What a small firm does when a complaint arrives on a Friday

Aug 29
3 min read

Introduction

A letter arrives from a client, or from a family member, or from a claims management company. It alleges unsuitable advice from four years ago. The principal reads it, feels the accusation personally, and drafts a robust reply the same afternoon.

That reply is the worst document the firm will produce in the whole matter. Complaints in regulated firms follow a prescribed process with defined timescales and an external escalation route, and the first response is both an obligation and the point at which most avoidable damage is done. Nothing later in the process recovers a first response written in temper.

1. What a small firm does when a complaint arrives starts with the procedure

Follow the process, not the instinct.

Most jurisdictions prescribe acknowledgement timescales, the content of a final response, the records required and the escalation route the client must be told about. Establish these before you have a complaint rather than while you have one.

2. Acknowledge promptly and neutrally

Separate acknowledgement from response.

A short letter confirming receipt, naming who is handling it and stating when they will hear, meets the requirement and buys the time to investigate. It should contain no defence and no admission.

3. Do not respond emotionally

The single most damaging tendency.

Complaints in small firms feel personal because the work was personal. A response written in that state is used later, by the client and by any external body, and it converts a defensible matter into an indefensible one.

4. Investigate properly and impartially

Establish what actually happened.

The file, the suitability report, the meeting notes, correspondence and what was recommended at the time. The test is what was reasonable given what was known then, and the file either supports that or it does not.

5. Be willing to conclude you were wrong

Sometimes the complaint is correct.

Where a mistake was made, acknowledging it and putting it right is both the obligation and the cheaper outcome. Defending an indefensible position through an external process costs considerably more and ends the same way.

6. Write the final response carefully

The document that matters most.

Address each point raised, set out the evidence, state your conclusion plainly and include whatever information about escalation rights is required. It should be readable by somebody outside the industry, because it will be.

7. Tell the client about the external route

An obligation, not a concession.

Withholding or obscuring the escalation route is itself a breach in most regimes and it damages your position significantly. Stating it clearly demonstrates a firm that follows its own process.

8. Notify your insurer and check your obligations

Time-critical and frequently forgotten.

Professional indemnity policies typically require prompt notification, and late notification can prejudice cover. There may also be reporting obligations to your regulator depending on the nature of the complaint.

9. Learn from it properly

The part that prevents the next one.

What in the process allowed it to happen: a record not kept, an explanation not given, a review not carried out. Complaints are expensive information about a weakness, and firms that treat each as an isolated event pay repeatedly for the same lesson.

Keep the client relationship in mind throughout where it can be preserved. A meaningful proportion of complaints arise from poor communication rather than poor advice, and a firm that handles the process calmly and fairly sometimes retains the client at the end of it.

Conclusion

Follow the prescribed process rather than responding to the accusation.

Establish your regulator's timescales and requirements before you need them, acknowledge promptly and neutrally, resist writing anything while you feel personally attacked, investigate the file impartially against what was reasonable at the time, be prepared to accept that the complaint is justified, write a final response readable by an outsider, state the external escalation route clearly, notify your insurer promptly, and treat each complaint as information about a process weakness.