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Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

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Page 1: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

Treating Customers Fairly - the challenge for financial services marketers

Tony Katz, Financial Promotions Team, FSA

Page 2: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

How consumers feel about financial providers

79%76%

63%60% 59% 57%

46%

They don’treward loyalty

Source: BMRB Online - regular newspaper readers who have acquired or renewed home or motor insurance within the last 6 months or acquired or renewed a mortgage, loan or credit card within the last 12 months, 3753

The language they use is difficult to understand

You have to change your

provider regularly or

you end up with a

poorer deal

They’re not interested

in helping youunderstand what’s best

for your needs

It’s hard to know if

you’re gettinga good deal

They make it so complicated youend up confused

You can trustthem

Page 3: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

Principles-based regulation

• A fantastic opportunity to innovate!

• Greater responsibility for firms and senior management

Page 4: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

TCF outcomes1: Consumers can be confident that they are dealing with firms where

the fair treatment of customers is central to the corporate culture.2: Products and services marketed and sold in the retail market are

designed to meet the needs of identified consumer groups and are targeted accordingly.

3: 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 circumstances.

5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.

6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.

Page 5: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

“Management must think of itself not as producing products, but as providing customer-creating value satisfactions. It must push this idea..into every nook and cranny of the organisation. It has to do this continuously and with the kind of flair that excites and stimulates the people in it”

Ted Levitt

Page 6: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

End of tick-box compliance

Page 7: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

No more silos

Page 8: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

COBS: high-level requirements for financial promotions

Communications must be accurate and sufficient for their purpose

They must be presented in a way that is likely to be understood by the average member of the group to whom they are directed

Where benefits are discussed, there must be a fair and prominent indication of any relevant risks

Firms must not disguise, diminish or obscure important items, statements or warnings

Page 9: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

Key FeaturesIssues to consider in designing KFDs• Type size• Attractiveness of the text• Clarity of the key messages about

cancelling• Relevance• Repetition• Amount of process detail (which is

better explained elsewhere)• Style:– use active verbs and positive

language;– stick to precise and short sentences;– avoid the use of abstractions and

redundant phrases; and– avoid legal terms and bureaucratic

language.

Page 10: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

"Save £150“/"You could save £150“/"Save up to £150"

Page 11: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

Savings claims

Good practice:

price/savings claim representative of likely customer benefit

clear basis on which such saving is to be achieved

Poor practice: unclear or hidden

explanation of savings claim

misleading claim,

false customer expectations

Page 12: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

1954 car advert from State Farm Mutual

Page 13: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

Internet promotions

Good practice• Risk information appears

prominently on the first page of the website the customer arrives at and near to the product description.

• Devices such as fixed risk warnings remain on the screen even when the customer scrolls up and down.

• The customer is encouraged to think about whether the product is right for them.

• The risks are repeated further into the application process.

Poor practice• The risk information can

be easily overlooked which could also result in the consumer being taken straight to an application form (e.g. by clicking on to a banner advertisement or accepting a cookie).

• Key information, such as on fees or exclusions are buried within the website or placed in a separate section such as FAQs.

Page 14: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

Commercial property funds

Page 15: Treating Customers Fairly - the challenge for financial services marketers Tony Katz, Financial Promotions Team, FSA

Last word

• Fewer rules do not mean lower standards

• Stand-alone compliance

• Culture is the key to it all