The FSCA advocates for financial firms to treat customers fairly
The FSCA ensures financial institutions conduct themselves with integrity and efficiency through six TCF principles
The Financial Sector Conduct Authority (FSCA) has taken up its new mandate from the former Financial Services Board (FSB).
The FSCA’s balancing act is three-fold. First, it is to ensure that financial institutions treat their customers fairly and prevent market misconduct in the financial sector. Second, it’s to ensure institutions remain sustainable, and last, it is to provide financial education programmes to consumers to promote financial literacy.
The authority’s approach in safeguarding the wellbeing of financial customers is to ensure financial institutions conduct themselves with integrity and efficiency through six “Treating Customers Fairly” (TCF) principles, which include:
- culture and governance;
- product design;
- clear communication;
- suitable advice;
- performance and standards; and
- claims, complaints and changes.
Firms need to educate their customers about the standard they are entitled to when purchasing products and services from them. Previously, the FSB was solely responsible for non-banking financial institutions, while the FSCA now supervises the market conduct of all financial institutions and how they interact with customers.
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“Customers should be central to the development of financial products throughout the life cycle of those products. This should be demonstrated through the customer-centric culture of financial institutions, strategies and governance processes,” says Kedibone Dikokwe, divisional executive of conduct of business supervision at the FSCA.
Lyndwill Clarke, head of consumer education at the FSCA, says: “The authority launched its MyMoney Learning Series to make consumer financial education available as e-learning content, and at no cost to consumers.” The content ranges a
cross foundational concepts and falls under five themes:
- financially smart;
- financial safeguard;
- financial protection;
- financial knowledge; and
- business finance.
This will make it easier for consumers to make informed decisions when purchasing products and services.
The FSCA continues its work of aligning its regulatory framework that reflects and supports the TCF initiative and leads to fairer treatment of customers.
The FSCA will monitor the compliance of the sector by using proactive supervisory approaches, which enables the authority to anticipate problems and intervene at the right time, to prevent bad customer outcomes.
According to Tembisa Marele, the head of communications at the FSCA, firms must ensure that their products are suitable for the customers they are selling to.
“This is part of the reason the authority focuses on monitoring whether institutions are aware of the financial backgrounds of the customers they are selling their products to. Before selling a product, a service provider should interrogate the quality of that product and whether the circumstances of the customer are suitable for that product,” Marele says.
“Furthermore, as the market conduct authority, we are geared towards positive outcomes for customers, and our message to firms is that a customer-centric approach ultimately helps them manage their risks. Ultimately, if your customer is not getting what they need from you, this affects you in the long run,” she says.
A customer will know if they are unfairly treated if:
- their products and services are not suitable to their needs, they are not provided clear (non-jargon and legal filled) information before, during and after point of sale;
- full disclosure and advice about the complexity of a financial product isn’t provided;
- their products don’t perform as promised; and
- they are faced with unreasonable post-sale barriers imposed by firms to change products, switch providers, or submit a claim.
This article was paid for by the FSCA.
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