No longer a ‘nice to have’, the scrutiny and fines applied by the FCA in 2014 demonstrate that Treating Customers Fairly (TCF) is not a measure that an operation can afford to get wrong in 2015.
The concept of TCF was first launched in 2008. In 2013, it became a key principle at the heart of the Financial Conduct Authority’s (FCA) mandate.
The FCA continues to challenge the industry to improve monitoring and delivery of TCF with an evidenced based outcome approach, but embedding TCF is not always easy. You just need to look at recent press reports to confirm that some businesses still haven’t got it right after all this time.
Towards the end of last year an organisation was fined over £4m by the FCA for failings in its approach to the treatment of delinquent mortgage customers in financial difficulties. Another organisation was recently fined for a “sales focused culture” that did not treat customers fairly.
Despite TCF being around for several years, it is still a relatively new concept in some industries. Utilities regulators, for example, are urging their member organisations to follow the FCA’s lead on TCF. Some have really embraced the concept but others are seriously lagging behind.
So how do some companies get it right whilst others don’t? The key is to remember that the FCA knows the difference between an organisation that laminates TCF and one that lives it deep in their culture and operational strategy.
Investing in wall art and signage – ok, so it is visible on the floor, all staff can see it, they even probably understand it and have had lots of meetings about it, but are they living the values or are they laminating them?
TCF is more than words on a poster. It is a way of life, fully embedded and continually assessed as being effective and related to customer outcomes. It is a good way to do business, and the right way to do business.
Evidencing the ‘personal’ side of your business
Within Collections & Recoveries, operational efficiency should be supported by a good customer experience. It is essential to achieve this balance – and in doing so you can’t have a one size fits all approach to dealing with customer affordability and vulnerability.
Real TCF is about empowering colleagues to deliver a high quality customer experience. How? By understanding how the company values are operationalised at the coal-face. That staff receive appropriate up-skilling and training; they listen, nurture and engage customers – gathering facts so that each outcome is consistent with that customer’s particular circumstances.
In order to provide an evidence-based approach to the Regulator, appropriate TCF training, controls, monitoring and robust MI must be in place to ensure that colleagues are not only empowered to deliver but actually do deliver. If it goes wrong (and sometimes it will), the business must be agile enough to provide immediate and individual support to colleagues to rectify this, with rapid resolution with the customer.
The same rigour around controls and monitoring should also be applied to operational strategies and processes.
The right MI will help you measure performance against:
- Your firm’s stated objectives in relation to TCF
- Internal service standards you’ve set that are relevant to TCF
- FCA rules/standards that aim to protect the interests of customers
All companies, both large and small, must have a robust TCF framework, including clear policies and procedures and tight controls and monitoring. This, combined, with highly skilled, emotionally intelligent front line staff will help your business prove that it treats customers fairly.
The right approach at the right time can keep customers loyal for the life of the relationship. Delinquency, financial distress and vulnerability can all be temporary.
The customer should never stop being a customer and whether signing up for that loan at the front end or ending up in recoveries at the back-end, TCF and company values should not be forgotten.
Scott Penman is a Senior Consultant with Arum specialising in operational strategy and EQ (Emotional Quotient) training for Collections & Recoveries staff.