Treating Customers Fairly

the key areas that need to be looked at, these are product design, disclosure, post sale & remuneration strategy, there could be an issue at a later date as some organisations will only look at those outlined & focus on them, maybe forgetting something simple or basic but deemed not TCF.Product design is a key when TCF as it can effect several functions within small firms, although this is illustrated with the reports by the FSA, it doesn’t give a true reflection of how much, the implications include marketing strategy, developing product literature & training. Training can mean big change including spending time & cost on making sure employees understand complex products or procedures.The FSA also emphasize the importance of not using Jargon and Financial wording as this can worry & confuse customers. This is important to any organisation as communication with its consumers is key, without this issues are missed and problems occur. Through illustrating how to use words to better effect including abbreviating & simplifying certain words it will help smaller organisations to relate to their consumers and in turn hopefully create a better relationship between them.There is a belief in the industry that with the rising level of complaints, falling customer retention & an alteration in the balance of consumer spending in financial products, it is an obvious feature of TCF that post sale procedures have been highlighted to alert small firms. This is especially an area smaller firms need to look at as complaint could lead to fines which could lead to serious financial trouble.Although it could mean wholesale change, strategically TCF could commercially be for the better. It’s going to directly effect capturing of new customers & retention of previous ones. It brings the need for strong risk management & could help strengthen reputation & show that they can differentiate from other. A clear strategy can gear a company toward a future market & help to become resilient, being better equip to deal with criticism or change. Management adopting these principles, using information management to their advantage organisations will be able to track the progress of TCF & make sure if problems occur then they are prepared.A key starting point for most organisations will be reviewing the literature that has been produced for them to make sure they are ready for the principles take effect; these include assessment tools, case studies & guides. Although these are at items are heavy reading they are informative and a good indication of what’s needed, they can also be understood by all from management to a new comer as they are easy to understand & this will be a huge aid when implementing.The FSA have setup training seminars & a website specifically designed for TCF, they want to make sure that if anyone has questions about TCF then they can be answered with the resources provided without causing problems.Although the principles have been given the date of March 2007 to take effect the timing of the principles has been questioned so closely after the Financial Services authority taking over. Although the FSA has seen the need that these need to be put in place it begs the question as to why the adequate research wasn’t done two years back when the FSA took over to prevent the confusion amongst organisations.Monitoring TCF is a key criticism from small firms as there have been no procedures put in place to monitor the implementation. Whereas larger firms will be able to produce reports and show results overtime, within the smaller firms it’s going to be hard to adhere to the standards set, let alone show results and findings. An issue that is going cause small firm’s problems is the cost to implement new procedures & put systems in place. Larger firms will have the resources to finance what they need to be compliant & could even afford to assign specific people to implement. Cost is likely to impact on processing & delivery costs, it will also be necessary for investments in infrastructure with behaviours in place. This may offer opportunities to develop efficiencies, for example, improved productivity & information management.The introduction of TCF confusion seems to have occurred regarding whether they are a define set of rules or whether they’re a set of ethical guidelines. The principles will bring tension between rules based & principles based, in some ways sitting at odds with its detailed & prescriptive rulebooks. This leaves many firms asking themselves whether practices are complaint or standards, which could lead to several firms slipping up due to not understanding. How come something that is supposed to be helping customers is causing so much confusion to so many?Not paying full regard to these principles there is feeling that any organisation not found cohering will be punished severely with fines or potentially fatal consequences. Following the introduction to the FSA in October 2004 there was very little disclosure of what would happen if nay rules were broken, firms were left wondering the severity until the authority came down hard on them with severe fines, this is little help to management as it leaves them in trepidation as to what they can & cant do in some instances. In approach to the deadline several articles have been published questioning the preparation of smaller firms before the deadline on the 31st March. With only weeks to go it has been estimated that although 75% are looking to implement new procedures, only an astonishing 6% of small firms actual know the deadline date.FURTHER RESEARCH POSSIBLE OUTCOMES - With the new guidelines there could be several outcomes it brings, any realistic outcome is going to take months even years to take effect. It is possible that it could get rid of certain organisations & shows them up for not treating their customers fairly & help customers to understand financial products. There is no guarantee that TCF will do what it intended, its possible it could lead to intermediaries losing money, spending unnecessary amount of time & effort & lose them business due to worry that there not compliant.HOW CAN THE PRINCIPLES BE MONITORED MORE PROFICIENTLY - Looking at this situation it is necessary to look at how the FSA can control & monitor TCF as visiting companies randomly & asking them to show reports could deter organisations.  The principles can be monitored better allowing both the governing bodies to make sure the correct procedures are in place & for the organisation to understand what’s needed might be to have people from the FSA to out on regular sanctioned visits to organisations to highlight key topics, assess current situations & work with each other to find a solution & correct any mistakes. It can be seen that in the industry there is not enough communication between lenders, firms & the authorities and that setting something like this up might prevent mistakes happening & improve the reputation. The lack of communication is backed up by the thoughts of Mike Fitzgerald, the sales director at Brentchase Financial services, stated in Mortgage Strategy magazine he commented ”I don’t think lenders or authorities have stretched themselves in helping the public or brokers understand TCF. Perhaps more will be done in the coming months.” If more isn’t done or ideas are thought of it could have disastrous consequences for smaller firms.  COULD TCF HAVE BEEN DEALT WITH BETTER BY THE FSA & LARGER FIRMS - From the announcement of TCF to the impending deadline there has been a lot of debating as to how the FSA could have handled TCF, although many big firms have supported the initiative throughout as they have the ability to dedicate time & money to the project it seems that smaller firms understandable are struggling to adopt the same philosophy due to there size. These thoughts are ushered by Justin Tomlinson, the marketing director of mortgage broker Mortgage Next who has slated bigger firms & the governing bodies for there approach”The FSA has created a massive communications gap, choosing to directly communicate key messages to larger firms whilst expecting small firms with limited resources to update themselves.”It is important that the FSA & all firms work together on TCF as it seems there will be no solutions with the industry in array.  Ways in which the FSA could have improved would be visiting smaller firms or holding conferences to discuss matter and for larger firms relaying the information gained is key as they have to work with the lenders to achieve results.HOW CAN FIRMS BE MORE PREPEARED - Although a lot of emphasis has been put on the FSA it seems some smaller firms haven’t helped themselves and could have allocate specific time to spend developing strategy for the principles.  Identifying areas for improvement is key and coming up with a timeline was implementing, this is likely to impress the FSA as they are keen to see companies demonstrating TCF before the deadline.In conclusion to the announcement from the FSA regarding TCF it is evident that no solution will be found overnight, it’s clear that the FSA are not happy with the current situation in the industry & trying to make a change before it s to late. This is something the organisations & governing bodies will have to work out to make sure that the goal of TCF is met and ultimately customers have more confidence when choosing financial products. BIBLIOGRAPHYWEBISTESwww.fsa.gov.uk  - Financial Service Authoritywww.tcfinfo.co.ukhttp://www.tcfinfo.co.uk/mepasite/51/Tips_and_Tools.aspxhttp://www.fsa.gov.uk/Pages/Doing/Regulated/tcf/library/index.shtmlwww.moneyextra.com www.bba.org.uk  - The British Bankers Association www.cml.org.uk  - The Council Of MortgagesBOOKSExploring Corporate StrategyFSA Handbook – October 2004, Updated 05,06 MAGAZINES/NEWSPAPAERS Mortgage Strategy MagazineMoney MarketingREPORTSFSA – TCF – What it means for small firms – July 05Mintel – Mortgages UK – March 2006 ReportDISCUSSION REPORT – The responsibilities of providers & distributors