Firms cannot afford to take their foot off the TCF pedal!
9th May 2007
Treating Customers Fairly (TCF) is having a seismic effect on the Financial Services industry. Despite its importance, the scale of effort and breadth of impact of TCF has been misunderstood and underestimated by many firms and their advisors.
Treating Customers Fairly (TCF) is having a seismic effect on the Financial Services industry. Despite its importance, the scale of effort and breadth of impact of TCF has been misunderstood and underestimated by many firms and their advisors.
In order to drive progress, the FSA had set a deadline of March 2007 for all firms to be implementing TCF in a substantial part of their business, with a further deadline of the end of 2007 to demonstrate “embedded TCF”. The recent update from the FSA - “Treating Customers Fairly initiative: progress report”, gives us the latest view on how well the industry is doing.
Huntswood, a leading provider of professional services to the financial services sector, asserts that the report rightly highlights the reliance on senior management for success but may run the risk of causing complacency at this important time – part way through the TCF programmes of many firms.
Has a major opportunity been missed? Huntswood believes so.
The feedback in this report focuses on performance to date against the March 2007 implementation deadline by looking at the progress firms have made with their TCF initiatives, i.e. against their own measures, rather than whether they are delivering fair outcomes for their customers. The focus on the outcomes from the customer perspective is what makes TCF so powerful and valuable as an approach to drive lasting positive change in the industry. Its principle-based approach is relatively new, which is one of the reasons why many firms are struggling to implement it; the other key factors are the difficulty in defining “fairness” and the mistake of using of a traditional gap analysis, tickbox approach to drive what is effectively cultural change.
The FSA has therefore decided to set a new deadline of December 2008 for demonstrating embedded TCF. That’s an extra year. So why move it if, as their report says, “93% of major retail groups have successfully met the 2007 deadline”? You only have to look at the increased media attention on Payment Protection Insurance (PPI) enforcements or bank changes complaints to realise that delivering fair outcomes for customers will take some time to embed in the culture of a number of firms.
Now is therefore not the time for some firms to take their foot off the TCF pedal, but instead use this additional time to gain real competitive advantage…
Eurfron Jones, Head of Regulatory Consulting at Huntswood, comments: “The real opportunity that is missing from the FSA’s latest update, and from the industry debate so far, is that of the competitive advantage that TCF can bring firms, in addition to protecting the customer. To see TCF as simply another regulatory requirement is missing the chance to do fairer, more rewarding, more sustainable business; the opportunity is tangible rewards in the areas of improved customer service, increased effectiveness in compliant sales and greater customer retention, all leading to increased profits.”
Jones concludes, “The good news is that some firms have taken a more holistic, challenged approach to TCF and are using it to drive sweeping process improvements and changes in front-line behaviours in a way that rules-based regulation never could.
“Huntswood are supporting a number of the industry’s leading firms in exactly this kind of transformational programme. An extra year means that many more firms can now take this approach and turn a TCF compliance programme into a benefits-driven business programme. Those who fail to embrace this opportunity will give a lead to their competitors, as the TCF bar will only be raised higher over the coming years.”
Huntswood looks forward to the findings of the FSA’s forthcoming TCF thematic visits, and hopes to hear some examples of best practice – in the language of customer outcomes and business benefits – to inspire and drive the right ambition for this important TCF journey.
About Huntswood
Huntswood, providers of professional services including consulting and customer services solutions, has produced a report that gives the clearest view in the industry to date of the real impact of TCF, how far the industry has actually come, why many firms are struggling with TCF and a practical approach to not only rapidly address TCF but drive lasting cultural change that will deliver competitive advantage. The details of this report are for client use only, however Huntswood is well positioned to provide informed thought-leading comment around the issues of Treating Customers Fairly and Principle-Based Regulation in general.