Examples - Outcome 4
Where consumers receive advice, the advice is suitable and takes account of their circumstances.
Example 1
An independent financial adviser assesses the quality of its sales and advice process
For each of the six TCF Outcomes, a sizeable firm of financial advisers sets out the MI it uses to track its TCF performance. For TCF Outcome 4 the firm has a number of measures, including:
- Monitoring the external environment for potential impacts on the firm and its customers such as regulatory issues. This assessment includes updates from the FSA on TCF and describes any actions required by the firm to maintain fair treatment of customers;
- An internal review process to assess the quality of advice, carried out independent of the individuals being reviewed and that includes analysis at branch level;
- Results of the process for monitoring of the quality of sales including volumes which did not meet required standards, failure reasons and actions needed to make improvements;
- Training and competence measures to ensure that ongoing assessments are carried out;
- An assessment of complaints; and
- A record of ex-gratia payments that have been made and that arise from the sales and advice process.
This information and the accompanying analysis are presented to the executive team and board on a regular basis. A red, amber, green (RAG) approach is used, with green meaning that the MI is effectively monitoring if TCF is being delivered.
Comment:
The firm has made efforts to use a broad range of measures to assess if it is achieving TCF Outcome 4 using a mix of TCF process and TCF Outcomes. Some of these indicators may also provide insight into other aspects of TCF, for example the firm's culture (TCF Outcome 1). However it is using its RAG approach to assess the effectiveness of the measurement rather than the delivery of the TCF Outcomes. A second RAG or a similar system to reflect this should be considered, which tracks the actual impact on consumers and the outcomes they experience.
Ensuring adviser quality is maintained may support the retention of advisers in the longer term and may enable the firm to more easily position itself as a high quality, professional intermediary.
Example 2
A mortgage lender checks the quality of sales made
A lender carries out case reviews to assess the quality of advice provided. A sample of advised sales and non-advised sales are monitored. This is done on a quarterly basis and asks:
- Is the mortgage affordable?
- Is it suitable based on the client's circumstances and needs?
- Is the documentary evidence in place (i.e. a copy of the Key Features Illustration, the offer document etc.)?
- Is the sales person suitably qualified and are training and competence up-to-date?
Comment
The firm should ensure that a suitably qualified and experienced team is used to carry out the reviews. The results of the analysis should be summarised and lessons learned should be communicated by senior management to the wider advice teams. It should be clear to the sales advisers that senior management fully support the process. The analysis and reporting should be set up as a continuous process.
The firm may also want to measure the commercial benefits arising from delivering better quality advice. These may include more durable customer relationships and more referrals from existing customers.
Other examples
- Outcome 1 - Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture
- 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
- Outcome 3 - Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale
- Outcome 5 - Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect
- 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