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Treating Customers Fairly: How is it Measured?

The FSB published feedback on their website about a tool they are developing to determine the status of TCF in your practice.

The purpose of developing – and piloting - a self-assessment tool is to:

• Provide firms with insight as to how ready they are to demonstrate to the FSB and other stakeholders, through management behaviours and monitoring, that they are consistently treating customers fairly
• Provide a high level indication to firms of the kinds of factors the FSB may in future take into account in monitoring and assessing TCF delivery
• Use the tool to conduct a TCF baseline exercise, against which the financial services industry’s future progress in delivering TCF outcomes can be measured
• Use the insights obtained from the pilot and baseline exercises to inform the development of the TCF regulatory, supervisory and enforcement frameworks.

Six outcomes were tested in the pilot.

Outcome 1: Customers are confident that they are dealing with firms where the fair treatment of customers is central to the firm culture
Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly.
Outcome 3: Customers are given clear information and are kept appropriately informed before, during and after the time of contracting.
Outcome 4: Where customers receive advice, the advice is suitable and takes account of their circumstances.
Outcome 5: 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 what they have been led to expect.
Outcome 6: Customers do not face unreasonable post-sale barriers to change a product, switch provider, submit a claim or make a complaint.

The practical side of measuring something that is outcomes based, rather than rules driven, will always be a challenge.

When you ask someone to report on the status of, say, client service, in his business, you are likely to get a different view than that of the client.

The above does not adequately clarify the role of the financial advisor for me.

When I see comments from FSPs about the horrendous lack of client service/care from prominent product houses, backed by documentary evidence, then I have to question the validity of a tool which is applied in an environment where self-deceit is often honed to a fine art.

Quite often, the advisor, as the go-between, is seen as the dunce in the matter, or more aptly, as we put it in Afrikaans, “die vark in die verhaal.”

Nobody, when considering restructuring the advisor’s remuneration, takes into account the enormous cost, both in terms of time and money, incurred by the advisor to rectify shoddy service and delivery from product providers.

Lastly, in terms of TCF, perhaps some product providers need to understand that the financial advisor is also a client with a right to be treated fairly.

And some of the clerical staff need to be made aware that the advisor is not an annoyance, but the very reason why they have a job, and worthy of decent treatment.

TCF, in the end, will be a moral thing. Perhaps the final word should belong to Mark Twain:

I have a higher and grander standard of principle than George Washington. He could not lie; I can, but I won't.

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