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Deliver on the promises

To be sure, if that&#39s where you want to be going, you don&#39t want to be starting from here.

Or put in the context of the UK financial services industry, if firms want their customers to believe what they say and have confidence in what they do, there needs to be a lot more time and effort spent delivering what has already been promoted.

To this day, I struggle with the quote that I read in the FT last year from a director, who in an attempt to justify his company&#39s patent failure to meet client expectations, explained that the contract had comprised a guarantee not a promise.

If the image of this industry has taken a battering over recent years, it is unlikely that it is because it has become more corrupt – after all, many of the practices for which it is increasingly criticised have been in place for decades.

But gone is the era when consumers knew their place, now they know their rights and make demands. In common with most other industries and professions, the financial services industry now finds its reputation much more vulnerable than in the past.

Banking, pensions, insurance, investment and mortgage businesses may be different to those in the know, but, for the majority, they are much of a muchness.

For this reason, financial services suffer more than most from the threat of contagion. A scandal in one financial sector has immediate adverse implications for others, not least because some of the big brand names straddle much of the market spectrum.

But customers need financial services and, often, as they see it, have no choice but to make do with what is on offer. If they do not make the effort to shop around it is because the task is too daunting. If they do not choose good quality products and services over poor, it is because it is seldom possible to tell the difference until long after the original purchase, by which time it is too late.

Every day the number of disillusioned clients and customers who have bought products that have failed to live up to their advertising promise increases.

If you were sold a pension contract that could never have matched up to the one you were encouraged to discard or you bought a high-risk investment that you had been told was safe, there is scope for compensation.

But other “victims” have fallen into more complex webs, where the “letter” of the promotion may well have been accurate although, to the non cognoscenti, the spirit of the contract was far from clear.

This conduct inevitably taints the image of all financial services. The poor publicity may start at the front door of a single firm but it spreads to others with similar products, similar names.

Needless to say, however unfair and ill-founded some of the accusations, the damage can be irreparable. Existing customers will be put off buying more from the same company, they may transfer what they already have, worse still, they may disinvest and not come back, warning friends and family of a similar fate.

Yet the Government has an explicit need to encourage people to provide for their own future financial security.

If it or the regulator has to step in, no matter how good the intention, the result is often costly and impractical regulation that does little to enlighten or protect the consumer. More often though, there is a political agenda and this industry has a very large, soft underbelly making it fair game for pre-election vote-winning campaigns. I can hear the knives being sharpened already.

Anne McMeehan is a director at Cauldron Consulting

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