This document discusses the importance of treating customers fairly (TCF) in the financial services industry. It outlines how TCF aims to build customer trust through principles like equitable treatment, transparency, and responsible business conduct. The document notes that while some organizations have TCF policies, many may not have dedicated roles to ensure compliance. It then provides examples of best practices for implementing TCF through initiatives like training, customer communications, and management information reporting. The presentation emphasizes that achieving TCF requires a holistic, cultural change across all business functions and product lines.
2. 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?
3. 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.
6. Why does “trust” matter so much to
financial 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
8. Costs of Getting it Wrong..
In the US: US$25 billion on residential mortgage lending
In the US: US$445 million on unfair, deceptive, abusive acts and practices
In the UK: US$ 15 billion on miss-selling of payment protection insurance
In HK: US$ 258 million to compensate Lehman Brothers investors
(Data Source: KPMG Report Nov 2012)
9. 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
10. ..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 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
11. The principles of TCF -
international
The OECD and Financial Stability Board‟s
universal “High Level Principles on Financial
Consumer 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
12. 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 .
13. Consumer Regulations…
Authorisation
Scheme for financial
Advisers
Treating Customers
Fairly (2008)
Retail Distribution
Review
Dodd–Frank Wall
Street Reform and
Consumer
Protection Act
Treating Customers
Fairly
14. Consumer Regulations… Future of Financial
Advice
Framework for
Insurance
Advertising
OCI proposal for new
Independent Insurance
Authority
Financial Advisory
Industry Review
Guidelines for
Introduction of Financial
New Products Investment Adviser Advisers
Regulations
Act
15. 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
16. TCF requires holistic effort along your
entire 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.
17. Step 1: Regulatory & Cultural
Audit
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
21. 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
22. 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
24. 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
25. 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.
26. “Brands must move from having nothing to
hide, to pro-actively showing and proving they
have nothing to hide” (Trendwatching.com)
“Trust grows at the speed of a coconut
tree, and falls at the speed of a coconut.”