From CompliNEWS | Financial Service Intelligence Watch
FSCA Industry Review reveals critical gaps in complaints management across financial institutions – A compliance perspective
The Financial Sector Conduct Authority’s (FSCA) 2025 Complaints Management Industry Review Report delivers a comprehensive analysis of how well financial institutions in South Africa handle consumer complaints. The findings, drawn from 1 178 institutions and over 650 consumer responses, reveal inconsistencies in complaints frameworks, low consumer awareness, and persistent inefficiencies that threaten fair treatment outcomes in the financial sector.
From the outset, the FSCA set out to assess whether financial institutions—including Category I financial services providers (FSPs), retirement funds, and retirement fund administrators—have effective, accessible, and timely complaints handling processes. The report reveals that while most institutions demonstrate basic commitment to handling complaints, significant shortcomings remain in record-keeping, training, escalation, and customer communication.
Only 25% of Category I FSPs reported receiving complaints between 2021 and 2023. Retirement funds and administrators reported slightly more, but even here, complaint volumes were surprisingly low. Yet this does not reflect satisfaction. Instead, consumer behaviour studies suggest financial customers—especially married women, youth, and rural populations—face structural barriers to lodging complaints, contributing to underreporting.
Of the small 8% of consumers who did lodge complaints, 67% regretted taking up the financial product or service in question. Among the dissatisfied, 63% were unhappy with the complaint resolution itself, and 67% rated the complaint process as ineffective. These figures point to an alarming disconnect between institutions’ perception of their complaint processes and the lived experience of customers.
Internally, most complaints were resolved by frontline staff, with limited escalation to senior levels. This operational approach contributed to inefficiencies—only 23% of complaints were resolved at first contact, while over 50% required escalation beyond that. Consumers further indicated that 65% were not kept informed about complaint status, and explanations for delays were often lacking.
The FSCA also highlighted disparities in the level of commitment and reporting between head offices and branch offices. In many cases, complaints were poorly tracked or categorised, making systemic analysis difficult. Complaints data often relied on Excel spreadsheets and manual entries, with limited use of automated systems for monitoring or feedback loops.
Training is another area requiring attention. While annual training was common, only a minority of institutions documented the frequency or quality of such training. Moreover, training was rarely tailored to complaint escalation levels, which likely undermines the ability of staff to deal with more complex or sensitive matters.
The report also noted that many financial institutions failed to communicate their internal escalation processes clearly to consumers, leading to unnecessary referrals to ombud offices. A lack of awareness of both internal and external complaints channels was a consistent theme. Just 34% of consumers knew about their institution’s complaint process, while 47% were aware of ombuds as an escalation point.
From a compliance perspective, the gaps highlighted in this report expose institutions to operational and reputational risk. Failing to meet the minimum expectations set out in the General Code of Conduct, Policyholder Protection Rules, and forthcoming Conduct of Financial Institutions (COFI) legislation could have regulatory consequences. The FSCA is clear that consistent, proportionate, and documented complaints management systems are essential to treating customers fairly.
The FSCA recommends that institutions improve their complaints handling by soliciting regular customer feedback, documenting internal escalation procedures, training staff appropriately, automating data tracking and communication, and ensuring service level agreements with third-party providers include standard resolution timelines.
The report makes it clear that complaints handling is not a peripheral function but a core compliance obligation, customer trust mechanism, and supervisory focus area. As the FSCA moves toward a more integrated, principles-based regulatory framework under COFI, institutions must prioritise closing the gaps in complaints management to align with the regulator’s fairness, transparency, and accountability standards.