Treating customers fairly what ce os must know- final

Treating Customers Fairly

(TCF):

What CEOs must know….

..to meet the challenge & reap the

reward.

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.

The State of Trust

The State of Trust

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

Why Should Anyone Buy From

You?

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)

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 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

The principles of TCF -

internationalThe 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

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…

Treating Customers Fairly (2008)

Retail Distribution Review

Dodd–Frank Wall Street Reform and

Consumer Protection Act

Authorisation Scheme for financial

Advisers

Treating Customers Fairly

Consumer Regulations…

OCI proposal for new Independent Insurance

Authority

Financial Advisory Industry Review

Future of Financial Advice

Financial Advisers

Act

Framework for Insurance

Advertising

Guidelines for Introduction of New Products Investment Adviser

Regulations

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 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.

Step 1: Regulatory & Cultural

AuditInterviews

Listening in

TCF Training TCF Employee Communication and Engagement

TCF Policy/Customer Committee TCF Escalation Processes

TCF Management Information

Product development and review processesMarketing Materials

Sales processes and documentationCustomer letters

Complaint Handling Processes

Step 2

• Analyse audit results

• Develop TCF action

programme

Best practice example 1: TCF

Training

• Mandatory attendance

• Delivery

• Annual refresher

• Exam

• Locations

• Language

• Board members

Training Messages..

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

TCF MI examples…

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 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.”

Thank you

Contact Details

Email: stephen.rosling@tcf-

matters.com

Tel: +44 7891 438 795

Contact Details

Email: john.ororke@tcf-matters.com

Tel: + 61 421 044 355