Treating Customers Fairly in the UK

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Treating Customers Fairly in the UK. Paul Timmins, Head of Risk & HR RIAD Brussels 5 June 2009. Contents. The Financial Services Authority (FSA) approach in the UK FSA Deadlines Consumer Outcomes DAS UK Action DAS definition of fairness Issues Positives Questions. The FSA Approach. - PowerPoint PPT Presentation

Text of Treating Customers Fairly in the UK

  • Treating Customers Fairly in the UKPaul Timmins, Head of Risk & HRRIAD Brussels 5 June 2009

  • ContentsThe Financial Services Authority (FSA) approach in the UKFSA DeadlinesConsumer OutcomesDAS UK ActionDAS definition of fairnessIssuesPositivesQuestions

  • The FSA ApproachPrinciples Based Regulator established 2001 11 Principles all rules lead from thesePrinciple 6 A firm must pay due regard to the interests of its customers and treat them fairlyFirst became priority in 2004/5 FSA business planPart of the FSA Retail AgendaFSA did not define fairness but, ...left it to senior management to work it out for themselves. Annual Report 05/06Fined Hastings Direct 735,000 (833,000) 28 July 2008

  • FSA DeadlinesEnd March 2007 Firms must have implemented work on TCFEnd March 2008 Firms must be at embedding stage and have sufficient MIEnd December 2008 Firms must have TCF fully embedded and be able to demonstrate they are consistently treating customers fairly

  • FSA Six Consumer Outcomes1. Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture2. Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly3. Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale

  • 4. Where consumers receive advice, the advice is suitable and takes account of their circumstances5. Consumers 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 expect6. Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint

  • DAS UK ActionIntensive activity involving external consultantsTCF programme completed December 2008Whole organisation has TCF targets and is trainedSenior Management embraced conceptHead of Risk and HR responsible for TCF complianceRegular MI reportingDeloitte reports on progressStaff competition

  • Managing Our Business DifferentlyAdopting a seamless, proactive and rapid response to the fair treatment of our customers and delivering commercial returnManufacture

    Design and developmentof our productsDistribution

    Selling via ourintermediaries

    Post-sales ServiceDealing with claims and assistance elements of the policyProduct Groups

    Personal LegalPersonal LegalCommercial LegalClass 18Motor Legal80eThe Product Lifecycle

  • The refreshed DAS corporate vision, mission and values have the definition of fairness embedded within themRefreshed versions have the definition of fairness embedded within them VISIONFirst for JusticeMISSIONTo deliver quality legal and associated solutions which provide value to our customers and meet their expectations whilst creating a fulfilling environment for our people and achieving our required return on capital to shareholders.VALUESExcellence - Our professional, experienced people deliver quality solutions and service to our customersRespect - We respect the customer and our people and always act in their best interestImprovement - We constantly strive to improve our legal and associated solutions, ensuring they are of value and meet the expectations of the CustomerPartnership - We work with our external and internal business partners to ensure a common approach to quality and fairness across manufacture, distribution and service

  • DAS Working Definition of FairnessWhere expectation and reality combine with suitability to allow a balanced exchange of value

    Each of the three elements of fairness match to the three product lifecycle stagesNo one area can be compliant we all rely on each other and need to work togetherFairness = + SuitabilityValue of customer to firmValue of firmto customer ExpectationReality+Manufacture (outcomes 1,2,3)Distribute (outcomes 1,3,4,5)Post sale service (outcomes 1,5,6)

  • IssuesNo FSA definition of fairnessInconsistent and changing approach from FSAFSA want specific MI but do not say soMany different approaches promoted by consultantsDifficult to benchmarkLack of positive sign off from the FSA

  • PositivesBetter overview of the businessMore focus on how customer perceives the productDriven customer initiativesFull engagement of staff, management and boardBetter relationship with the FSAChallenge encouraged and listened toPositive business advantages e.g. SRA, Business Partners


    Statutory Objectives: -1. Market Confidence 2. Public Awareness 3. Consumer Protection 4. Reduction of Financial CrimeHastings cancelled nearly 5000 customers policies due to pricing errorThe Principles 1 Integrity A firm must conduct its business with integrity. 2 Skill, care and diligence A firm must conduct its business with due skill, care and diligence. 3 Management and control A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems. 4 Financial prudence A firm must maintain adequate financial resources. 5 Market conduct A firm must observe proper standards of market conduct. 6 Customers' interests A firm must pay due regard to the interests of its customers and treat them fairly. 7 Communications with clients A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. 8 Conflicts of interest A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client. 9 Customers: relationships of trust A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment. 10 Clients' assets A firm must arrange adequate protection for clients' assets when it is responsible for them. 11 Relations with regulators A firm must deal with its regulators in an open and cooperative way, and must disclose to the FSA appropriately anything relating to the firm of which the FSA would reasonably expect notice. *Key Points:Traditionally we have always looked at our business like this, e.g.:Underwriting make the product or coverThe sales team take the product to marketClaims/ASU look after our customersDoing business this way equates to a rugby game where the ball is passed along DASs new approach is about looking at the business differently AND doing business differently.We will now take a more holistic approach by putting one person in charge of each product group on a completely end-to-end basis.This will create opportunities to resolve product issues seamlessly, proactively and rapidly (this relates to the product lifecycle, cradle to grave perspective)CARE System the new complaints system CARE will automatically record a root cause of problems and link back to either Manufacturing, Distribution and Post-sales Service, so that we can measure and take preventative action.

    Owners of the product groups are as follows:Personal Legal Matt FrostCommercial Legal Matt FrostClass 18 Chris BranniganMotor Legal Richard Dunn80e Phil Bellamy