Can you prove your client commitment to the FCA?
It’s no longer enough to know you have your clients’ best interests at heart, you have to be able to demonstrate it in a format that the regulator can observe, says David Carrington, marketing director, Personal Touch Financial Services
Much has changed since 2006 when the FSA published the first ‘Treating Customers Fairly’ document outlining the regulator’s expectations and the need to ensure ‘customers interests are at the heart of how firms do business’. In recent years we have seen the introduction of substantial new regulation and the arrival of a new regulator but all the predictions of devastation to the regulated advice sector have fortunately been proven wrong.
Likewise the scaremongers who saw both the ‘restricted’ label and the restricted business model as a threat to an adviser firm’s survival have been forced to eat their words, with most networks now having realised it was actually a smart route to have taken and followed suit to some of their smaller competitors who led the way.
What unifies the adviser sector now, regardless of status, is the need not just to pay lip service to consumer focus in attractive marketing leaflets but also to actively demonstrate and provide evidence of the commitment in a format that the regulator can observe.
The only way to run a business
As some recent and rather shocking examples have shown, Wonga being one of these, the failure by any financial services company to adequately demonstrate complete consumer education, satisfaction and transparency across the whole business process can prove a very expensive mistake indeed. Whether it be motivated by lower insurance premiums, regulatory costs or simply risk reduction, all financial services firms must now realise that the biggest form of protection a business can take is by putting clear and robust customer-focused processes in place. But the predominant reason for doing this has to be simply because it is the only way to run a business – and there are two examples from the FCA that make this point very well.
Firstly, the FCA has made it clear that putting the customer first transcends all commercial interests. If you can’t do so and make a profit the regulator highlights your only option is to exit the market without damaging the integrity of the market.Secondly, taking a direct quote from Clive Adamson, FCA Director of Supervision, in a speech earlier this year: “the fair treatment of customers is not something that can be reduced to a risk to be managed”. In other words it has to sit above all other considerations.
Putting this into practice in a demonstrable form means ensuring clients are encouraged and motivated to give feedback and further to this, that this information is used positively and proactively to help mould services to meet their changing needs. Using technology, social media, email marketing or a combination of all three can be an easy and efficient way to begin the process but demonstrating that the voices have been heard and changes made as a result are equally vital.
Risk reward is a phrase not often used now in a regulated arena but in this context it is one which is extremely relevant. Taking the risk out of an adviser business is now the only route to achieving rewards and by protecting your firm you are also giving clients the protection they need.
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