An overview of TCF
Why treat the customer fairly? The irregularity of information between retail financial
services consumers and financial institutions means
that financial services consumers are particularly
vulnerable to unfair treatment.
Typically, financial institutions have far more expertise and
resources available to them in designing, distributing and
servicing financial products than consumers have available
to them in making decisions about financial transactions.
The nature of financial products and services is such that, in
many instances, the consequences of unfair treatment or poor
decisions are only felt some time – in some cases many years
– after transacting. Significant hardship can be the result. In
Namibia, challenges are worsened by low levels of both basic and
financial literacy, increasing the risk of consumer exploitation.
The desired outcomes of TCF
TCF is a regulatory approach that seeks to ensure that
specific, clearly articulated fairness outcomes for financial
services customers are demonstrably delivered by regulated
financial institutions.
The further intention is that delivery of these specific
outcomes will in turn ensure the supply of appropriate financial
products and services to customers and enhanced transparency
and discipline in financial institutions, resulting in improved
customer confidence.
The final desired outcome is that customers’ financial services
needs are appropriately met through a sustainable industry.
It is proposed for the six Treating Customers Fairly (TCF)
outcomes to be introduced in Namibia. These are:
1. Consumers should be confident that they are dealing with
firms where fair treatment of customers is central to corporate
culture.
2. Products and services marketed and sold in the retail market
should be designed to meet the needs of identified consumers.
3. Advice should be suitable and take account of the
consumer’s circumstances.
4. Consumers must be provide with clear information and
kept informed before, during and after the point of sale.
5. Consumers should be sold products that perform as firms
have led to expect, within reasonable limitations.
6. Consumers should not face unreasonable post-sale barriers
imposed by firms to change products, switch provider, submit
claims or complain.
These outcomes are to be demonstrably delivered throughout
the product life cycle, from product design and promotion,
through advice and servicing, to complaints and claims handling
– and throughout the product value chain.
In summary, all financial institutions regulated by NAMFISA
in time, will be under TCF scrutiny.
– What does it entail?
“A customer is the most
important visitor on
our premises, he is not
dependent on us. We are
dependent on him. He is
not an interruption in our
work. He is the purpose of
it. He is not an outsider in
our business. He is part of
it. We are not doing him
a favour by serving him.
He is doing us a favour by
giving us an opportunity to
do so.”
Mahatma Gandhi
TCF is a regulatory
approach that seeks to
ensure that specific,
clearly articulated fairness
outcomes for financial
services customers are
demonstrably delivered
by regulated financial
institutions.
References:
1. LAUTENBERG, C. (2011). Background and overview of the
Incoming TCF Framework
2. Financial Services Board website
3. METZLER, R, HAMATA, I, MATOMOLA, K.S. (July 2013).
Briefing Paper on Microlending Industry in Namibia