I am conscious that, as I get older, I am increasingly susceptible to grumpy old man syndrome. But two recent and unconnected personal experiences brought home to me how financial services still struggles at times to meet customers’ expectations.
The first was a tortuous process to take some cash and income from my Sipp using flexi-access drawdown. My Sipp fund is quite small and is invested via two platforms in conjunction with my adviser. Part of the problem was some major personnel changes at the advice firm I was using, which led to me dealing with three different advisers in the space of six months.
But the experience with the Sipp itself was less than impressive. It took over a month to receive the payments: far too long.
Although risk aversion was a major cause of delay, outdated technology was also a major contributory factor. Where are the online tracking facilities to check the status of your request? This is something that is commonplace with many retail business transactions these days.
Recently I have also had the misfortune to experience a major water leak at home. Initially, the response from my insurance company was reassuring. I was told by the call handler she would be my personal contact point for the claim.
In reality, the claims assessment and settlement process was totally outsourced under a triage approach. It seemed I was the one having to contact and coordinate the various companies involved.
Moreover, it seemed the company’s priority was to secure payment of my excess and for their work. It was clear the insurance company’s only goal was to keep costs down, not make life easier for the customer.
All of this led me to revisit the thinking behind the drive by the Financial Conduct Authority (FCA) to ‘transform culture in financial services’, as set out in their discussion paper DP18/2 published in February. That has been followed by confirmation the senior managers and certification regime (SM&CR) will apply to most FCA solo regulated firms from December 2019. Insurers are one of the exceptions, as extending SM&CR to most of them will apply from December 2018.
One of the five conduct rules that will apply to all senior managers of all firms under SM&CR is: ‘you must pay due regard to the interests of customers and treat them fairly.’ I would like to think this will prove to be a final wake-up call for the profession.
In recent years, I have been involved with a small company, Investor in Customers, that helps companies by providing insight to improve their customer experience (CX). That is done by surveying senior managers, employees and customers. The company has worked with over 100 regulated financial services companies, including life companies, investment platforms, wealth managers, advisers, debt collection companies and health companies.
The results have been revealing. In over 60% of the CX assessments undertaken, senior managers and staff rated their customer experience higher than customers did. Some of the biggest gaps occurred in areas such as customer feedback, anticipating needs and treating customers fairly.
The right balance
I believe it will be increasingly difficult for senior managers in financial services companies to fulfil a key responsibility under SM&CR unless they can evidence the CX with proven data. As has been said before: the price of light is less than the cost of darkness.
We have observed cases where companies take note of the CX feedback and develop improvement programmes that have the backing of the board or chief executive. Here, the improvement on the business’s financial performance can be startling. Great CX can really differentiate a brand.
These days, the digital experience is vital. But so is the need to develop and foster long-term relationships with customers. Balancing the advantages of digital with the effectiveness of a personal service is one of the biggest challenges facing businesses today.
John Moret is principal of MoretoSIPPS