5. Do not argue, and do not be defensive

The tone of the response matters as much as its content.

Acknowledge the client's experience, explain what happened factually without excuses, and say what you propose to do. Clients escalate when they feel dismissed, and a response that reads as legally drafted self-protection produces exactly that feeling.

6. Put things right where you should

Where the firm was at fault, remedy it — a fee reduction, corrective work, or an apology properly made.

The cost of doing so is almost always lower than the cost of a regulatory referral, an insurance notification, or the reputational effect. Firms that fight small justified complaints on principle pay considerably more than the principle was worth.

7. Notify your insurer when you should

This is a professional obligation with real consequences for getting it wrong.

Know what your policy requires you to report and when, and do it. Handling a complaint quietly and only informing the insurer once it has become a claim can prejudice cover, which turns a manageable situation into a serious one.

8. Tell the client about their escalation rights

Most regulated professions require this, and it feels counterintuitive.

Explaining that they may take the matter to the relevant ombudsman or regulator if unsatisfied is both an obligation and, in practice, reassuring. Withholding it is a compliance failure and it makes the firm look as though it has something to hide.

9. Record every complaint and review the pattern

A register, maintained properly, reviewed at least annually.

Individual complaints feel like isolated events. The register usually reveals a recurring cause — a particular type of matter, a communication gap, a fee-estimating problem — and fixing that is worth considerably more than resolving each instance.

Conclusion

Acknowledge quickly and follow your own published procedure precisely, because most escalation is caused by the handling rather than by the original issue.

Move the complaint away from the person complained about, investigate the file properly before replying, respond without defensiveness, put right what you got wrong because it is cheaper than the alternative, notify your insurer as your policy requires, tell the client about their escalation rights, and maintain a complaints register you actually review for patterns.