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Category: Compliance · 4 min read

How to Deal with Client Complaints

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on May 21, 2019

author profile photo

on May 21, 2019

Financial professionals meeting with clients

At some point in your career, it’s likely that you’ll deal with an upset client.  

Most often, it’s a client that becomes unhappy with the product you sold them or the service you provided. If they feel like they can’t resolve the matter with you personally, they could decide to file a complaint with either the carrier or a state insurance department.  

So, what happens when a complaint gets filed? What do you do? Knowing what steps to take to help protect yourself and your practice is important. Let’s look at how to do just that. 

 

The Complaint Process 

The National Association of Insurance Commissioners (NAIC) defines a complaint as “a written communication primarily expressing a grievance”. Once a written complaint is filed with an insurance department, the department will contact the parties involved. The department will likely contact the carrier for additional information, and you’ll be contacted by the department and/or the carrier, as well.  

Since carriers must respond to the insurance departments directly, they generally have shorter turnaround times required for responses. So, if a carrier notifies you of a complaint and requests a response, you may have just a few days to respond. 

 

Be Prepared 

Here’s the good news: if you’re properly prepared, responding to a complaint shouldn’t be difficult. State insurance departments require that agents keep client records in a manner that’s easily accessible. For tips on keeping thorough and complete client files, check out The Importance of Client Files. The overall point is that having files that are detailed will help expedite your complaint response.  

Common items that are requested in a response include: 

  • Signed written statement that addresses all allegations within the complaint 
  • Copies of all marketing materials used at the time of sale, including any materials that may have initiated the sale (seminar invitations, flyers, postcards, etc.) 
  • Client notes and any other relevant documents that led to the recommendation 
  • Client application and any additional correspondence, in chronological order 

As you draft a response, keep it clear, concise, and address all allegations completely. Include any documentation that supports the recommendation you made for your client. This could be anything from an email that they sent requesting information on a product, or a note from your first meeting about their financial goals. Avoid including information that is unnecessary and keep emotion out of your response by sticking to the facts. Refrain from admitting any wrong-doing or making an offer to settle a claim with the customer directly. This could appear to be an admission of guilt and become a larger issue later if the matter would become a regulatory or civil action. Plus, your errors and omissions insurance may deny a claim based on your prior admissions.  

Here’s the good news: if you’re properly prepared, responding to a complaint shouldn’t be difficult.

Above all Else, Respond 

The bottom line is that you need to respond. Carriers reserve the right to terminate a financial professional’s appointment for failure to respond to a complaint inquiry. State insurance departments can also take disciplinary actions, up to and including suspending or terminating your insurance license. 

If you are involved in a complaint that feels more serious or complex than you are comfortable responding to, or you’re unsure how to respond, consider contacting an experienced attorney to help guide you through the process.  

 

The Resolution 

How soon do complaints get resolved? It depends. For insurance departments, it varies based on the complexity of the complaint. However, states can take up to four to six weeks for resolution. Once the complaint has been resolved, all the parties will be notified of the outcome. Since each state’s requirements are different, we suggest reviewing your state’s regulations periodically, so you are familiar with them. 

If you are involved in a complaint that feels more serious or complex than you are comfortable responding to, or you’re unsure how to respond, consider contacting an experienced attorney to help guide you through the process.  

One of the most important things to remember is that you might not be able to avoid having a complaint filed against you, regardless of how well you feel you have served your client. It can be out of your control. But making your clients’ interests your number one priority will always help point you in the right direction. 

 

#19-0268-051520 

This information is intended for Financial Professionals who are insurance licensed only. If you are securities licensed, please contact your Broker Dealer for their requirements. 

These educational pieces are intended to be informative and provide generalized guidance. They should not be construed as legal advice or provide protection against compliance violations brought on by a consumer or state insurance commission. It is the sole responsibility of the financial professional to seek compliance or legal direction specific to their individual situation. These pieces should be used to raise awareness and evaluate business practices.  

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Written By

Rocky Robbins

Vice President, Compliance

Rocky Robbins is the Vice President of Compliance at Brokers International. Over his more than 15 years of experience in the financial services industry, Rocky served in a variety of corporate legal and compliance positions. Rocky understands the complex regulatory environment that financial professionals must navigate, and strives to provide real-world solutions to help financial professionals reduce their risks.

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