Keynote introduction The significance of the TCF initiative

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Keynote introduction The significance of the
TCF initiative
Rob Devey Managing Director, HBOS Financial
Services
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Context Three Inter-related initiativesThematic
Work 2008/9
Retail Distribution Review
Financial Capability Programme
Treating Customers Fairly
Access and Understanding
Market Effectiveness
Fair Outcomes
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Context Six Inter-related consumer
outcomesLinking Providers and Distributors

• Culture of organisation allows customers to be
  confident they will be treated fairly
• Products/Services meet needs of customer and are
  targeted accordingly
• Clear information clients informed before,
  during and after sale opportunity to ask
  questions
• Advice is suitable
• Products perform as clients have been led to
  expect associated services are acceptable
• No unreasonable barriers to change product,
  switch provider, or make a complaint

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TCF - Overview
MANAGE PEOPLE
T C F
SET CLIENT EXPECTATION
DELIVER SERVICE
Well-managed businesses will only find a small
number of areas that may require change but
EVIDENCE is essential
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Key Dates, Deadlines and Progress Milestones
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March 2007
March 2008
Development of Management Information
TCF Implementation Plan
Identification of Key Issues
Process Review
Client related MI
Gap Analysis
Client Survey
December 2008
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By end March 2007 the FSA expected

• Basic staff training on TCF
• 1st stage Gap Analysis undertaken
• Key Issues identified
• Written and communicated TCF Plan
• Action Plan in place to deal with TCF key issues

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. and from March 2007

• Action Plan being implemented
• Progress review against milestones in the action
  plans
• Evidence of measurable change consumer outcomes
• Increased use of Management Information
• Structured staff training and development to
  support the enhanced client outcomes

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By end of March 2008 FSA expected firms to
demonstrate effective TCF MI

• 13 of firms assessed met the March deadline
• FSA believe that with substantial effort 80 of
  firms will meet the December deadline
• Examples of good practice
• Strategy consistent with fair treatment of
  customers
• Well constructed and easy to interpret MI owned
  by Senior Management
• MI incorporated into existing governance
  structure and driving the identification and
  resolution of customer fairness issues
• Fair treatment of customers written into personal
  objectives at all levels
• Firms listened to, and acted on, feedback from
  customers

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By the final deadline it is expected that firms
are able to demonstrate that .
TCF is being integrated into their business
culture The appropriate MI and measures are in
place to test whether they are treating customers
fairly (including delivering the six TCF
outcomes) The MI demonstrates consistently
treating customers fairly and delivering on the
consumer outcomes There are processes in place
that monitor the MI to enable the right people to
take action
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HBOS Implementation of TCF
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HBOS Interpretation Customer Contract

• Applies to all brands
• To provide positive outcomes for clients
• Brings the client outcomes to life for the
  business
• Gives meaning to TCF at the personal level
• Provides the principles to support business
  decision taking and day-to-day operations

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HBOS Customer Contract - how does it work?
Annual Product Review at the core of Customer
Contract, incorporating MI from across the
product life cycle
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Developing policy, actions and MI around the 6
client outcomes is key Outcome 1

• Consumers can be confident that they are dealing
  with firms where the fair treatment of customers
  is central to the corporate culture
• Senior management engagement
• Performance assessment encourages TCF
• Remuneration linked to expectations and accounts
  for quality (e.g. advice, complaints etc).
• Staff opinion survey covers views on TCF

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Developing policy, actions and MI around the 6
client outcomes is key Outcome 2

• Products and services marketed and sold in the
  retail market are designed to meet the needs of
  identified consumer groups and are targeted
  accordingly
• Analysis of retention indicates high levels of
  persistency and the reasons for cancellations do
  not indicate TCF issues
• There is an expected profile of customers for
  each product that is compared to the actual
  profile this is reviewed and tracked over time

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Developing policy, actions and MI around the 6
client outcomes is key Outcome 3

• Consumers are provided with clear information
  and are kept appropriately informed before,
  during and after the point of sale
• Customer experience including documentation is
  developed and maintained in collaboration with
  Customers via customer focus groups

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Developing policy, actions and MI around the 6
client outcomes is key Outcome 4

• Where consumers receive advice, the advice is
  suitable and takes account of their
  circumstances
• quality of advice is assessed to ensure very low
  levels of advisory failure
• the expected and actual mix of advised sales is
  assessed to spot potential issues of sales bias
• the expected and actual percentage of
  recommendations made for products that do not
  attract commission is reviewed at Adviser level

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Developing policy, actions and MI around the 6
client outcomes is key Outcome 5

• Consumers are provided with products that
  perform as firms have led them to expect, and the
  associated service is of an acceptable standard
  and as they have been led to expect
• Annual product reviews assess the existing
  products to ensure they are meeting Consumer
  expectations
• Development of new products is consumer lead via
  detailed research and customer forums

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Developing policy, actions and MI around the 6
client outcomes is key Outcome 6

• Consumers do not face unreasonable post-sale
  barriers imposed by firms to change product,
  switch provider, submit a claim or make a
  complaint
• The use of penalties and lock-in periods are
  assessed as fair to the customer and then
  reviewed regularly
• The route to the provider is clear via numerous
  communication methods

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Quant and Qual Evidence Senior Management and
Customer Involvement

• Board Review of TCF MI including the green
  indicators!
• Monthly Sampling complaint letters and individual
  ownership of some complaints
• Observed interviews and call listening across all
  channels
• Calling detractors and promotors
• Development, implementation and communication of
  TCF plans accountability and oversight
• Customer panel made up of practitioners to review
  new literature and monthly sample of satisfaction
  questions on outcomes

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Summary

• TCF is core to FSAs agenda and is here to stay
• Increasingly the lens for all supervisory
  activities
• Firms response must be led from the top
• Outcomes are everything, evidence is key
• TCF can be a competitive weapon