Desired Outcomes expected upon adoption of TCF :

The firms which have adopted TCF are expected to deliver the following outcomes:

Outcome 1: Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture (RIGHT CULTURE).

Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly (RIGHT TARGET).

Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale (RIGHT INFORMATION).

Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances (RIGHT ADVICE).

Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect (RIGHT GUIDANCE).

Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint (RIGHT AFTER SALES SERVICE).

Let us now discuss each of the above little bit in detail.

Outcome 1 – Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture – RIGHT CULT

TCF seeks to bring about a cultural change in the way financial institutions operate by embedding the requirements with the organization and not looked at another compliance requirement. The principle should be injected into the corporate genes so that it becomes a way of life. As such, the principle is expected to be driven from the top, demonstrable commitment from senior management of such financial institutions (also called as “firms”). FSA have encouraged firms to think about TCF using the product life-cycle approach, and this has raised cultural questions about connectedness and consumer focus within firms. TCF should be reflected in the approach taken to human resources and reward within an organisation as well as the front line business areas. It should be taken into account when corporate strategy is determined and when standard form consumer contracts are drafted. Senior management and the board should receive management information that enables them to assess whether customers are being treated fairly. Putting consumers at the centre of the corporate culture means that TCF, rather than simply being about process, should translate into practical outputs in the shape of fair outcomes for consumers

Firms should make TCF an integral part of their business culture. TCF is a continuous process – it is not something that firms can implement and then forget about.

Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly – RIGHT TARGET

There are two elements in this principle:

(a) Designing the products keeping the needs of the targeted consumer groups

(b) Targeting the consumer groups in respect of whom the product has been designed’

Any product or service is designed keeping a customers’ needs in mind. Unless a product delivers a value, it has no meaning. Some of the customers’ needs which insurance products address are as follows:

(a) Coverage of risk of untimely death of the breadwinner, resulting in stoppage of income for the family(Term Life Insurance or Whole Life Products address this need)

(b) Provision for financial needs at various stages in life cycle, such as marriage and education needs of children (Endowment and Money back products typically fulfill this need apart from covering risk of death

(c) Risk of accident to a vehicle (Motor insurance)

(d) Risk of fire accident or damage to due to floods and natural calamities to property (Fire Insurance, Comprehensive Household insurance etc.)

(e) Risk of hospitalisation and financial needs during medical emergencies (Health Insurance Policies and Critical Illness Riders)

(f) Risk of living longer and therefore need for money to support the prolonged living (Annuity or Pension Policies which provide for periodic payments after active years in one’s life)

The second element speaks about delivering products to the right groups. There is no meaning in designing a product and but not delivering to the right segment. In fact, after designing the product intended for the target groups, if efforts are not taken to deliver the product to the intended market segment, it could result in the risk of the product being sold to unsuitable segment.

For example, a Pension product being sold to a person who has already attained age, say, 65. A Pension product can be sold only to a person during his active years when he saves for his post retirement income. If it is sold to a person who has already attained age 65, there is a clear mismatch between the product sold and the targeted segment.

Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale (RIGHT INFORMATION)

This outcome is aligned to Principle 7 which states that a firm must address the information needs of the client and communicate in such way that it is clear, fair and not misleading. The information needs of the client are require to be addressed at 3 points of time – before, during and after the point of sale.