Treating Customers fairly principles require building a culture of caring for every customer
Organisations that have caring for customers at the heart of their businesses are more likely to take into account the experience of the customer, and take steps to address any elements that drive poor outcomes. They take time to identify the cause of the customer’s poor experience, whether it comes from the product’s contractual terms and conditions (T&Cs), poor communication or poor implementation and take steps to fix them.
Organisations that do not have caring and TCF principles at the heart of their business are more likely to rely on strict compliance with contractual T&Cs hoping that this automatically results in a fair outcome for the customer. Unless we pay attention to the customer experience we can miss drivers that lead to poor outcomes, and end up being non-compliant.
This is particularly important with existing customers where they have signed a pre-TCF set of terms and conditions and the organisation feels it is entitled to apply these conditions, regardless of the resulting outcome. TCF compliance requires organisations to treat all customers fairly – not just those that sign up after the implementation of the Treating Customers Fairly principles. It is important to apply TCF principles is all areas of the organisation including: strategy, governance and oversight, remuneration, recognition, reward and performance management.
Are you paying more attention to new customers than existing ones? Applying TCF principles effectively requires us to care for every customer, not just those we are trying to attract.
Putting the Treating Customers fairly principles into practice
- Do you value new and existing customers in the same way? Treating customers differently based on how long they have been with your organisation increases your risk of non-compliance.Are your new and existing customers both considered when making strategic decisions? Best practice is to take into account both new and existing segments of the business when considering potential strategies, providing a more focused strategic direction for each.
- Does your culture allow you to challenge the strategic decisions made in relation to both existing and new customers? Our culture is created out of what we do every day, the conversation and actions that are “accepted” or encouraged. This accepted way of doing things plays a key role in shaping the outcomes experienced by both new and existing customers. Do you pay attention to (and test) the experience of all customers – or just focus on what you are contractually obliged to do? Understanding the differing needs and experiences of these two types of customers can help us remain competative, while meeting compliance requirements. Documenting this understanding can also help us evidence our compliance to the 6 TCF principles to the regulator.
- Are historic products reviewed regularly to ensure that they now deliver on the 6 TCF outcomes? Organisations that regularly assess customer’s experiences with historic products find it easier to craft new TCF compliant products, and evidence that they are committed to looking out for their customer’s best interests.
- Do you place too much weight on your terms and conditions when customers complain? Too much reliance on contractual terms and conditions can produce unfair outcomes, particularly when dealing with customer communication, complaints or claims. Are we communicating relevant information timeously or just what the terms require? Placing too much emphasis on T&C’s can inadvertently create two different classes of customers: existing customers (on terms that may no longer be considered ‘fair’ into today’s TCF context), and new customers (on more favourable terms TCF compliant terms).
- Do your customer communications effectively engage existing customers? For full TCF compliance understanding and recording why we do things is probably just as important as what we do. Does your communication strategy ensure you are sending the right messages at the right times, throughout the product life cycle, to help meet expectations and give customers the information they require? Being able to show why you send certain communications at certain times will also form part of your TCF audit trail for the regulator.
- Do you have a strategy to find existing customers who may have lost contact with you? Customers who have lost contact with you are not receiving all the relevant information they require in order to make informed decisions. Organisations need to have an effective approach in place to trace ‘lost’ customers to ensure they are able to communicate effectively with all of their long-standing customers.
Treating Customers Fairly principles require us to identify potential drivers of poor customer experience, and take conscious steps to correct them across the value chain.
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