Transcript
Page 1: Treating Customers Fairly in the UK

Treating Customers Fairly in the UK

Paul Timmins, Head of Risk & HR

RIAD Brussels 5 June 2009

Page 2: Treating Customers Fairly in the UK

Contents

• The Financial Services Authority (FSA) approach in the UK

• FSA Deadlines

• Consumer Outcomes

• DAS UK Action

• DAS definition of fairness

• Issues

• Positives

• Questions

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The FSA Approach

• Principles Based Regulator established 2001

• 11 Principles – all rules lead from these

• Principle 6 – A firm must pay due regard to the interests of its customers and treat them fairly

• First became priority in 2004/5 FSA business plan

• Part of the FSA Retail Agenda

• FSA did not define fairness but, “...left it to senior management to work it out for themselves.” Annual Report 05/06

• Fined Hastings Direct £735,000 (€833,000) 28 July 2008

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FSA Deadlines

• End March 2007 – Firms must have implemented work on TCF

• End March 2008 – Firms must be at embedding stage and have sufficient MI

• End December 2008 – Firms must have TCF fully embedded and be able to demonstrate they are consistently treating customers fairly

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FSA Six Consumer Outcomes

• 1. 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

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• 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 both 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

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DAS UK Action

• Intensive activity involving external consultants

• TCF programme completed December 2008

• Whole organisation has TCF targets and is trained

• Senior Management embraced concept

• Head of Risk and HR responsible for TCF compliance

• Regular MI reporting

• Deloitte reports on progress

• Staff competition

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Managing Our Business Differently

Adopting a seamless, proactive and rapid response to the fair treatment of our customers and delivering commercial return

Manufacture

Design and developmentof our products

Distribution

Selling via ourintermediaries

Post-sales ServiceDealing with claims and assistance elements of

the policy

Product Groups

Personal

Legal

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The Product Lifecycle

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The refreshed DAS corporate vision, mission and values have the definition of fairness embedded within them

Refreshed versions have the definition of fairness embedded within them

VISION• First for Justice

MISSION• To 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.

VALUES• Excellence - Our professional, experienced people deliver quality solutions and

service to our customers

• Respect - We respect the customer and our people and always act in their best interest

• Improvement - We constantly strive to improve our legal and associated solutions, ensuring they are of value and meet the expectations of the Customer

• Partnership - We work with our external and internal business partners to ensure a common approach to quality and fairness across manufacture, distribution and service

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DAS Working Definition of Fairness

Where 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 stages

No one area can be compliant – we all rely on each other and need to work together

Fairness = + Suitability

Value of customer to firm

Value of firmto customer

Expectation

Reality+

Manufacture (outcomes 1,2,3)

Manufacture (outcomes 1,2,3)

Distribute (outcomes 1,3,4,5)

Distribute (outcomes 1,3,4,5)

Post sale service (outcomes 1,5,6)

Post sale service (outcomes 1,5,6)

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Issues

• No FSA definition of fairness

• Inconsistent and changing approach from FSA

• FSA want specific MI but do not say so

• Many different approaches promoted by consultants

• Difficult to benchmark

• Lack of positive “sign off” from the FSA

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Positives

• Better overview of the business

• More focus on how customer perceives the product

• Driven customer initiatives

• Full engagement of staff, management and board

• Better relationship with the FSA

• Challenge encouraged and listened to

• Positive business advantages e.g. SRA, Business Partners


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