Money & Banking
What’s fair for banking industry may not be so for the customers

I recently did a word count on a new product offered by a well-known bank—the total word count was over 40,000!  Now some customers would choose to read this material before they sign. However, I would suggest that 99.9% would simply sign without reading. Is this fair?

It’s fair to say that, at the moment, consumer protection high on the agenda of many national regulators and central banks. The global financial crisis has severely dented consumer trust, with the most recent scandal—the global LIBOR rate manipulation—dealing a further blow to consumer confidence.
And as the Banking Codes and Standard Board of India (BCSBI) embarks on a “Review of the Code’s of Banks Commitment to Customers” many national regulators are introducing, reviewing and strengthening legislation and guidelines to govern the way in which financial products are developed, sold, and serviced. And, in almost all instances, the principles which underpin these guidelines are the same. The clear and simple message is this—treat your customers fairly and be prepared to prove it.
Some countries, and their financial institutions, have been on this journey for a number of years so there are plenty of lessons to be learnt. There are two key questions for banks (and indeed all types of financial services companies)


What do they need do differently?

  • How will their customers know? 
From an organisational point of view these means, for example, having a product development process that includes customer input and feedback, providing annual staff training, (and testing) relating to fair treatment, and finding ways to evidence and measure that you are identifying and dealing with customer issues in a fair manner. (And by the way, don’t get fair treatment confused with customer satisfaction.)
More importantly from a customer point of view, they should receive clear, simple, unambiguous advice, (with no high pressure sales), based on a thorough understanding of their needs and financial circumstances. It means that product literature should be simple, clear and easy to understand. It means the product does what it says on the tin. It should also mean that the service they receive should match what has been promised. These are all areas in which a customer can have a view and can use their experience to assess, not only their level of satisfaction, but also how fairly they have been treated. 
Now this is all sounds well and good and, to be honest, relatively straightforward... or so you might think. Here’s the conundrum: what you think is ‘fair’ may be completely different to what customers think as fair.
Let me illustrate this by using a non-financial services example.
You’ve purchased a first-class train ticket. The carriage is half-empty... 
1 The guard discovers that a passenger in the first-class compartment has a second -class ticket and asks that passenger to leave. Is this fair? 
2 It then transpires that there are no seats in the second-class. Is it still fair to ask the passenger to leave? 
3 The train company has just announced large profits and is refusing to put on extra carriages. Is it still fair? 
4 The passenger being asked to leave is a woman aged 80 who is infirm and nobody in the second class has given up their seat for her. Is it fair to eject her from first class or do you just hide behind your laptop? 
I put this to a group of colleagues recently and the responses were 100% in favour of scenario one and progressed down to one person who rather sheepishly insisted on ejecting the elderly lady. So fairness in this case depends on the circumstances and, crucially, on your own attitude to train companies, first-class travel and elderly people, which is why fairness in general is so hard to define and presumably why many companies might find it difficult to acknowledge that their practices might be unfair. 
This example also illustrates the certainty that rules give; no first-class ticket, no seat in first class. And the uncertainty, but potential for greater fairness, of principles; an elderly person with no ticket ought, perhaps, to be allowed to stay.
You may also want to read about customer service in the hospitality industry.
If we return to financial services, an obvious situation that might generate very different points of view is the quality of product literature. Regulators have made repeated calls for customers to be “fully informed” of the details relating the product they’ve purchased—brochures, key facts, terms and conditions, etc.  This all sounds fair and reasonable and one might be excused for thinking that such action reflects well on a firm that’s putting the customers’ interests first. However, when you consider this from the customers’ perspective it paints quite a different picture. Think about how much information you’re asking the customer read and, even more importantly, understand. I recently did a word count on a new product offered by a well-known bank—the total word count was over 40,000!  Now some customers, (although I suspect very few), would choose to read this material before they sign, however, I would suggest that 99.9% would simply sign. Is this fair?
It’s not enough to get into the customers shoes; you also need to change your mindset.
In essence, the guidelines have the potential to deliver substantial improvements for consumers. The banks must hope, however, that their interpretation of ‘fairness’ matches that of their local regulator. 
(Stephen Rosling has worked in the UK financial services sector for over 25 years holding senior management positions in Aviva, Friends Life, and Friends Provident International. He is a qualified customer services professional with experience in running and improving customer service functions. His experience extends to employee engagement and leadership development.)




5 years ago

Not an appropriate example

FDI in retail: Opposition motion defeated in Lok Sabha

With SP and BSP members staging a walk out, passing the motion for FDI in retail was a piece of cake for the UPA government

The United Progressive Alliance (UPA) government on Wednesday survived the attack from Opposition over foreign direct investment (FDI) in retail. The motion brought by the Opposition was defeated in the Lok Sabha. Out of total 471 members present in the House, 253 voted in favour while 218 opposed FDI in retail.

Members from both Samajwadi Party (SP) and Bahujan Samajwadi Party (BSP) both outside supporters of the government staged a walk out, thus reducing the numbers for the UPA government to win the motion.

Government has neglected the interest of farmers and small traders by deciding on FDI in multi-brand retail, SP chief Mulayam Singh Yadav alleged after his party's walkout.

"We walked out because the government has neglected the interest of farmers and small traders," he told reporters.

Asked why SP MPs walked out instead of voting against the motion, he said "this was the party's decision. The party has decided to stage walk out rejecting the move."

When it was pointed out that SP's decision has helped the government, he said "whatever the party has decided we do that exactly."

Expressing concern over the fate of farmers and small traders after FDI in retail, Yadav said the "interest of five crore small traders and 20 crore farmers and their families were sacrificed by the government's decision. That is why we have walked out."

Hours before the vote, the government sought to create a wedge among parties opposed to opening the retail sector to foreign companies, asking them to realise the politics of BJP.

"The question is not FDI as the decision to implement it is on the state governments. If the states have to decide, what are we deciding here. The only thing to be decided here is to support or oppose BJP's politics and condemn it," Parliamentary Affairs Minister Kamal Nath told reporters.

In reply to a poser on UPA's outside supporters SP and BSP opposing FDI in multi-brand retail, he said, "Speaking against FDI is a separate issue, because they can be against it. But I request all political parties to vote against the politics of will be demonstrated in the voting on Wednesday. They will be defeated today," he said.

Earlier, his deputy Rajiv Shukla said government was in touch with various parties for their support.

"We are in touch with all (parties). We have requested them to support us. FDI will not hurt the interests of farmers or small traders. In fact, it will help them," Shukla said.

While both SP and BSP had opposed FDI on Tuesday during a debate on the issue, they had not made it clear whether they will support the motion.

BJP leader Sushma Swaraj had asked the two parties to support the motion, saying their fears that the government could fall were "unfounded."




5 years ago

Coalition politics, in a situation where any political party in India growing into a size to muster single-party majority is very remote, is an unavoidable evil. But, any game should have pre-decided rules and changing rules mid-way should be avoided. To make things more transparent and credible, political leaderships at national and state levels should work out some formula which will ensure coalitions formed before any election from panchayat to parliament should remain in tact till the subsequent election. Once it breaks mid-term, mid-term elections within six months of such ‘break’ alone should be the alternative before political leadership. But, who wants stability, continuity or a transparent conduct of ‘political business’ or ‘business of politics’ which happens to be the prerogative of certain families across the nation? In this case, what happened is, representatives of majority members of parliament spoke against FDI in retail in the form UPA II wants to introduce it and their views did not transform into votes!


5 years ago


UP politicians are the bane of India.

Government transfers land for Dr Ambedkar memorial in Mumbai, Mayawati unimpressed

Meeting a long pending demand of several supporters of Babasaheb Ambedkar, the union government announced transfer of prime Indu Mill land in Mumbai to Maharashtra for constructing a memorial


New Delhi: The Union Government on Wednesday transferred a piece of prime land in Mumbai for a memorial to Dr Babasaheb Ambedkar ahead of the crucial vote on foreign direct investment (FDI) in Parliament but BSP Chief Mayawati appeared unimpressed seeking at least 30-40 acres of land for the purpose, reports PTI.

"If the government allocates 12-13 acres of land for it, it would not be sufficient for the memorial. For such a grand memorial for Dr Ambedkar, at least 30-40 acres of land would be required. In 12-13 acres, no grand memorial can be built," she told reporters outside Parliament House.

"We will not accept if the government makes a memorial for Dr Ambedkar in 12-13 acres of land. He will have to be given his due respect as he is the father of our Constitution," she said.

Earlier, the government announced in both Houses of Parliament transfer of prime Indu Mill land in Mumbai to Maharashtra government for constructing a memorial to Dr Ambedkar, meeting a long pending demand of several political parties in the state.

Reports had it that the total land of the now defunct Indu Mill near Chaityabhumi at Dadar in Mumbai, was of 12.5 acres.

Mayawati raised the issue in a big way in Rajya Sabha.

Even though Chairman Hamid Ansari said a statement by the government is listed in the agenda and the announcement will be made at noon, she insisted that the Question Hour be suspended and the statement be made forthwith leading to the adjournment of the House.

When the House reassembled and Minister of State for Parliamentary Affairs Rajiv Shukla announced the decision to transfer land, Mayawati asked the details of the memorial plan seeking to know how much money would be spent on it and how much land would be allocated for the purpose.

Making the announcement in Lok Sabha, Textile Minister Anand Sharma said, "The Government of India has taken a view to make available this land for use to the Government of Maharashtra for the construction of a befitting memorial."

The ashes of Babasaheb Ambedkar are interred at Chaitya Bhoomi, situated in the vicinity of the 12.5 acre land of India United Mill, popularly known as Indu Mill, under the National Textile Corporation at Prabhadevi in central Mumbai.

"The government has initiated the process to give effect to this decision and I will be shortly be moving the necessary legislative proposal for Parliamentary approval. I seek the support and endorsement of the House," Sharma said.

The announcement came at a time when the government, which does not have numbers in the Upper House, is banking heavily on BSP for a smooth sail during voting on the FDI issue.

In Rajya Sabha, Shukla promised "whatever explanation they (BSP) are seeking will be made available."

BJP's Ravishankar Prasad also supported Mayawati's demand.



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