Commissions and customer service
The financial services industry is currently facing major issues when it comes to customer service. Following scandals such as the misselling of products such as Payment Protection Insurance (PPI) and major technology problems at RBS, consumer confidence is at an all time low. No wonder that an increasing number of customers are looking to take their business elsewhere.
As part of its remit to protect customers, the Financial Services Authority (FSA) is now stepping in, calling for a clampdown on sales commissions paid when a consumer buys a product. It argues that many commission schemes encourage agents to sell unsuitable products (such as PPI) to those that don’t really need them, simply to hit their targets and earn a bonus. Instead of this it believes that commissions should only be paid if the customer benefits from the product, rather than on volume of sales.
Commissions have been a way of life in financial services for many years, incentivising staff and others (such as Independent Financial Advisers) to sell. But many schemes have been potentially unfair to customers, meaning the FSA’s move is a timely one.
Rebuilding the trust between the financial services industry and customers won’t happen overnight or simply by tighter regulation of commission schemes. Based on Eptica’s experience in financial services, here are three other areas that companies should focus on:
Consistent, easy to access information
Consumers need to know exactly what they are buying so have to be able to access clear, jargon-free explanations of both the benefits and potential pitfalls of what they are signing up for. Having a single source of consistent information that is used across all channels, and is central to training of sales people is key to delivering this.
Multichannel customer service
If customers have a query or if things do go wrong, they want to get a fast, informed answer. Technologies such as web self-service, social media service and investment in the email channel will help provide speedy responses to customer questions – answering them through their channel of choice.
Working out whether a particular product is right for a customer shouldn’t be left to chance – instead it should be based on a thorough understanding of their profile, current products and attitude to risk. Rather than silos of information this requires joined up systems that give a full picture of the customer which is then used for targeting products and offers.
The current recession has deepened consumer suspicion of banks and other financial services companies – what is needed is a focus on better understanding customers and service that puts their needs first if the relationship is going to improve.