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Protect and thrive

In 1964, IBM were selling a model 1620 computer which boasted 64k of memory. “Who would ever need more memory than that?” My word, haven’t things changed.

More important, IBM found that there was no short-age of consumers for whom the IBM machine provided a solution to their needs. Maybe they would feel less satisfied with a similar product today. Indeed, it is unlikely that the manufacturer would find any market.

The rather obvious lesson that this example demonstrates is that the standards that will satisfy a customer today are unlikely to be either acceptable or appropriate in the future.

The question that has to be considered is how often service levels and product features should be reviewed to ensure that the provider stays ahead of the game? Sadly, we can all think of examples where customer dissatis-faction is rife before action is taken and then it is frequently too late to salvage reputation.

The only way to stay ahead is for improvement to be a continuous process based on two truths. First, that the compet-ition will not stand still and, second, that the consumer, our customers, will have increased expectations.

The other factor is that we have to consider the totality of our offerings and to recognise that we will frequently be judged by the quality not of our primary product but of the secondary services that we provide.

The recent FSA review of the sales of payment protection insurance is an example of where a significant percentage of mortgage providers reviewed were found not to have been meeting the required standards of selling practices and compliance, particularly for the sales of single-premium products.

When payment protection was introduced, it simply provided an insurance product that was linked to a defined liability. It gave borrowers and lenders a level of comfort that had not previously been enjoyed. As always, things have moved on and the product is now better understood by the provider. It is more complicated and therefore harder for the adviser and the customer to understand. Again, we have a case where previous levels of knowledge and the quality of service providedhave to be reviewed in the light of the current situation.

PPI is certainly an appropriate product for many clients who take out a mortgage and the Government has in the past encouraged the promotion of the product as it acts as a buffer if the client falls out of paid employment. That said, all the usual issues of suitability have to be considered and the downside of single-premium products should always be explained to the customer.

The key message is that PPI products need to be taken seriously and given the same degree of attention as the mortgage product. Advisers should ensure they have a full understanding of what the product does and does not do and should alsoregularly review the market to ensure their recommend-ations meet all the suitability requirements.

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