People buy because they understand that benefits outweigh the cost. Cost is not limited to money – it includes time, hassle and effort. The more paperwork involved in the sales process, the more the customer sees this as hassle. A good intermediary makes sure that the customer always sees the benefit in completing paperwork accurately and completely.
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A benefit statement is the gain the customer will achieve from acquiring the product or service. It is personal. A gain does not need to always be a positive. It can also be the absence of a negative. For example, life insurance is geared towards ensuring that there is not a financial negative in the event of death. People more often take action when they understand the consequences of not taking action.
When 59 per cent of directly authorised small firms failed to meet the ‘Treating Customers Fairly’ (TCF) deadline by the end of March, perhaps they did not understand the consequences. Or perhaps the benefits have not been understood so as to outweigh the time, hassle and effort of complying with a TCF regime.
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No doubt the financial services regulator will embark on a campaign of helping firms understand both the benefits of introducing proper systems to evidence fair consumer outcomes and the consequences if they do not.
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