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www.pwc.com/za
March 2011
Treating Customers Fairly (“TCF”) What to expect?
© 2011 PricewaterhouseCoopers (“PwC”), a South African firm, PwC is part of the PricewaterhouseCoopers International Limited (“PwCIL”) network that consists of separate and independent legal entities that do not act as agents of PwCIL or any other member firm, nor is PwCIL or the separate firms responsible or liable for the acts or omissions of each other in any way. No portion of this document may be reproduced by any process without the written permission of PwC. (JB 11-08885)
www.pwc.com/za
The FSB’s TCF initiative:
The FSB issued a discussion paper in April 2010 examining the elements of the TCF programme and to consider its application in South Africa. The discussion paper looks at a principles and rules based approach to compliance. The FSB expects to issue its TCF Roadmap in March 2011.This will deal with the key comments received on the discussion paper, as well as outline the proposed approach for the implementation of TCF across all relevant sectors supervised by the FSB.
Questions to consider in preparing for TCF:
• What does TCF mean to your company and how has TCF been defined?
• How is TCF integrated into your company’s corporate strategy and culture?
• To what extent have human resources been involved in your company’s TCF thinking?
• Has your company assessed the impact of TCF on your day-to-day business processes?
• What assessment has your company conducted in respect of existing reporting to identify specific TCF measures that will enable your company to monitor TCF compliance?
• Has your company considered the IT needs and changes to implement and monitor TCF?
• What is your company doing to educate and train line management and staff on TCF and to what extent has your company revisited training requirements as a result of TCF?
• Is your company satisfied that, in light of certain scenarios manifesting, its processes are fully evidenced, consistent and understood and will work?
• What policies and procedures does your company need to put in place to manage the application of discretion?
• Has your company considered the value being added to consumers from your products?
• Does your company monitor the delivery of product outcomes to ensure they are in line with consumer expectations?
• Have operational savings been identified as a result of TCF?
Our PwC Team:
Tom Winterboer PwC Southern African Financial Services Leader Tel: +27 (11) 797 5407 [email protected]
Victor Muguto PwC Southern African Insurance Practice Leader Tel: +27 (11) 797 5372 [email protected]
Ernst Maritz PwC Southern African Financial Services Advisory Leader Tel: +27 (21) 529 2002 [email protected]
Mark Claassen Actuarial & Insurance Management Solutions Leader Tel: +27 (21) 529 2521 [email protected]
Jorge Goncalves Insurance Regulatory Director Tel: +27 (11) 797 4567 [email protected]
Maadian Botha Regulatory Risk Services Associate Director Tel: +27 (11) 797 4058 [email protected]
Gerda Burger Insurance Regulatory Manager Tel: +27 (11) 797 4220 [email protected]
Treating Customers Fairly (TCF) is a Financial Services Board (FSB) initiative to improve the levels of fairness in the conduct of financial services
Treating Customers Fairlyg y ( ) ( ) p
business. The fair treatment of consumers of financial services products is one of the mandates of the FSB. The FSB is therefore pursuing a TCF programme similar to what was implemented in the United Kingdom.
P d d
In order to achieve the core outcomes of TCF (as highlighted alongside) the cultural and operational aspects of companies will need to change. The concept of TCF will need to be considered at each stage of h d lif l Products and
services marketed and sold are designed to meet the needs of identified consumers and are targeted accordingly
Consumers do not face unreasonable post-sale barriers
the product life cycle:
The fair treatment of customers is central to the corporate culture of companies
accordingly
Where consumers receive advice, the
advice is suitable and takes account of their
circumstances
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Consumers are provided with clear information and are kept appropriately informed before, during and after point of sale
Consumers are provided with products and services of an
acceptable standard what they have been
led to expectIn C c
point of saleled to expect
Are South African financial institutions treating customers fairly? Examples of matters that may need to be focussed on :
High and layered fee structures on
investment policies lower the likelihood of a positive return
Highly restrictive contractual wording
resulting in low claims payout
Misleading promises in marketingmaterials
Unexpected charges that come into effect
on inception of a policy
Promotionalmaterials fail to
inform about key risks
Upfront commission structures in long-
term insurance lead to over-eagerness to
sell inappropriate policies
Retail products contain automatic
inclusion of insurance
Banks direct all business to related parties which may not offer the best
Inadequateinformation is
provided to telemarketing
Delayed payouts of retirement annuities
reduce optimal investment
Resources are concentrated on the
repudiation of claims instead of
d
The terms used in sales material and by brokers are not
l d l
Broker culture does not specifically
address TCF
Policies to apply discretion are not
transparentnot offer the best value for money
customers to ease the sales process
investmentopportunities
educatingconsumers upfront
clear and simpleaddress TCF transparent
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