Regulated firms are subject to the Financial Conduct Authority (FCA) regime, and treating customers fairly and within the FCA framework is a given. While credit businesses will always adhere to the FCA regulations, their SME clients do not have the same overarching regime governing their every response, writes Wright Hassall partner Gemma Carson

Customers of credit businesses, whether commercial or consumer, will experience times when they will receive complaints about the services or goods they have provided.

Some might view a complaint as an unjustified attack on their hard work, or believe it to be a tactic to avoid or delay payment. Human nature ensures some will take the complaint personally.

But customers should remember that responding without due consideration could cause more harm than good.

Knee-jerk reactions

So often we see people react and fire off an angry email or argue their case on the phone, but that could spell disaster and prove expensive for the business.

When emotions are running high it is easy to get embroiled in a heated discussion as to the rights and wrongs, mistakes and failures, or actions and inactions of one party or another. Things can quickly escalate and problems arise when parties decide to take certain steps in the heat of the moment, without consideration given to the terms originally agreed when the commercial relationship was entered into.

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A knee-jerk reaction will only offer inconvenience and regret and there is plenty that can be done to avoid making the situation worse. Initially, we advise businesses to consider the content of the complaint fully; make no commitments and make no threats.

If you are feeling outraged and feel the need to respond aggressively, it is best to ‘mantelpiece’ your response. Write out everything you want to say in an email, but then put it on your virtual mantelpiece to consider, without sending.

Once you have calmed down, return to the draft and decide whether it makes sense to send your angry response. E-mails written in the heat of the moment have a nasty habit of biting back when a complaint turns into a dispute.

It is important to check whether a service agreement and/or a contract exists between the parties. Read any agreements carefully and check what they actually say.

With an agreement in place, you may be able to respond to the complaint by pointing out relevant contractual terms which may help manage the situation.

Do something

It is important to be proactive when dealing with a complaint. Ignoring a glitch and hoping it will go away will not work.

If you take steps to deal with a complaint when it first happens, you can often prevent it developing into a major problem before positions become entrenched. Face-to-face meetings can often help air issues before they escalate.

If it feels serious, we advise businesses to ensure they retain all relevant information relating to the complaint. They should keep documents, correspondence, any products or specimen products from the same batch, and/or carry out and document any inspections of equipment or machinery.

Where a dispute cannot be resolved easily, early intervention can prove very effective, using more collaborative methods of dispute resolution. These include mediation, conciliation and negotiation, as opposed to the traditional adjudicated court proceedings or arbitration. Early intervention options can offer significant benefits such as speed, reduced costs, flexibility and preserved working or commercial relationships.

Professional help

Seeking legal advice early on does not necessarily mean a serious legal dispute has arisen.

Dispute resolution advice is very effective when delivered as an issue first emerges. Lawyers do not need to necessarily take an active role, but can offer legal guidance focused on strategy and resolving complaint situations by diffusing potential disputes, while preserving the commercial position for the future.

The most important legal factor to remember is that making a rash statement, or taking a knee-jerk decision to stop providing services or products, may cause a serious breach of contract. In simple terms, a breach of contract can entitle the party affected by it to terminate the contract and bring legal proceedings against the business for damages. This will result in a time and money drain to clients’

This will result in a time and money drain to clients’ businesses, and should be avoided at all costs.

As a last resort, where parties have become so embroiled that legal proceedings are threatened and seem the only option, choose to work with experienced lawyers, well versed in commercial disputes who demonstrate commitment to early, pragmatic, commercial and cost-effective resolution.