Satisfaction or Fairness?

Tuesday, 12th October 2010 15:55 - by Resident IFA

We had a Financial Services Authority (FSA) ‘Treating Customers Fairly’ (TCF) telephone assessment today. The plethora of TLA’s (Three-Letter Abbreviations!) aside, it was an interesting experience. The interviewer started off by asking if we knew the difference between a satisfied Client and a Client treated fairly. Luckily, I am quite aware of this…although it was a good opening gambit. You can easily have a Client who is initially satisfied with the product recommendation/advice given to them. Sometimes this is because they effectively ‘know no better’ i.e. they rely on, and judge their happiness on, the limit of information given. I perceive fairness as letting the Client ‘into my world’. By that, I don’t mean providing superfluous or vast amounts of information to make their head spin. Rather, enough to make the oft-quoted ‘informed choice’. A good recent example is a Client seeking my advice on investing a substantial sum of money. I gave them an insight into how the Financial Advice industry is changing between now and 1st January 2013, including the way I am remunerated – from what I call the ‘smoke & mirrors’ old-fashioned way that largely relied upon commission (i.e. an Investment Bond offering a higher amount ‘allocated’ to the investment than was actually invested, say 105%) – to either a Fee or Adviser-Charge basis, whereby the Adviser’s remuneration comes clearly and transparently from the amount invested. Some might say this is over-kill. I disagree. The Client’s were comforted to know that I would cover-off any question, often volunteering information which negated the need for them asking lots of questions. We, of course, had development points arising from the Assessment, mainly concerning the transfer of our good actions to evidencing they have taken place (i.e. write everything that happens on a piece of paper!). Overall, we were delighted with the FSA’s approach and our grasp of what it is to ‘treat a customer fairly’…including an understanding of the gap between satisfaction and fairness. Until next time…