The financial world came under scrutiny recently at the Moneyfacts Conference, with speakers claiming that not only is the Financial Services Authority’s (FSA) ‘Treating Customers Fairly’ (TCF) ruling ‘a disgrace’, but that consumers now wield the power in the mortgage and finance market.
The FSA’s ruling on TCF came under fire in the first session, with speakers claiming that it was a ‘really sad indictment that the regulator needs to enforce’. Moneyfacts chief executive officer, Paul Pester, claimed that the installation of the TCF ruling ‘creates the assumption that firms are giving treatment unfairly; it doesn’t make sense and is very vague in its definition. The fact that the FSA is employing this is a disgrace’.
However, Pester claimed that there was a way forward for companies when TCF had been implemented, as long as it was used effectively. He said that as long as any complaint received by a company ended up with the marketing department, they could use the criticism constructively in future promotions, rather than it going to the head office where it would most likely be met with ‘heads in hands’.
Problems
TCF was also criticised by Philip Machin, market analyst consultant at CACI, who claimed that the FSA’s rulings were very vague, and as it is regulating by a principles-based nature it is difficult to establish what the regulator means by TCF. He said: “For those companies who don’t have a very good record there is more to be done, and more is for the benefit of the borrower.”
Louise Cuming, head of mortgages at moneysupermarket.com, said: “The problem with TCF is that one company doing something well can be different from what another does well, so you wonder how successful it’s being. An example could be in the banking world, with the changes to overdraft charges, as all banks have a different approach. In mortgages there are different fees and some are not fair to customers. I would join the voice that TCF as an ideal is to be applauded, but it means keeping lots of paperwork.
“A lot has to be taken on trust when it should be based on recognition. Advice has to be taken on trust and should be based on recognition. As most bonus systems are based on volume rather than quality it’s very hard to judge.”
Who’s managing whom?
The main theme of the conference was ‘who’s managing whom’, a statement loosely covering the area of consumer power that served as the main theme of Pester’s opening speech. He made references to flocks of birds and how they move in the same patterns to work together.
Particular attention was paid to how consumers have come together to create pressure groups, with networking sites such as Facebook allowing the public to create a voice on a subject, attract other ‘victims’ and supporters and ultimately press for change.
Communication via the use of e-mail and mobile phones has led to consumer groups gaining power and forcing change, with an example made of the recent Burmese protests, which were organised by mobile phone and internet – and quelled when these services were disabled.
Another example was given as when HSBC added a 9.9 per cent interest rate to student loans and the establishment of a Facebook group with 5,000 members led to a rethink and change in policy by the bank.
Pester said: “The question is who is managing whom? The way consumers are dealing with us has changed and we have changes in the way they interact and communicate.
“The world has changed significantly and not just for banks and building societies, as we now face groups of customers who can form quickly and create immense pressure.
“This is a changing relationship between us and consumers, so how do we deal with it? It is a difficult one but we need to communicate with the flock to talk within them. However, it amazes me that units can form bodies and wield power in this way.”
Positives
Rachel Le Brocq, press and public affairs officer at the Building Societies Association, agreed that although the mass of consumers is not a new phenomena, there are positives to be drawn from the movement. She said: “Consumers have always been very influential and the increased use of the internet and new forms of communication, such as Facebook, means this influence has heightened. This does not have to be seen as a negative, however.
“As mutuals, building societies are owned by their customers and welcome representations from their members. They themselves use the internet to talk to their members – online annual general meeting voting and online members’ question times, for example.”
So is it good to witness such interest in personal finance by the general public, or should lenders and providers stand against these tirades in order to protect their business, their options and their providing? One thing is for sure, as freelance journalist Annie Shaw says – ‘the financial world is a battlefield’ and this is becoming more and more true every day.
get the daily news delivered to your inbox
find the latest industry jobs
download our news ticker
