We should by now, all be familiar with the Regulator's view that firms must be able to show consistently that fair treatment of consumers is at the heart of their business model. It’s not unreasonable for consumers to expect the provision of financial services and products that meet their needs from firms they trust. After all the whole concept of the fair treatment of consumers isn’t ground breaking. It’s not just a regulatory requirement, it’s good business practice, right?
Six Consumer Outcomes
There are six consumer outcomes that firms should strive to achieve to ensure fair treatment of consumers. These remain core to what the regulator expects of firms:
- Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture
- Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly
- Consumers are provided with clear information and are appropriately informed before during and after the point of sale
- Where consumers receive advice, the advice is suitable and takes account of their circumstances
- 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 let to expect
- Consumers do not fact unreasonable post sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint
It’s common practice for the regulator to constantly gather intelligence and information on the activity of the firms that it regulates. One of the many ways in which it is able to do this is through the use of the helpdesk. Often consumers will make contact with the regulator to discuss queries and highlight any concerns that they may have with the inappropriate activity of a regulated business.
In establishing whether regulatory supervision intervention is necessary, one of the fundamental questions that the regulator considers is “Who is batting for the consumer here?”
A business that consistently has the fair treatment of consumers at the heart of their business model will be able to clearly evidence that it is actively delivering on all six consumer outcomes. This will include the identification of consumer risks and deployment of appropriate risk mitigation strategies to ensure the delivery of good consumer outcomes with no consumer detriment.
All too often I encounter firms who have robust policies and procedures in place to ensure the delivery of fair consumer outcomes, however when challenged they struggle to evidence that they are delivering on what is required.
In essence, if you have a policy and procedures statement saying that you do something, then you must make sure that you do it!
Often a firm that is unable to evidence that it fulfils all of its requirements as defined in its own policy and procedures documentation is usually giving a key indicator that it does not have a truly customer centric culture.
This is a clear indication that compliance is bolted on and not built in.
Remember compliance is for everyone, not just the compliance department.
Some firms have an over reliance on customer satisfaction surveys to try and evidence good consumer outcomes, however what is often lost in the process is that a happy customer is not necessarily one that has received a good outcome and been treated fairly.
There are commonly five key stages to a successful consumer outcome strategy and each stage leads into the other and should continuously evolve as a cycle:
Some businesses that have all elements of the cycle in operation can, at a senior level, develop misconceptions that all is well. This is often due to the fact that there is very little noise from within the business to suggest that something isn’t working correctly.
Honesty and openness cascaded throughout all levels of the business operation must be encouraged at all times to ensure successful delivery of good consumer outcomes. Quite often Senior Management Teams within firms can unwittingly adopt a ‘Shoot the Messenger’ mentality when things go wrong. This serves to drive key management information and the identification of issues including customer detriment underground giving a false pretence that all is well.
If you would like to challenge your business policies and procedures or want to discuss consumer outcomes for your business in more detail and in confidence, please do not hesitate to contact Steve Walton or another member of the RWA team.