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Treating customers fairly: mounting pressure for financial services

With the UK economy looking its bleakest in over a decade, the resilience of many businesses is being put to the test. At the same time, consumers are suffering financial uncertainty with jobs lost, incomes reduced and potential redundancies on the horizon.

The COVID-19 situation is a unique challenge for all, but with the economic uncertainty brought about by one of the most destabilising events on record, the spotlight is definitely on the financial services sector and how brands in general are responding and treating customers at this difficult time.

The Financial Conduct Authority’s (FCA) Treating Customers Fairly (TCF) programme aims to ensure that all financial services firms put their customers’ best interests at the very core of their business model. In light of COVID-19, the FCA has reinforced its guidance, encouraging financial service organisations to be flexible in how they treat consumers experiencing financial difficulties, for example through mortgage holidays granted by lenders and reduced payment plans offered by insurers.

Are consumers getting fair treatment during the COVID pandemic?

With consumer confidence low, many are looking towards organisations for transparency and reassurance in these tough times - but are brands meeting expectations?

The airline and travel industry is one of the hardest hit sectors, with income at zero following travel bans and holiday cancellations and there has been mixed response in terms of how brands in this sector have handled the crisis. Some, including Ryanair, have hit the headlines for all the wrong reasons, accused of dragging their heels in issuing refunds or pushing consumers to accept vouchers or re-book rather than refunding their hard-earned cash.

Lloyds Bank landed itself in hot water with a £64million fine from the FCA as it was revealed it put thousands of mortgage customers in financial difficulty. According to Money Expert, one of the biggest failings in Lloyds’ case was that its call handlers were not given access to appropriate information about customers in order to devise individual solutions, meaning up to 250,000 customers agreed to minimum payment terms that could have put them in vulnerable circumstances.

These scandals leave their mark and brands that fall short and fail to respond in a crisis will lose market share as consumer confidence starts to grow. So, what are the key behaviours that brands need to demonstrate to ensure they maintain and build trust as we look towards recovery?

Treat customers as individuals

The FCA’s six advised consumer outcomes (1) outline what financial services firms should strive to achieve, including that customers should be clearly informed at all stages of sales journeys and that all products and services should meet the needs of identified groups.

A failure in the system used by LLoyds to gather information from mortgage customers in payment difficulties or arrears meant that their payment arrangements did not take sufficient account of individual circumstances. A one-size fits all approach falls a long way short of the outcomes recommended under the FCA guidelines. To avoid the risk of significant fines, brands must ensure that they capture and maintain relevant insight and accurate, up-to-date information around their customers’ needs and circumstances and that this is available to staff so they can consider and address the particular needs of each customer.

Transparency from the start

In the case of Lloyds, not only were customers given a ‘one size fits all’ solution for mortgage repayments, it also transpired that the firm first became aware of the error in 2011 and neglected to update customers accordingly.

In this era of transparency when customers expect brands to ‘do more’ or perhaps even just ‘do better’, failure to be open and transparent puts providers' reputations at risk as well as consumer trust in their brand. As we all appreciate, buyers are much more likely to share a bad experience than a good one so the impact of such a breach extends much further than the affected customer pool. Much better to acknowledge and rectify the mistake at the earliest opportunity, than wait until a revelation by the regulatory authority casts doubt on the trustworthiness of the company and destroys the brand’s reputation, not to the financial penalty incurred.

Provide clear channels of communications

As well as ensuring employees and partners have a full understanding of the principles of TCF through thorough, continuous training, maintaining open and clear channels of communication is essential for managing the customer experience and closing the feedback loop.

In addition to devising bespoke solutions based on individual customer needs, ensuring clear communications and two-way dialogue enables teams to gather feedback, solve problems before they escalate and learn more about what different audiences need in order to adapt products and services.

Conducting post-sales research to gather feedback on customers’ experiences, understand their needs and ensure the sales process is compliant, mitigates the risk of unfair treatment and should form a natural part of an ongoing process.  This pre-emptive approach helps minimise issues or complaints, whilst demonstrating to customers that they are valued and that the business is prepared to act on their feedback.

How can we help you to meet your compliance challenges?

Whilst the current economic situation is increasing the need for brands to treat customers fairly and protect and maintain trust with their client base, TCF should be a continuous process embedded across all areas of a business. By ensuring rigorous training, upholding internal procedures, and establishing a solid feedback loop with clients, businesses can avoid the risk of reputational damage and fines from failing to adhere to FCA guidelines.

Telemarketing and telephone research both provide opportunities to establish a positive, two-way dialogue that captures valuable insight and ensures businesses are in tune with, and supporting customer needs. At The Telemarketing Company we’ve helped many clients establish a robust compliance process and carried out FCA regulated TCF compliance calls on behalf of organisations including global insurers and major retailers.

As an FCA authorised agency and Market Research Society Company Partner, we’re expertly placed to help financial services organisations implement communications strategies with customer needs and compliance at their heart. If you would like to discuss your compliance needs and how we might be able to help, get in touch.
 



(1) https://www.fca.org.uk/firms/fair-treatment-customers

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