1. TREATING CUSTOMERS FAIRLY IS A
BENEFIT, NOT A COST
February 2013
Prepared by Stephen Rosling and John O‟Rorke
© 2012 TCF Matters. Proprietary and Confidential.

2. Contents
• What is fair treatment?
• Costs & Risks of getting it wrong
• What we can do?
• Benefits of getting it right
© 2012 TCF Matters. Proprietary and Confidential.

3. What is fair treatment - Background
• Treating customers fairly (TCF) is central to the delivery of the retail
regulatory agenda, which aims to ensure an efficient and effective
market and thereby help consumers achieve a fair deal.
• Since the 2008 start of the global financial crisis, the Financial
Services industry has been in the media, regulatory and consumer
spotlight like never before.
• Almost on a daily basis, there is a new headline highlighting a failure
of firms in relation to misleading and deceptive marketing and sales
practices.
• Reputations, having taken years to nurture, are being destroyed
over night.
© 2012 TCF Matters. Proprietary and Confidential.

4. Government & Regulatory Actions
• In 2012, the OECD and Financial Stability Board published “High Level
Principles on Financial Consumer Protection.”
• National financial regulators are introducing, reviewing and
strengthening legislation and guidelines to govern the way in which
financial products are developed, sold and serviced
• National regulatory bodies are being re-organised and re-structured.
• Legislation is supported with enforcement powers ranging from
suspensions and bans all the way to financial penalties and public
censure.
© 2012 TCF Matters. Proprietary and Confidential.

5. Jurisdicti Name of Review Effectiv Key Features
on e Date
UK Treating Customers Fairly 31/12/08 Firms must be able to demonstrate that they are
consistently delivering fair outcomes to
consumers .
USA Dodd–Frank Wall Street Reform 21/7/10 Introduction of Bureau of Consumer Protection to
and Consumer Protection Act protect consumers from abusive financial
services practices
Australia Future of Financial Advice 1/7/12 Fees to replace commissions; ban on non-
monetary incentives;
Norway Authorisation Scheme for 1/4/09 Raises qualification standards for advisers;
Financial Advisers separate authorisation schemes for life and non-
life providers
Singapore Financial Advisory Industry TBC Raising the competence of financial advisory
Review representatives; promotion of a fair dealing
culture; making financial advice a dedicated and
professional vocation.
New Zealand Financial Advisers Act In force Financial advisers must be registered, authorised
& meet tougher tests including minimum
educational, ethics and competence
requirements.
Malaysia Guidelines on Introduction of Updated Providers must give due regard to the interests of
New Products for Insurance 2011 consumers in the development, marketing and
Companies, Takaful Operators, sale of new products; customer suitability
and Banks
South Africa Treating Customers Fairly 1/1/14 Firms must be able to demonstrate that they are
consistently delivering fair outcomes to
consumers .
© 2012 TCF Matters. Proprietary and Confidential.

6. Costs of Getting it Wrong – Fines, Refunds,
Compensation
US £15.6B on residential mortgage lending
US £278M on unfair, deceptive, abusive acts and practices
UK £10B on miss-selling of payment protection insurance
HK £1.2B to compensate Lehman Brothers investors
(Data Source: KPMG Report Nov 2012)
© 2012 TCF Matters. Proprietary and Confidential.

7. Costs of Getting it Wrong (Cont.)
• Public censure & damaging media coverage
• Loss of staff, customers, shareholders
• Loss of licence
• Increased regulation (additional costs)
• Additional capital charges to provide for risks that are not
satisfactorily managed
• Impact on profit
• Loss of public trust
© 2012 TCF Matters. Proprietary and Confidential.

8. TCF Matters has been created to help
organisations re-focus the way they
conduct business – to create a culture
consistent with the principles of treating
customers fairly and to restore
customer trust.
© 2012 TCF Matters. Proprietary and Confidential.

9. What can we do to help?
Step 4
Coaching and
Step 1 Step 3 On-going
Delivery Support
Step 2
Programme
Step 1 Design
Gap Analysis .
Culture & Practice
Systems, Process and Documentation
Organisational Assessment
© 2012 TCF Matters. Proprietary and Confidential.

10. How are we different?
• We believe that (restoring) customer trust is a fundamental
component of customer satisfaction.
• We believe that treating customers fairly is more than a regulatory
and compliance requirement.
• We believe behaviours and culture, as well as systems, processes,
and controls need to change.
• We offer a unique combination - up to date and in depth consumer
regulatory knowledge, plus the skills and expertise to support
behavioural and cultural change.
• We can stay with you for the journey.
© 2012 TCF Matters. Proprietary and Confidential.

11. The Benefits of Getting it Right
• Benefits of trust could also be viewed as „cost of lack of
trust‟
• Monetary benefits of public re-engagement with UK
financial services industry:
• GBP15bln for customers (timely and sufficient investment & life-
stage planning)
• GBP3.6bln-5.5bln for the industry (bad debt reduction, reduced
acquisition & regulation costs)
• GBP4.6bln-6bln for Government (increased VAT, tax from savings,
pension credit savings)
• Association of Independent Financial Advisers
• 25% uptake in customer engagement equivalent to £650mn of new
regular premia entering the industry
© 2012 TCF Matters. Proprietary and Confidential.

12. The Benefits of Getting it Right
(Cont.)
• Reputation
• Public trust
• Demonstration of commitment to social and governance
issues (Corporate Social Responsibility)
• Improved customer satisfaction and advocacy
• “An ounce of protection (or prevention) is worth a pound
of cure.”
“There can no longer be any doubt about the link between
protecting consumers from abusive products and practices,
and the safety and soundness of the financial system”
Chair of the US Federal Deposit Insurance Corporation
© 2012 TCF Matters. Proprietary and Confidential.

13. Who are TCF Matters?
John O‟Rorke has worked in the international financial services sector
for over 30 years, holding senior management positions in the UK and
Australia with Lloyd‟s Life Assurance, Royal Insurance and the
Prudential.
Based in Sydney, John has been consulting in Asia since 1998,
including 8 years with Watson Wyatt where he set up and ran their
Distribution Consulting Practice.
Stephen Rosling has worked in the UK financial services
sector for over 25 years, holding senior management
positions in Aviva, Friends Life, and Friends Provident
International.
Based in the UK, Stephen is a qualified customer services
professional and holds the Certificate in Regulated
Customer Care from the IFS School of Finance and is a
registered Change Management Practitioner. He has over
10 years of experience in running and improving customer
service functions. His specialties include implementation of
consumer protection regulations, employee engagement,
and change management. © 2012 TCF Matters. Proprietary and Confidential.