Consumers will only willingly buy products and services from companies they trust, so re-establishing confidence is critical. Openly addressing problem areas and implementing consumer value practices can build consumer trust. These are critical components of an enhanced customer experience that can differentiate brands, increase customer loyalty, and capture more market share. the key is to make consumer value part of an organization’s core philosophy, and to make responsible business behavior a core value.
Making business open and transparent is central to consumer value. This goes beyond disclosure to assuming a much broader responsibility for consumer awareness and education. Fair access implies effective financial literacy and the ability to understand options. The principle of ‘caveat emptor’ does not absolve the financial services provider from the responsibility to behave fairly against the background of the substantial imbalance of information between seller and buyer. Financial services organizations must actively participate in ensuring that consumers understand their options, have clarity around complex products and services, and are fully cognizant of price, in order to make informed decisions.
It is essential that financial services organizations offer products and services that responsibly satisfy customer needs as well as generating profit to the seller. Many companies are re-evaluating the structure, risk, and revenue contribution of fee-based products and services and considering revenue replacement opportunities in product innovations. Aligning product innovation strategies with consumer need ensures that consumers will have access to an array of appropriate products and services that benefit them and the financial institution alike. Organizations that innovate in this way will succeed, and will satisfy consumer protection principles as a matter of course.
A company that engages actively with its customers, that treats them fairly and provides them with products and services that meet their needs is simply pursuing competitive advantage by doing business well by delivering value to consumers: understanding their needs; designing products which meet those needs appropriately; providing those products at a reasonable price consistent with customers’ risk profile and risk appetite. The best companies will do these things automatically, not because of consumer protection regulation but because delivering consumer value is just good business.
The consumer protection agenda, though currently being driven by regulation, should result in business models and practices that improve consumer service and the customer experience in the following ways:
- the provision of timely and understandable information
- protection from unfair, deceptive, or abusive practices
- consistent enforcement to promote fair competition
- transparent and efficient markets for consumer financial products and services.
Regulators will continue to supervise firms to ensure they are treating customers fairly, and make specific interventions to eliminate harmful products and ensure appropriate redress in the event of failure. But if companies act rationally, with their own and their customers’ long-term interests in mind, the case for regulation will weaken - and the global financial services sector will evolve and move forward without incurring a heavy regulatory burden.