Treating customers fairly what ce os must know- final
Treating Customers Fairly(TCF):What CEOs must know…...to meet the challenge & reap thereward. Stephen Rosling Director
Quick show of hands…Thinking about your own organisation:• How many have a TCF policy in place?• How many have a role or function that is specifically responsible for TCF?
This session will…•Give you a clear understanding of TCF and why it matters.•Show you can use TCF to your advantage in ▫ Building better quality business ▫ Staying ahead of further consumer regulation.
Why does “trust” matter so much tofinancial services customers? ▫ Intangible ▫ Long term ▫ Don‟t know if it‟s going to work until the point customers desperately need it ▫ Complex products; forced purchase
Costs of Getting it Wrong..In the US: US$25 billion on residential mortgage lendingIn the US: US$445 million on unfair, deceptive, abusive acts and practicesIn the UK: US$ 15 billion on miss-selling of payment protection insuranceIn HK: US$ 258 million to compensate Lehman Brothers investors(Data Source: KPMG Report Nov 2012)
The benefits of getting it right..• Customers - US$ 23.2 billion• Insurance industry - US$ 6 billion• Government - US$7.4 billion• Better customer engagement - US$1 billion
..more benefits of getting it right.• Reputation• Public trust• Demonstration of commitment to social and governance issues (Corporate Social Responsibility)• Improved customer advocacy “There can no longer be any doubt about the linkbetween protecting consumers from abusive products and practices, and the safety and soundness of the financial system” Chair of the US Federal Deposit Insurance Corporation
The principles of TCF -internationalThe OECD and Financial Stability Board‟suniversal “High Level Principles on FinancialConsumer Protection” relating to TCF:• Equitable and Fair Treatment of Consumers• Disclosure and Transparency• Responsible Business Conduct of Financial Services Providers and Authorised Agents• Complaints Handling and Redress
UK first on TCF principles• Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly .• Customers are provided with clear information and are kept appropriately informed before, during and after the point of sale.• Where customers receive advice, the advice is suitable and takes account of their circumstances.• Customers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect.• Customers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.• Customers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture .
Consumer Regulations… Authorisation Scheme for financial Advisers Treating Customers Fairly (2008) Retail Distribution ReviewDodd–Frank WallStreet Reform and Consumer Protection Act Treating Customers Fairly
Consumer Regulations… Future of Financial Advice Framework for Insurance Advertising OCI proposal for new Independent Insurance AuthorityFinancial Advisory Industry Review Guidelines for Introduction of Financial New Products Investment Adviser Advisers Regulations Act
Building a culture of fair dealing:the six crucial points of influence• Leadership – TCF „championed‟ by CEO• Strategy – vision/values; customer view; org.dev• Decision-making – informed, empowered, open to challenge• Controls – define, implement, report, review• Recruitment, Training and Competence• Reward – reshape around quality treatment of customers
TCF requires holistic effort along yourentire product value chain• Product Design• Product Development• Marketing• Sales• Customer Service/Maintenance• Claims/Maturity• AND in all your support functions: IT, Finance and Accounts, Change Management, Facilities.
Step 1: Regulatory & CulturalAudit Interviews Listening in TCF Training TCF Employee Communication and Engagement TCF Policy/Customer Committee TCF Escalation Processes TCF Management Information Product development and review processes Marketing Materials Sales processes and documentation Customer letters Complaint Handling Processes
Best practice example 2:Customer Letters• Tone – what will you say and how will you say it?• Language – choosing the words• Writing style• Layout and presentation• Grammar and punctuation
Best practice example 3 - TCF MI• 12-month rolling report• Board Summary• Qualitative and quantitative data• Internal and external data• Align to principles of fair treatment• New and existing measures• Highly visual• Commentary provided by Senior Management• Action oriented
Treating Customers Fairly is NOT..• About improving customer satisfaction• About treating all customers in the same way• Just about the quality of advice• A traditional “do once & move on” project• Only about compliance and risk management
Treating Customers Fairly IS....• About building/restoring customer trust in financial services companies• About cultural change• About everyone playing their part• A benefit, not just a cost• About being able to prove that you treat your customers fairly.
“Brands must move from having nothing tohide, to pro-actively showing and proving theyhave nothing to hide” (Trendwatching.com)“Trust grows at the speed of a coconuttree, and falls at the speed of a coconut.”