Reviewing the various comments from interested parties about the ongoing review of the regulation of mortgage business, it seems a common objective is lacking. Some are focused on the costs of the new proposals while others either seek to give their own business a competitive advantage, carve a role for their area of expertise or use the changes to generate business opportunities. Sadly, none of these objectives has much to do with the real purpose of regulation – to treat the customer fairly.
The Chartered Insurance Institute’s charter makes clear that a key part of its role is “to secure and justify the confidence of the public”. This focus on serving the public through technical expertise and ethical behaviour also serves the interest of our sector by building a reputation of professionalism.
The FSA has a similar objective to encourage public confidence in financial markets. Its long-standing treating customers fairly initiative gives prominence to the way in which the FSA believes firms should interact with clients.
It has become obvious that some groups are not willing to embrace a set of high-level require-ments and so the FSA has developed detailed rules and procedures.
Having proper regard for customers is not optional. Across all commercial sectors, consumers are now king. Whether in manufacturing, retail or services, the winning firms and individuals are always those who can clearly demonstrate the importance of customer satisfaction.
The financial services sector is no different and there are worrying signs that many lessons have still to be learnt and subsequent improvements made.
Customer dis-satisfaction can be monitored by the volume of customer complaints and figures published by the Financial Ombudsman Service make for depressing reading, particularly as these represent only those customers who have been unable to resolve their issues directly with a firm.
There can be little doubt these numbers are representative of significant problems for many firms. The number of customer complaints has become so significant that it has encouraged an ancillary industry of third parties – often referred to as ambulance-chasers – who, in turn, generate even higher volumes of dissatisfied people.
To enjoy a success-ful and healthy relationship with clients, financial services must provide the range of services customers need. Customers must have complete trust in these services and products, whether it is insurance, savings, loans or money transmission.
Not only must the products be fit for purpose and competitive but the customer must also be confident the product and the provider will deliver adequately throughout the term of the contract.
Ideally, customers should feel they would like to develop an ongoing relationship with the product provider and believe the firm values the customer in a similar way.
To rebuild this scenario, firms and individuals must play their part and not rely solely on regulation.
Richard Fox is chief executive of the Chartered Insurance Institute’s Society of Mortgage Professionals