Posted: 10th January 2017

First featured in the BSA's Associate Knowledge

Treating customers fairly isn’t just a regulatory requirement; it goes hand-in-hand with protecting customers from detriment, increasing consumer trust, gaining brand advocacy and, as a result, can greatly assist you in meeting your commercial goals.

Customer risks arise throughout the product lifecycle and it’s important for your firm to achieve a positive outcome for those customers and ensure that they are sufficiently protected against detriment.

Forming an effective customer strategy isn’t so much a journey as it is a cycle of continuous improvement, and performing effective outcomes testing – and reacting proportionately to the findings to make improvements – forms a vital part of this.

By performing outcomes testing at each stage of the customer journey, firms can evidence the extent to which cultural drivers such as senior management engagement, decision making and staff reward structures are delivering good outcomes for customers.

Getting it right

There are five steps involved in developing a robust approach to outcomes testing:

Step one: agree a clear view on what a fair outcome would look like for the interaction being tested across each step of the customer journey (pre-sale, post-sale delivery, closure, maturity and transfer).

Step two: capture and assess all relevant customer information and perform a ‘Needs / Eligibility / Suitability Test’ (NEST) which will include looking at individual circumstances.

Step three: classify the customer outcome, and whether it aligns with the desired outcome in step one.

Step four: identify the likely root causes and likely source of root causes of the outcomes being experienced, and assign any issues against your firm’s pre-defined and agreed categories.

Step five: address the root causes by making any necessary changes to processes, policies and procedures.

Classifying the customer outcome

There are two factors to consider at this step in the process; whether the firm has fulfilled its obligations, and whether the customer has received a fair outcome. The two aren’t inextricably linked, as a firm may not have followed the rules, yet the customer may still inadvertently have received a good outcome. Outcomes can be classified as follows for example:

Fair: customer has received a fair outcome and all relevant regulations and internal processes, policies or procedures have been followed.

Fair – fail: customer has received a fair outcome albeit there has been a failure to follow internal process / procedures.

Fail – unfair: customer has received an unfair outcome and there has been a failure to follow internal process / procedures. An additional classification can also be considered for certain situations where information may be missing or unclear.


Carried out well, outcomes testing represents a valuable opportunity for firms to enhance their relationships with their customers, not only when something has gone wrong, but proactively ahead of any issues crystallising. The information gathered can then be used to make changes that deliver good outcomes to an individual firm’s wider customer base.

Matt drage

Matthew Drage

Director of Advisory Services