Since the FCA crackdown on the DMP sector began in earnest in April 2014 we have seen major changes in the IVA landscape. Many dual DMP & IVA providers exited the market or had an extended period of restructuring. New entrants & non-DMP firms have grown hugely and many DMPs have converted to IVAs thereby increasing volumes across the board. There has been a push for greater transparency in the IVA world with many moves afoot, particularly around fees & disbursements (as a supplier that is paid as a Category 1 disbursement I have very strong feelings on this but that’s for another day!). I have also noticed a move to adherence with the FCA’s TCF principles perhaps borne out of a suspicion that even tighter audit & control is just around the corner.
So, what are the TCF principles? Well, they basically set out six consumer outcomes that firms should strive to achieve so that customers are sold the correct solution for their specific situation and are treated fairly throughout their journey. In summary, an IP must ensure:
- Fair treatment of customers central to corporate culture
- Products & services designed to meet needs of identified consumer groups
- Consumers are provided with clear information and kept appropriately informed
- Advice given to consumers is suitable and takes account of their circumstances
- Products\services must be of an acceptable standard and perform as consumer led to expect
- Processes exist post appointment to allow consumers to make a complaint
With respect to ensuring that best advice is given and that an IVA is the correct solution for the client, I believe that the IP must differentiate the advice stage from the IVA to clearly show no pre-disposition to directing a client to an IVA. All aspects of an IVA should be clearly explained to the client as per SIP3.1. A full, audited I&E (SFS anyone?) using well known guidelines is a must. An automated decision matrix that weighs up the case and compares the outcome with other potential solutions (DRO, BKY, etc.) is also hugely useful.
At the advice stage and indeed throughout the case I have seen a push to handle client vulnerability with far more thoroughness than previously. Capturing the type of vulnerability, ensuring that vulnerable clients are directed to a workflow and staff that are best placed to service them and following up regularly to re-assess the vulnerability is the type of best practice that I believe IPs must follow.
We are living in a world of multichannel communications and in my opinion clients must be free to decide how they wish to make & receive contact with their IP. This ensures that the correspondence arrives in a format they are comfortable with and encourages them to more easily make contact when they need to. There are many simple examples where automated communication from an IP can help the IVA process, including SMS reminders:
- Ahead of a scheduled contribution payment (for some clients)
- If a payment is missed (be gentle though!)
- As a receipt (possibly include the number of remaining payments and amount left to pay)
It is essential however that there are controls to ensure that the client is not bombarded.
Most importantly a case management system must tailor each client’s treatment to their unique situation, it is an Individual VA after all. Dynamic workflows that react not just to case specific information, e.g. missed voluntary contribution payments but also, to changes in the client’s personal situation, e.g. their vulnerability status, automatically without reliance on users.
TCF also calls for a full and proper complaints process, which is sometimes a neglected part of the client’s journey. Complaints must be easy to make and must trigger an automatic response from the IP. Workflow tasks should be created and directed to specially trained staff. Cases must be flagged as having an outstanding complaint so that any staff member that touches the case is prepared to deal with the client properly. There must be an internal Service Level Agreement to ensure that all complaints are dealt with in a timely fashion.
Last, but not least, in the TCF enforcement journey is a strong Management Information capability with exception reports that highlight any failures in process and are automatically delivered to the correct recipients on a scheduled basis. Case audit reports that list all major events on a case and prove that best advice was given, clear communications were sent and fair treatment was consistently applied. A flexible query tool for ad hoc investigations is also needed.
TCF has been around for years but is only really coming across our desks now, so I would be delighted to hear any feedback from the IP world on my opinions.