TCF requires financial services providers to consider their treatment of customers at all stages of their relationship with the customer, from product design and marketing, through to the advice, point-of- sale, and after-sale stages. Financial services providers are ultimately required to demonstrate, through management information and monitoring, that they are consistently treating customers fairly throughout the stages of the product life cycle to which they contribute.

 

Product lifestyle cycle

 

The FSCA defines the product lifestyle cycle as follows:

• Product and service design
• Promotion and marketing
• Advice
• Point-of-sale
• After-sales service
• Complaints

Products and services should be designed and developed for specific target markets, based on a clear understanding of the likely needs and financial capability of each customer group. Products and contracts should be frequently reviewed with the use of management information to assess the fairness of these, for example the claims success ratio of insurance products.

 

When designing a product, it must be ensured that the design does not defeat the purpose of the product. For example, funeral policies are designed so that cover terminates at age 65. For those who live to this age, cover terminates when they need it.

 

One-way financial services providers may test the fairness of a new product is to test the product with customer groups representative of the target market and make the necessary changes to the product should it become evident that the product does not meet the intended fairness outcomes.

 

Employees must suggest changes to products if they will feel that it will offer customers a better service and/or a better deal.

 

Promotional material should adhere to the following stipulations:

 

• Be clear, fair and not misleading.
• Enable the customer to balance potential reward against risks.
• Target the appropriate audience.

 

What might be considered suitable product targeting and clear information (and therefore TCF) for one set of customers may not be true with another.