Treat Customers Faily

8/6/2019 Treat Customers Faily

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Treating Customers Fairly

If Treating Customers Fairly isIf Treating Customers Fairly is

implemented.implemented.

The future of our industry could lookThe future of our industry could look

like thislike this


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Treating Customers Fairly

Unfair treatment of clients

Long-term nature of financialservices

Information asymmetry

Lack of financial education


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Treating Customers Fairly (UK)

Outcomes based legislation Now includes some detailed rules

And guidance including case studies

Education of customers Elevate level of financial literacy in customers

Make unfair treatment too expensive

through Intense enforcement Credible deterrents


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Six TCF Outcomes

1.1. Consumers can beConsumers can be confidentconfident theythey

are dealing with firms where theare dealing with firms where the fairfair

treatment of customerstreatment of customers is central tois central to

the corporate culturethe corporate culture

(Consequence of rest of the outcomes)(Consequence of rest of the outcomes)


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TCF Outcome 2

Products and services marketed andProducts and services marketed and

sold in the retail market aresold in the retail market are designeddesignedto meet the needsto meet the needs of identifiedof identified

consumer groupsconsumer groups and are targetedand are targeted

accordinglyaccordingly


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TCF Outcome 3

Consumers are provided withConsumers are provided with clearclear

informationinformation and are keptand are keptappropriately informedappropriately informed before,before,

during and after the point of saleduring and after the point of sale


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TCF Outcome 4

Where consumers receive advice, theWhere consumers receive advice, theadvice is suitableadvice is suitable and takes accountand takes account

of theirof theircircumstancescircumstances


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TCF Outcome 5

Consumers are provided withConsumers are provided with

products thatproducts that perform as firms haveperform as firms haveled them to expectled them to expect, and the, and the

associatedassociated serviceservice is both of anis both of an

acceptable standardacceptable standard and what theyand what they

have beenhave been led to expectled to expect


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TCF Outcome 6

ConsumersConsumers do not face unreasonabledo not face unreasonable

postpost--sale barrierssale barriers to changingto changingproduct, switching provider,product, switching provider,

submitting a claim or making asubmitting a claim or making a

complaintcomplaint


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Treating Customers Fairly (SA)

FSB released a discussion paper inFSB released a discussion paper in

May 2010May 2010

ASSA have given written commentASSA have given written comment

through the TCF Task Force Teamthrough the TCF Task Force Team

WorkshopWorkshop

TCF vision and program detailsTCF vision and program details


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Value Chain

Culture, Strategy and Behaviour Impacted

Product

Design

Promotion

&

MarketingAdvice

Point of

Sale

Post-

Point

ofSale

Complaints

Resolution


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Impact of TCF

GoGo forfor aa businessbusiness thatthat anyany idiotidiot cancan

runrun -- becausebecause soonersooner oror later,later, anyanyidiotidiot probablyprobably isis goinggoing toto runrun itit..

PeterPeter LynchLynch


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TCF MythsTCF Myths

Compliance Actively promote fairness throughout the value

chain

Just reasonable benefit expectations

Looks through info asymmetry to providers Being nice to clients

Unrealistic expectations not met

Happy, but ignorant happy clients not acceptable

Once-off job Requires continuous process

Requires high commitment from senior levels


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Impact of TCF

Leadership

Strategy

Decision Making

Controls

erformance Mgt

Reward

Understand and implement

Vision, values & implementation

Staff able to challenge

Management Information

Evaluated on TCF

Reward for consumer outcomes


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Challenges of TCF

Beyond compliance a culture

change

What exactly is fair?

Developing MI

FSB ability to regulate


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TCF and Pension Environment

Pension Fund AdjudicatorPension Fund Adjudicator

FAIS ActFAIS Act

PF Circular 130PF Circular 130

Fiduciary ResponsibilityFiduciary Responsibility

Actuarial CodeActuarial Code

Professional Guidance NotesProfessional Guidance Notes


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TCF IssuesTCF Issues

Who is the customer?

Trustee or member or both?

Will retirement funds have to comply?

Could trustees be prosecuted?

Role of the valuator

Fairness and Financial soundness

Role of the Principal Officer Fairness officer?


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TCF IssuesTCF Issues

Independent advisors, consultants andactuaries?

Lets see your strategy and MI

What is in a name? Name confusion unfair?

Could MLIC and Lifestage investment

models be unfair? When does bad service become unfair?


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Implementing TCF

WheneverWhenever therethere isis aa hardhard jobjob toto bebe

donedone II assignassign itit toto aa lazylazy manman;; hehe isissuresure toto findfind anan easyeasy wayway ofof doingdoing itit..

WalterWalter ChryslerChrysler


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Implementing TCF

Buy in from senior managementBuy in from senior management

Incorporate into strategic planningIncorporate into strategic planning

Formulate targets and measurementsFormulate targets and measurements Incorporate into performanceIncorporate into performance

measurementmeasurement

Review of incentive structuresReview of incentive structures Education and communicationEducation and communication


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TCF Risk Areas

Retirement AnnuitiesRetirement Annuities

Not according to client need

Charges not disclosedTermination conditions not disclosed

Insufficient comparison

Risks not highlighted


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TCF Risk Areas

InvestmentsInvestments

Layers of undisclosed costs

Performance mis-represented

Not correct match for profile of

membership

Termination penalties only discovered at

termination Performance does not meet

expectations!


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TCF Risk Areas

Service Provider ComparisonsService Provider Comparisons

Small section of the market

Terms and conditions not checkedService not considered

Termination conditions ignored

Fee sharing arrangements notdisclosed and explained


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TCF Risk Areas

New Business PromisesNew Business Promises

Unsupported service claims

Unsupported capabilities

Lack of delivery after business is

secured


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TCF Risk Areas

Valuators RoleValuators Role

Financial soundness not mean fairness

Inappropriate benefit designs

Outsourcing of pensions

Conversions and surplus

Performance does not meet

expectations!

Changes in risk benefit design


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Summary of TCF

OurOur missionmission statementstatement aboutabout treatingtreatingpeoplepeople withwith respectrespect andand dignitydignity isis notnot justjustwordswords butbut aa creedcreed wewe livelive byby everyevery dayday..

YouYou can'tcan't expectexpect youryour employeesemployees totoexceedexceed thethe expectationsexpectations of of your yourcustomerscustomers if if youyou don'tdon't exceedexceed thetheemployees'employees' expectationsexpectations ofof managementmanagement..

HowardHoward SchultzSchultz


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Thank You

Documents

Treat Customers Faily