Not just a nice to have, the principles of TCF (Treating Customers Fairly) require FSPs (financial services providers) to make fundamental changes to how their businesses operate, while proving they are adhering to these principles along the way.
To recap, consumers should be provided with clear, suitable information and kept appropriately informed before, during and after the point of sale (i.e. throughout the product/service’s life cycle), as well as enabled to make product changes or to submit claims or complaints along the way. But TCF is not about creating satisfied consumers at all costs.
A satisfied consumer can still be treated unfairly and not know that he/she is being treated as so. TCF does not absolve consumers from making decisions and taking responsibility for such decisions either – consumers still have a responsibility to know what they are getting into and to take responsibility for their decisions. Not all FSPs will handle TCF in an identical manner, but as long as business is done fairly and transparently, TCF requirements will be met.
Through TFC, the regulator expects that FSPs will:
– Integrate TCF into their business culture through allocating resources and responsibilities;
– Have appropriate Management Information (MI) measures in place to test whether they are treating their customers fairly, within the 6 TCF Outcomes.
MI demonstrates to everyone that they are consistently delivering on TCF. All information relevant to a firm can be deemed MI, be it via customers, staff, calls, visits, meetings, sales, opinions, parts of a process, or predictions, among other resources such as compliance reports. MI, however, is not just about numbers. Quantitative data is valuable to any business, but commentary or opinions are also MI and can help provide a comprehensive, balanced view. Good MI should enable management to make good decisions, so MI must be accurate, timely, relevant and consistent.
Put processes in place that monitor the MI to enable the right people to take action – and this will become ‘business as usual’.
TCF is not possible without MI. Here’s why:
Imagine the head partner and business manager of a medium-sized firm meet every fortnight to discuss the current MI including all TCF MI. The TCF MI pack is included in the board meeting and a newsletter goes to all staff thereafter, showing how the firm is performing against customer expectations.
Now imagine that all MI is emailed to sales advisers every month, that the CEO can access the MI by looking on the shared computer drive in the office and MI reports are stored in the business information filing cabinet. Imagine if MI is produced on request, or that if no-one asks to see a report in a given month, that the firm does not run the report.
In the first scenario, TCF MI is seen promptly by the right people so that they can act. A newsletter to staff can be a good way of keeping TCF ‘fresh’ and ‘business as usual’. In the second scenario, the MI goes to the wrong people, or to the right person, but may be overlooked, or fall into disuse.
The right MI needs to be seen by the right people at the right time. Passive presentation or ad-hoc production does not demonstrate that anyone has looked at it.
In another example; imagine one firm attributes a root cause to all complaints, but another firm says that complaints are unjustified, so doesn’t bother to understand the causes. The first firm is able to better spot common themes to resolve them.
Being able to present and interpret trends through MI reporting will enable management to make better decisions. It’s not just about reporting back; it’s about planning ahead. This is relevant to any sized firm too, irrespective of the levels of management. MI is not about sharing what’s happening with various parts of a firm; it’s about measuring performance and identifying potential risks.
It may confirm or summarise what a firm already knows, but enabling management to see a pattern and then to make an informed decision, ensures longevity in a business.