Complaints handling and telecommunications in the United Kingdom and Australia1
Cosmo Graham, School of Law and Centre for Consumers and Essential Services, University of
Leicester, UK
Contact: cosmo.graham@leicester.ac.uk
There are a number of things that we know about complaint handling and consumers from the
research that has been done. We know that complaint handling matters to consumers: the one
thing that they do not want when they make a complaint is an additional problem. We also know
from the research that failures in customer service affect both the reputation of the company
concerned and consumers’ intention to purchase the same good or service from the company. The
research also seems to demonstrate that customers who complain are more likely to re-purchase
the good or service than those who do not complain, even if their complaint is not resolved.
It is
worth noting as well that recorded complaints are only a proportion of dissatisfied customers. The
research estimates that there are from ten to twenty-five to fifty problems for every recorded
complaint.2 As TARP put it, “noncomplaining, dissatisfied customers may not be angry enough to
complain, but they often are unhappy enough to switch brands.”3 TARP itself did specific work on
telecommunications in the early 1980s which showed that repurchase intentions ranged from thirtyone per cent for non-complainant to seventy-five per cent for satisfied complainants and forty-three
per cent for dissatisfied complainants, indicating that a marketing advantage was created even when
1
. This is a revised version of a presentation given at the ACCAN National Conference, 28 June 2010,
Melbourne.
2
. Van Essel, G, Stremersch, S and Gemmel, P “Customer satisfaction and complaint management” in B van
Looy, P Gemmel and R Van Dierdonck Services management: An Integrated Approach, 2003, London, Prentice
Hall 2nd edition; Goodman, J. and Grimm, C. (2005) Beware of Trained Hopelessness, TARP, ICCM Weekly,
October 20, 2005, revised June 2006, Arlington Virginia; Welsh Tourist Board (no date) Handling complaints
successfully available at
http://new.wales.gov.uk/topics/tourism/contactus/complaints/businesscomplaints/consumercomplaints/?lang=en
(accessed 24/06/10)
3
. TARP (Technical Assistance Research Programs) (1986) Consumer Complaint Handling in America: An
Update Study Part II at 44.
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the complaint could not be satisfactorily resolved.4 We should note as well that customers whose
complaints were resolved to their satisfaction were more likely to remain with the company and
purchase its products. We know as well that customers will talk about their complaint experience to
their friends, relatives and neighbours and, increasingly these days, vent their frustrations on via
web-sites or Facebook. So for example, there is an “I hate Telstra” group on Facebook, a “Nope
Optus” group as well as Telstrasucks.com (and I do not claim that this is comprehensive).
To summarise, good complaint handling can make it more likely that you retain your customers and
bad complaint handling also has reputational effects on the brand, as well as losing customers. In
addition, the data from complaints can be used as a source of information to improve a business by
showing where problems are occurring and what customers think is important. This point is seen in
the ISO standards, as well as in academic work.5 (Johnston (2001: 61) and see also Johnston and
Mehra 2002).
These points are, in general, well understood and not controversial. What is striking about the
telecommunications industry in Australia, is the extraordinarily high number of complaints received
by the Telecommunications Industry Ombudsman over the last few years (see Table 1).
Table 16
Year
2006-07
2007-08
2008-09
09 (2nd half)
Complaints
102,463
149,742
230,065
115,531
4
. Ibid. Although this study could only have been done at the earliest stages of a competitive long distance
telecommunications market.
5
. Johnston, R. (2001) “Linking complaint management to profit” International Journal of Service Industry
management, 12, 60-69; Johnston, R. and Mehra, S (2002) “Best-practice complaint management” Academy of
Management Executive, 16, No 4, 145-154.
6
. Source TIO Annual reports and personal communication.
2
We can compare this to the UK’s experience, bearing in mind that the UK population is about three
times greater than that of Australia and the market is worth about twice as much, on OECD statistics
for 2007 (Table 2).
Table 27
Year
2005-06
2006-07
2007-08
2008-09
2009-10
Complaints (Otelo and Cisas)
5,734
5,609
5,789
8,887
Complaints (Phonepay Plus)
19,591
9,435
10,463
23,244
11,249
There are a number of issues in relation to the comparability of this data but, even taking this into
account, the difference is striking. On the worst interpretation of the UK figures, there are around
seven times as many complaints in Australia about telecommunications services as in the UK in
2008-09. On the best interpretation, there are around twenty-five times as many complaints in
Australia. This difference cannot be explained by saying that the UK telecommunications companies
are better at handling complaints, as the UK regulator, Ofcom, is not happy about complaint
handling by telecommunications companies.8
The absolute level of complaints recorded in the Australian telecommunications industry is, in my
experience, quite extraordinary. The only body dealing with private sector complaints in the UK
which comes near is the Financial Ombudsman Service, which covers most of the financial services
sector in the UK and had a record 127,421 new cases in the year 2008-09, again, less than the TIO.9
The Financial Services Authority, the industry regulator, lays down rules about record keeping for
7
. Source: Otelo, Cisas and Phonepay Plus Annual Reports. Complaint handling in the UK is split between
three organisations. Otelo (Office of the Telecommunications Ombudsman) and Cisas (Communication and
Internet Services Adjudication Scheme) cover complaints against public communications providers, who may
belong to either scheme. Phonepay Plus covers premium rate products and services and its jurisdiction extends
beyond public communications providers.
8
. See Ofcom A Review of Consumer Complaints Procedures (2009).
9
. The data here and later in the paragraph is taken from Financial Ombudsman Service Annual Review 200809 and http://www.financial-ombudsman.org.uk/publications/complaints-data.html (accessed 27/07/10)
3
financial services companies and these indicate that there are around three million complaints
recorded for the last three years, of which about two million per annum relate to complaints about
banks. This converts to a ratio of 22 complaints at company level for every one ombudsman
complaint. If this were the case in the Australian telecommunications industry, it would suggest 5
million company complaints in 2008-09, about one in four of the Australian population.
Having said this, there does seem to be a wider issue here about complaint handling and customer
service in relation to telecommunications as an industry. Work a few years ago by IPSOS-Mori for
Ernst & Young found that consumer satisfaction with the handling of complaints by UK
telecommunications companies was worse than that of retailers, bank and other utilities.10 Of this,
perhaps the most surprising is the finding in relation to the banks – which are not renowned for
customer service in the UK.
Ofcom’s own work has found that telecommunications companies do not handle complaints well
and is currently considering changes to the UK regulatory framework. Both the TIO and Otelo (the
UK equivalent ) have been concerned with the telecommunications companies approach to
complaint handling and customer service. As Otelo put it: “it is disappointing that despite
[customer service] appearing in every annual report we have produced to date, it remains a real
problem for the sector.”11 Similarly, the TIO has said, “The proportion of customer service related
complaints remains unacceptably high, and in the TIO’s view, the industry still has much work to do
in this area.”12
So, there is a problem. What can we do about it? We can divide complaint handling systems into
those internal to an organisation and those external to it. I am going to focus more on internal
10
. See Ofcom, above, n 7 at paras 4.48-4.49.
. Otelo Annual Report 2009 at 13. This was still the highest category of complaints for Otelo in the 2010
report: Oteleo Annual Report 2010 at 4.
12
. TIO Annual Report 2009 at 26.
11
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systems because I suspect that this is where the problem lies. An external complaint handler, like
TIO or Otelo, is just the recipient of complaints that are not resolved at the first level.
We start with setting out some basic principles that internal systems ought to adhere to. This is
based on work that I have done in the UK with a colleague but they should be familiar to everyone as
there is widespread agreement on the underlying principles, which are reflected in, among other
things, industry standards of best practice. I have organised them as five points:
•
Accessibility
•
Effectiveness
•
Fairness and consistency
•
Responsiveness
•
Organisational ownership and commitment
One important introductory point: the devil is in the detail. I mean this in two senses: we can all
agree at a high level on the general principles that inform good complaint handling. We may,
however, not agree on how to implement these principles. For example, Ofcom is still arguing with
the industry about adopting a common definition of complaints in the UK, unlike in Australia.
Secondly, there is often a gap between the top of an organisation and the front line where good
intentions do not get translated into action – a fairly common failing of large organisations.
Let us have a look at these in some more detail, with some reflection on where things might be
going wrong.
Accessibility encompasses a number of dimensions. These days you assume that everyone allows
you to make a complaint via their web-site or at least provides the information on how to do so on
the web-site. Some make it easier than others. Before doing this presentation, [I did my usual thing
of checking on a couple of web-sites. For Telstra, make a complaint is right on the front page of their
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site. For Optus, I couldn’t find out how to make a complaint, within a short space of time. I could
find it for BT and British Gas, although neither had them on the front page – and BT’s promise to
explain how they handled complaints didn’t work!]
Whether the information is clear is another matter. Providers tend to make it easy to submit
complaints by not specifying what you have to provide, ie, by just providing a blank form to fill in.
Finding out information about how the complaints process is actually going to work, and what you
can expect in terms of responses, can be more difficult. This links into the effectiveness question, in
particular the ability of staff to respond to a complaint. This is a very common problem with
complaint handling systems in telecommunications in that people feel that they are pushed around
an organisation, as opposed to getting one person who can deal with their query. This experience
suggests that organisational learning is not working.
Everyone would accept that an important part of fairness is objectivity and listening to the
complaint. . The listening side is anecdotally often a problem: staff do not listen to the complaint
but assign it to pre-planned boxes/categories in their heads.
Responsiveness does seem to be an important problem, especially in the UK. Here Ofcom reckoned
that 30% of telecoms complaints were unresolved within 12 weeks, which they estimated worked
out as 3 million complaints a year where the complaint was unresolved after 12 weeks .13 The time
limits that are set in Australia are tighter and this does not seem to be a major source of problems.
According to the TIO, the two biggest problems in terms of complaint handling are the failure to do
what was promised (“action undertakings”) and the failure to escalate to the TIO (that will be
worrying). The former is also a large part of the customer service complaints, as well as the giving of
incorrect information.
13
. Ofcom above n 7 at para 4.19.
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Finally, there is organisational ownership and commitment. This was a point that was made to me
by the Local Government Ombudsman in the UK – that you could not improve complaint handling in
an organisation unless those at the top bought into the idea of effective complaint handling. When I
did the first research into the Insurance Ombudsman in the early 1990s, I also tracked company
complaint handling systems. For large insurance companies, these were typically run by a woman
who “did” complaints, that office was not part of the general business structure. At this point, there
was not organisational buy-in. It is worth emphasising again, that organisational buy-in requires
more than those at the top of the organisation accepting the principles of good complaint handling,
no matter how sincerely. This is a necessary first step but then the principles have to become part of
the organisational culture and be implemented on the ground.
In terms of external systems, the following principles are generally agreed:
•
Accessibility
•
Consumer support
•
Fairness
•
Effectiveness
•
Redress
•
Independence
•
Accountability
The UK system is not a great model to hold up to the world. First, we have two complaint handling
bodies: Otelo and Cisas, who split the industry between them. Consumers have never heard of
either of these two bodies. Ofcom research found that consumer awareness of these two bodies
was eight per cent for their entire sample and only fifteen per cent for those who had complained to
a telecommunications company.14 Although I have not seen any data, I suspect that the TIO in
14
. Ofcom above n 7 at para 4.42.
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Australia has a much higher recognition factor, if only because of the number of complaints that it
handles and the high public profile of the issue. Because there are two bodies in the UK, they spend
some time turning people away because they are in the wrong place. For example, about 3,800
contacts for Otelo in 2009 were turned away because the company was not a member of Otelo,
about 9% of total contacts. Around 72% of total contacts in2009 could not be accepted for
investigation because, although they related to a member company, they were outside Otelo’s
jurisdiction, typically because the complainant had contacted them too early in the process. 15
Another point to notice is that, although both Otelo and Cisas are quite open about their own
operations, they do not publish the sort of company complaints data that the TIO does. Nor has
there been equivalent of the connect.resolve campaign in the UK.
Conclusions
The Australian figures and experience present a puzzle to me. If you look at the rules and
arrangements which are meant to govern complaint handling, they look pretty good, in terms of
substance as well as procedure. However, the recent record looks very poor, even when compared
to the UK which is not a beacon of good practice in this area and this raises the question as to
whether what has been agreed is actually being implemented. This looks like an example of the
industry failing to meet the expectations of its customers. When you get failure on this scale, this is
likely to call into question the effectiveness of the regulatory arrangements, particularly when they
are based on self-regulation. Indeed, since this presentation was given, ACMA has announced the
terms of reference for its inquiry into customer service and complaints handling in the Australian
telecommunications industry, as well as publishing a consultation paper.16 The issue may, as well, be
high profile enough to feature in the election campaign. Solving problems for customers is not,
however, a matter of the headlines – it does require detailed work and cultural and organisational
change within the telecommunications companies.
15
16
. Otelo Annual Report 2009 at 21. The same pattern holds true in 2010: Oteleo Annual Report 2010 at 3.
. See http://www.acma.gov.au/WEB/STANDARD/pc=PC_312222 (accessed 28/07/10).
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