Treating Customers Fairly (TCF)

Financial
Services
Board
Treating Customers Fairly
(TCF)
Presentation for the South African Underwriting
Managers Association (SAUMA)
Annual Conference, May 2013
By: Leanne Jackson
Head: Treating Customers Fairly
Financial Services Board
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Agenda
Treating Customers Fairly
• TCF and the regulatory framework
• The 6 TCF Outcomes
• TCF considerations for underwriting managers
• TCF and binder agreements
• Roll-out of the TCF framework
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TCF and the financial regulatory
framework
Treating Customers Fairly
• National Treasury published its policy position for financial sector
regulation in “A Safer Financial Sector to Serve South Africa Better”
(The “Red Book”) with the Feb 2011 Budget Speech
• Policy objectives: (1) Financial stability (2) Consumer protection
and market conduct (3) Expanding access through financial
inclusion (4) Combating financial crime
• Shift to “twin peaks” regulation – prudential regulation under SARB
and market conduct regulation (including banking conduct) under
FSB
• Financial Regulatory Reform SC (NT, FSB, SARB) has published
Twin Peaks Implementation document on 1 Feb 2013
Implementing TCF will be a key component of the FSB’s enhanced
market conduct mandate
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The 6 TCF outcomes
Treating Customers Fairly
1. Customers can be confident they are dealing with firms where TCF is
central to the corporate culture
2. Products & services marketed and sold in the retail market are designed to
meet the needs of identified customer groups and are targeted accordingly
3. Customers are provided with clear information and kept appropriately
informed before, during and after point of sale
4. Where advice is given, it is suitable and takes account of customer
circumstances
5. Products perform as firms have led customers to expect, and service is of
an acceptable standard and as they have been led to expect
6. Customers do not face unreasonable post-sale barriers imposed by firms
to change product, switch providers, submit a claim or make a complaint
These outcomes are to be demonstrably delivered throughout the
product life cycle, from product design and promotion, through advice
and servicing, to complaints and claims handling – and throughout the
product value chain.
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Treating Customers Fairly
General TCF considerations for
underwriting managers
• Are you clear about your TCF responsibilities - at all
times – vs. those of the insurer, broker, other service
provider?
• Are customers clear on this too?
• Who is responsible for TCF in your firm? Have your staff
been trained on TCF?
• How do you measure TCF delivery?
• How do you take TCF into account when deciding
whether to act for an insurer?
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Treating Customers Fairly
TCF considerations for underwriting
managers: Outcome 2 (Product design)
• What is your role in product design – is it “your”
product or the insurer’s? Are you and the insurer
giving a consistent message?
• What do you do to ensure the product design meets
the needs of identified customer groups?
• Do you monitor whether products actually reach
their intended markets?
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Treating Customers Fairly
TCF considerations for underwriting
managers: Outcome 3 (Disclosure)
• Do you develop disclosure material, or use material
developed by the insurer? In either case, do you test it for
clarity and appropriateness?
• What do you do to ensure customers get information
(including post-sale information) when they need it?
• Are you confident information is adequately accessible to
customers and brokers?
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Treating Customers Fairly
TCF considerations for underwriting
managers: Outcome 4 (Advice)
• In practice, who “owns” the relationship with advisers – you
or the insurer?
• What responsibility do you accept for ensuring advisers have
adequate product training?
• Do you insist that the insurer provides your staff and / or the
advisers with product training?
• What do you do to mitigate risks for customers if you become
aware of inappropriate advice?
Non-mandated intermediaries of course have more direct
responsibility for this Outcome
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Treating Customers Fairly
TCF considerations for underwriting managers:
Outcome 5 (Delivery on expectations)
• Are customers clear on the service standards they can
expect in relation to your functions?
• Do you have the necessary controls in place to ensure your
binder activities in no way compromise fair treatment of
customers – whether by you or the insurer?
• What level of feedback do you give insurers and brokers on
their products and service?
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Treating Customers Fairly
TCF considerations for underwriting managers:
Outcome 6 (Claims, Complaints, Switches)
• Where you handle claims, have you tested your process
from a TCF perspective?
• Do you have a review process in place to test the fairness of
repudiations?
• Do your claims service standards focus on more than just
turnaround times?
• Do you analyse and act on complaints for TCF purposes?
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Treating Customers Fairly
TCF aspects of implementing binder agreements
In addition to the general TCF considerations discussed, binder
relationships have specific TCF implications:
• Is your binder fee reasonably commensurate with your
binder activities? Is it clear what activities are covered by the
fee? Is there a risk that the value chain is carrying multiple
costs for the same activities, to the detriment of fair pricing?
• Does your data provide sufficient management information
for you and / or the insurer to measure delivery of TCF
outcomes?
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Treating Customers Fairly
Roll-out of the TCF framework
• TCF Regulatory Framework SC has carried out a gap analysis of a wide range of
existing consumer protection legislation
• Final TCF self assessment tool has been issued for industry use – to be regarded
as regulatory guidance
• A TCF baseline study is in progress – involves a range of FSB regulated sectors
(including binder holders), plus banks (approx. 100 groups, 250 questionnaires).
Findings will be published.
• TCF reporting requirements and indicators – for both regulatory and public
reporting – to be developed
• Key sub-projects: Key information documents; complaints handling, reporting
and categorisations; planned review of insurance claims handling practices
Not all elements of the TCF regulatory and supervisory framework require
legislative amendment. A number of elements can be – and are being - rolled
out within the existing regulatory framework
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Treating Customers Fairly
Thank you
Questions please?
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