Management consulting firm, Consulta, has released its\u00a0latest\u00a0South African Customer Satisfaction Index (SAcsi) for the local banking industry – including a measurement as to how well South African banks comply with the incoming Treating Customer Fairly (TCF) code.<\/p>\n
As of 1 May 2017, the TCF is a regulatory framework is set\u00a0to improve market conduct in financial services by \u00a0governing the way a Financial Service Provider (FSP)\u00a0conducts daily dealings with its clients, ensuring that all clients are treated fairly.<\/p>\n
As\u00a0the new codes will be primarily consumer-facing, banks will now also be financially liable for not meeting these standards, noted Consulta CEO Professor Adr\u00e9 Schreuder.<\/p>\n
“The cost of non-compliance in countries where the TCF framework has already been adopted has increased substantially in recent years. This is likely to continue, as the new codes are introduced to the local market.”<\/p>\n
This was echoed by\u00a0associate director of market conduct at KPMG, Finn Elliot who believed that the new legislation was single most significant financial sector regulatory reform that South Africa has ever experienced.<\/p>\n
\u201cThe FSCA is going to want to see and understand institutions\u2019 governance structures, risk controls, corporate culture and their business practices \u2013 institutions will need to objectively demonstrate to the FSCA how they are ensuring the fair treatment of customers,\u201d\u00a0said Finn.<\/p>\n
Market conduct\u00a0refers to the prices and other market policies pursued by banks\u00a0in terms of both their aims and the way in which they coordinate these decisions.<\/em><\/p>\n The new rules that FSPs will now have to follow as highlighted\u00a0by Finn include:<\/p>\n 1. Institutions are required to\u00a0perform an assessment of their business model and strategy with the aim of identifying and assess “conduct risks” prevalent in their business.<\/p>\n 2. Institutions are required to\u00a0implement the necessary governance structures, policies, processes and procedures to be able to manage, monitor and control conduct risks.<\/p>\n 3. A market conduct risk framework should be established, within which the governance structures and policies will operate.<\/p>\n 4. All management and staff must understand and appreciate what market conduct is, the basis or rationale for it, and support the need for its introduction into the business.<\/p>\n