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Customers are provided with products that perform as providers have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect.

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Principle 5: Performance and Service in line with expectations

  

What that means:

 

Just like anything else which we buy on the main street, financial products and services must ‘do exactly what it says on the side of the tin’.

 

It is only fair that if you are told that your investment will deliver a certain amount of interest in a given period, it does just that.

 

This principle covers all types of financial products, from pensions and loans to insurance and bank accounts.

 

TCF involves being clear about what product or service is being provided and the range of possible results and experiences for the customer. Any situation where a product or service could fail to deliver the benefits that the customer was led to expect is covered by TCF outcome 5.

 

The requirements have been concluded from the generic self-assessment questions developed by the FSCA and should, therefore, only be used as a guide for FSP’s to develop their own processes and procedures to ensure delivery of outcome 5.

The responsibility of meeting the expectations of customers under this outcome is the responsibility of FSP and product suppliers. However, management must ensure that third parties and representatives inform the customer of the product terms and conditions as well as terms of service without creating unfair expectations.

 

The products provided to customers should perform as FSP’s, third parties and representatives have led them to expect. Customers should be alerted to the risks of actions and non-action on their part, including early termination of a product, non-payment of contributions and failure to review insurance needs. Processes must be in place to mitigate the risks to customers where it becomes clear that products are not performing (or are unlikely to perform) as the customers have been led to expect.

 

It is imperative that FSP’s closely monitor environmental, regulatory, and economic developments that could impact the extent to which products will meet customers’ expectations.

 

The onus is on FSP’s to check product performance before offering them to customers. The FSP must conduct feedback assessments in terms of whether the products are suited to what it was led to be believed.

 

The second part of the outcome stipulates that the associated service should both be of an acceptable standard and what customers have been led to expect.

Clear service standards must be in place for customer services, and the standards should be tested regularly to determine if they are in line with customer expectations. The FSP must also give feedback to third parties about their services to ensure that areas not adhering to the standards are corrected.

FSP’s must have procedures to deal with errors promptly and provide redress as soon as possible.

If the financial services provider makes use of third-party providers, it is essential that agreements stipulate who is responsible for customer service delivery and the standards that must be adhered to must be adequately defined. For instance, response turnaround time on queries must be clearly defined, for example 1 business day.

 

Processes must be in place to protect the confidentiality of customer information. The General Code of Conduct stipulates that a financial services provider may not disclose a customer’s confidential information without the customer’s written consent unless disclosure is required in public interest or the terms of the law. This requirement also applies directly to third parties and representatives.

 

FSP’s are required to have management information mechanisms in place not only on customer satisfaction but also on customer expectations and how the financial services provider meet these expectations. This requires that the financial services provider must have full and unrestricted access to information held by the third parties.

 

The mechanisms may include the analysing of the following behaviours of customers to identify risks that products or services are not meeting expectations created:

 

• Product retention
• Product switching
• Early termination

 

Processes must be in place to mitigate the risks to customers where it becomes apparent that products and services are not performing or are unlikely to perform as they have been led to expect.