Treating Customers Fairly – it’s not compliance, it’s just good business
The South African financial services sector has increasingly seen the introduction of regulation that includes various measures aimed at protecting consumers of financial services and products. Treating Customers Fairly (TCF) is no different, aiming to ensure that clearly articulated fairness outcomes for financial services customers are demonstrably delivered by regulated financial institutions.
The further intention of these specific outcomes is to ensure enhanced transparency, improved customer confidence and that client-appropriate financial services and products are supplied in a sustainable environment.
While generally perceived as a burden within the industry, TCF has become synonymous with complaints of “over-regulation”, “stifled growth” and “massive costs.” However, when one examines the inherent logic within TCF, it is not so much a burden as a real competitive advantage for those companies that pay it more than lip service.
The inherent logic of TCF is that the best companies will do the right thing automatically, not because of consumer protection regulation but because it is good business. A company that engages actively with its customers through all available channels, treats them fairly and provides them with products and services (which meet their needs) is simply pursuing competitive advantage by doing business well.
In this regard, what the regulator understands as fairness outcomes may be better articulated as another important cog in a “new” customer-care paradigm and an important communication link in the insurance supply chain.
More than compliance, the industry is being asked to relook at their customer value and supply chain in an effort to understand their customers’ needs; design products which meet those needs appropriately and are consistent with the customers’ risk profile and risk appetite; and provide those products at a reasonable and transparent price. This essentially means providing products and services of both quality and fairness to consumers.
In this context of customer fairness and quality, the words of Peter Drucker, who is widely considered the father of modern business management, ring true: “Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money… this is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality” – and perhaps nothing else constitutes fairness like real product and service quality.
In a market that relies on brokers and other third parties to provide products and services to customers the applicability of TCF may not be immediately clear. For this reason Etana is currently looking to the Etana Academy to help provide training and support on TCF to brokers, insurers and Etanans alike.
In the interest of good business as well as fair and quality service the argument about who owns the customer becomes increasingly redundant when the insurance company works alongside the broker to present quality products and information to the end customer.
TCF is more than a compliance exercise; it is about balancing insurance industry priorities, customer values and supply chains to help each and every market participant improve the quality, value and fairness in all the products and services they provide. At the heart of these goals is not compliance… it’s just good business.
Greg Scott is the Etana TCF Champion and represents Etana at the SAIA TCF sub-committee.