I find it amusing when “treating customers fairly” is described as something that the UK regulatory authorities introduced to make financial services firms behave themselves.
Just compare this description to recent examples to the contrary - pension mis-selling, the endowment scandal and most recently of course, the huge fines levied on firms who sold PPI insurance to a great many consumers who would never be able to claim on it in a time of need. It is clear that the reality doesn’t reflect the description.
The Financial Services Authority has outlined six core consumer outcomes that it wishes to see as a result of the TCF initiative. These are:
- Outcome 1 - Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture
- Outcome 2 - Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly
- Outcome 3 - Consumers are provided with clear information and kept appropriately informed before, during and after the point of sale
- Outcome 4 - Where consumers receive advice, the advice is suitable and takes account of their circumstances
- Outcome 5 - Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect
- Outcome 6 - Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint
When you break these down and actually consider the implications for a firm that flew in the face of these outcomes, I’m sure you’d agree that they’d be pretty toxic.
The firm would be run purely in the interests of those who financially benefited from it regardless of the customers; it would sell products to anyone who would buy them even if they weren’t really right for that consumer; it would only provide information about the upside of products or services and not disclose the costs or downsides properly; it would provide advice to potential customers based only on a desire to sell products rather than need or circumstances; it would make wild promises about product performance that were unlikely, at best, to be realistic and if a consumer wanted to change to another product it would make it difficult or even impossible to do so.
Doesn’t sound very nice to me, but I can see some parallels with the aforementioned mis-selling scandals.
So, this got me to thinking about how you test yourself and the way you do business. This is not about the customer always being right or always feeling satisfied; I am sure that many recipients of mis-sold products felt satisfied at first. It is also not about being vanilla and simply doing the same as everybody else, or removing responsibility from customers for decisions.
It is about culture, and doing business in a way that will ensure customers get fair treatment. I like to use what I call the sniff test, and in TCF terms for me that means, “Would I be comfortable if the customer was my mum?”
If hand on heart the answer is yes, you have probably done the right thing.