[The Wrap] The word on good customer outcomes from the top
A couple of weeks ago I wrote about how there is a lack of clarity around what a good customer outcome looks like. Since then many people have commented.
Friday, September 13th 2019, 4:38PM 
2 Comments
It's increasingly clear this isn't something which is prescriptive or binary.
Rather. it's a subjective thing which no doubt will get tested in court sometime.
This week, at the Financial Services Council annual conference, FMA chief executive Rob Everett made a few things clear. The first is good customer outcomes is not something which is defined by law or regulations. It's doing the right thing.
The second is that it's not up to the regulators to define good customer outcomes - it's the institutions.
Here's a pithy piece from his speech:
Good conduct is up to you. Given what we’ve all seen in other countries, I have to ask why you are waiting for us to come knocking – look at what we are saying, and think about how it applies to your business. I’ve been talking since I started in this job about putting customers at the heart of your business model, about moving beyond compliance to serving the needs and interests of your customers. Yet still, I get asked – ‘what do you want us to do’.
Some of you may simply be hoping we’ll shut up and go away or are waiting for a law change to ensure a level playing field with your competitors. Your response is ‘we can’t or won’t change on our own – you need to make us change’. I would warn you to be careful what you wish for.
The Financial Markets Authority responded to The Wrap saying it did some work around customer outcomes in its recently published Strategic Risk Outlook ( SRO) and the Annual Corporate Plan. (While useful the readership of these documents is probably similar to that of Product Disclosure Statements and the like).
The regulator says that serving the needs of customers means financial service providers focus on:
- treating customers fairly in all interactions
- recognising and prioritising the interests of customers and effectively managing the conflicts of interest that arise
- giving customers clear, concise and effective information
- designing and distributing products that are suitable, work as expected and as represented, and are targeted at appropriate customer groups
- ensuring adequate after-sales care, including complaints and claims handling, and not imposing unnecessary barriers to switching or exiting a product or service
- effectively monitoring their own conduct, and where relevant the conduct of suppliers and distributors, to ensure they can identify, rectify and learn from mistakes.
It helpfully says that the above list is neither extensive nor comprehensive; "It was drafted to help providers focus on key areas that will help serve their customers," they say.
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at the next market correction, the outraged will say "who are these cowboys that told us to move from default funds? I've lost money! It's a disgrace!"
I know we all have polished arguments to say that people should be prepared to cope with ups and downs - but when it actually happens, all of that flies out of the window. It really does.
Advisers run for the hills and the media will go with the angle that creates the most outrage.
Why on earth would the FMA want to be involved in that?
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Cut the default funds to 2 billion. Have 66% of population understand , the importance of qualifications.
And be the catalyst for the recruitment of 1500 advisers , so in ten years time they can provide advice for the $200 B of funds invested in kiwisaver