Updated: Jul 4, 2022
Treating customers fairly seems to be the flavour of the day with the Financial Conduct Authority and they are not shy about dishing out the punishment.
Last year some of the biggest names in financial services were fined in excess of £200m for failure to meet the FCA's principles of business. The two standouts were Barclays and Lloyds Banking Group fined £26m and £64m respectively for unfair treatment of customers in contravention of Principle 6 (A firm must pay due regard to the interests of its customers and treat them fairly).
It is difficult to understand how 2 stalwarts of the UK retail banking scene, that spend substantial sums telling us how consumer-centric they are, could get it so wrong. Their Treating Customer Fairness (TCF) policies will be amongst the best written and most comprehensive in their sector so it appears that they are simply not embedding the principles well enough within the fabric of their business.
The challenge appears to be in the word "fair". Ensuring that your products and services are fair and offer good value is actually highly complex and 3 dimensional. Consumers' perception of what constitutes fair value is constantly evolving driven by market forces such as competition and technology.
To provide further complications both of these aspects are also central to the FCA's strategy so the current level of change in financial services is greater now than it has ever been.
Insurance is now the sector firmly in the FCA's sights. Again fair treatment of consumers is at the top of the "could do better" list. It will be interesting to see how they approach the challenge the FCA has set them. Will they " tick the boxes" or will they look to understood fairness and value as perceived by the consumer and ensure TCF is front and centre of how they do business.
What is clear from the Banking sector is that Insurers should not wait for the regulator to come knocking...