TCF CPS SA

Key TCF Messages

  • CPS SA endeavours to ensure that TCF forms the backbone of its corporate strategy.
  • CPS is committed to producing relevant and high quality TCF Management Information so that its performance can be monitored against the TCF principles.
  • CPS Staff receive ongoing TCF training.
  • CPS takes all reasonable steps during the selection of distributors and outsourced service providers to ensure that the TCF outcomes are achieved throughout the supply and distribution chain. This involves a due diligence process, undertaken by or on behalf of CPS.
  • CPS’s TCF is included in all change processes, such as product development, compliance sign-off of marketing material and advertising.
  • In summarising, CPS is committed to embedding the TCF Outcomes (see page 4) and principles within its culture and operational processes and procedures.

Introduction

The Treating Customers Fairly (TCF) initiative represents a practical articulation of one of the core overarching FSA principles of business: “A Firm must pay due regard to the interests of its customers and Treat them Fairly”.

The principles of TCF are relevant to CPS

  • Both the letter and spirit of this TCF Policy will be applied and respected within CPS
  • CPS recognises the importance of putting customers’ interests first and promoting the fair treatment of customers throughout the life cycle of a product from the point at which the product is designed, through to post-sales support. CPS aims to embed the principles of TCF into its culture and to make sure that all decisions relating to its business are made having full regard to the interests of customers.
  • A strong TCF culture must be understood, embraced and, crucially, acted upon consistently by all staff, from senior management through to staff at the most junior level so that TCF becomes integral to CPS’s ethos and business processes. In turn, where CPS uses third party distributors/intermediaries or outsources operations to service providers, CPS uses reasonable efforts to ensure that such distributors or outsourced service providers fully understand their TCF responsibilities. CPS board of directors and senior management will lead by example by helping to implement, and emphasising the importance of, TCF on a continuous basis.

In order to achieve its stated TCF objectives (and do so in a comprehensive manner), CPS ensures that TCF appropriately influences all areas of its business, including:

  • product design;
  • strategy;
  • training;
  • staff behaviours;
  • and remuneration.

CPS will continuously monitor its TCF performance and is committed to maintaining high TCF standards.

CPS will apply TCF principles to all of the products that it designs, markets and distributes (whether directly or indirectly).

The FSA has issued guidance on the responsibilities of providers and distributors for the fair treatment of customers and CPS will use this guidance to steer its approach towards the implementation of TCF during the product “life-cycle”. This is considered in further detail below under the headings “Implementing TCF throughout the lifecycle of the product”, CPS uses TCF “Management Information” (MI) as a key tool to capture data around TCF and the key intended outcomes discussed below. MI is designed to enable CPS to ensure that TCF is, in reality, underpinning its strategic decisions and operational practices.

TCF Outcomes

The FSA has formulated six key outcomes which underpin TCF. CPS’s business practices are mapped against each of these outcomes below.

  • Outcome 1 Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture.
  • Outcome 2 Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.
  • Outcome 3 Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.
  • Outcome 4 Where consumers receive advice, the advice is suitable and takes account of their circumstances.
  • Outcome 5 Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.
  • Outcome 6 Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.

Mapping Car Protection Services business practices against the six TCF outcomes

Outcome 1 - Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture. CPS Senior management is resolutely committed to ensuring that TCF lies at the heart of CPS

CPS TCF principles are employed when recruiting all staff (on a permanent, temporary or contract basis) and incorporated into the training and compensation packages of current staff.

For example, staff will not be compensated or incentivised to perform their job purely on the basis o f volume of sales, without paying due regard to the interests of customers.

CPS’s approach to recruitment of staff and the ongoing training and competence of existing staff is set out in detail in the Compliance Manuals, which all staff must understand and adhere to.

CPS acknowledges the importance of factoring TCF-related behaviour into staff annual performance reviews.

CPS recognises the importance of collecting and acting upon comprehensive and insightful MI (see below) on a regular and frequent basis.

Analysing and consolidating MI will help to ensure that the fair treatment of customers is central to all aspects of its business. However, it is also essential to ensure that this MI is considered at the right levels within CPS.

A TCF Management Committee has been established to monitor TCF within CPS and to analyse relevant MI. This Committee reports to the Board and comprises a number of senior executives and board members, including the Key Individual. The composition of the TCF Management Committee ensures that MI is considered and challenged at an appropriately senior level and on a regular basis.

Customer feedback will be captured and consolidated, as part of the MI, from customer-facing staff.

Outcome 2 - Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.

A considerable amount of primary consumer research is undertaken – broadly, to establish the likely appetite of distributors of CPS’s products, and the reasons for their interest.

All products are market tested with potential consumers before launch to make sure that they are clear, easy to understand and meet the needs of identified consumer groups.

CPS will take time to identify the target market in relation to its products and assess the appropriateness of the product for the proposed customer base; tests its products before they are launched to see how they might perform in a range of market environments; and ensures, prior to launching a product, that adequate risk management controls are in place and operational.

All product features, including risks, will be clearly articulated in the relevant literature and on the website (see “Outcome 3”). Risks will be clearly shown and explained. All new products or new developments require sign off from the internal control functions.

Product design, including updating existing products, will always take into account the need to treat existing and future customers fairly.

Outcome 3 - Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.

All literature is written in plain English, and samples market tested with customers to validate clarity and understanding (see “Outcome 2”). CPS will provide clear, accurate, relevant and comprehensible information to customers, whether directly or through a distributor.

All sales and customer-facing staff receive comprehensive training and testing to ensure good understanding and consistency of information delivered to customers and potential customers.

CPS is a provider of Warranty Products, and Vehicle Manufacturers Products and are distributed by regulated intermediaries, including independent financial advisors.

CPS ensures that the distributors and, where appropriate, outsourced service providers fully understand their TCF responsibilities and use best efforts to ensure that distributors and outsourced service providers are appropriately trained in this area;

Intermediaries, Including Independent Financial Advisors

CPS takes all reasonable steps during the selection of distributors and outsourced service providers to ensure that the TCF outcomes are achieved throughout the supply and distribution chain. This involves a due diligence process, undertaken by or on behalf of CPS.

Clear, accurate, relevant and comprehensible information is provided to distributors to ensure that they understand all of the features of the product being distributed; and CPS takes steps to provide any distributor with clear and consistent information about the Partnership and any changes that the distributor can then pass on to the customer.

All post sale literature clearly articulates the options available to customers, including cancellation rights (see “Outcome 6” below).

CPS maintains regular, clear correspondence with customers after the point of sale (see further “Outcome 6”). For example, CPS will send (or otherwise make available) regular updates to the Dealer/Partner with information on how each customer’s product has developed.

All information will be produced in a timely manner and will be made available on the CPS website, which is designed to be as ‘user-friendly’ as possible.

All customer-facing staff are required to confirm that all distributors with whom they have dealt have met with the TCF principles. Additionally, all managers of CPS customer-facing staff will confirm that all such customer-facing staff have complied with the TCF principles.

This is mirrored so that such customer-facing staff are also required to confirm that their manager is complying with the TCF principles. The outcomes of this process are captured in the monthly TCF MI.

CPS will use reasonable efforts to ensure that its customers receive information which is clear, fair and not misleading and that all literature is pitched at a level that its target customers are readily able to understand.

All product features, including risks (which, importantly, will be clearly shown and explained), terms and conditions and charges, are clearly articulated in all relevant literature and on the CPS website.

For example, CPS provides worked examples in its Extended Warranty literature and on the CPS website illustrating what the repayments will be with different product circumstances.

CPS also enables advisers to provide worked examples of how a CPS Warranty might compare with more generic products. These examples are intended to make the characteristics of the Warranty more simple for a purchaser of the product to understand.

Outcome 3 - Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.

CPS does not offer advice to retail or professional customers.

CPS ensures that its staff understand that they must not (and are not approved to) provide advice (broadly, implicit or explicit investment recommendations). This is achieved primarily through staff training and ongoing monitoring.

TCF will always be an item on the agenda at review meetings with distributors.

CPS requests that the distributors disclose any potential TCF issues or complaints. Any TCF issue arising from those meetings will be brought to the attention of the TCF Management Committee and will be captured in the monthly TCF MI. CPS’s customer-facing staff are required to confirm that, in their dealings with those distributors, they believe that the TCF principles have been adhered to. Such confirmations (or otherwise) will be captured in the monthly TCF MI.

The TCF Management Committee monitors that no advice is offered by CPS and documents this as part of the regular MI.

Outcome 5 - Consumers are provided with products that perform as CPS have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.

All literature clearly states the performance objective of each product and the outcomes in different scenarios, with component covered tables and/or illustrations, where appropriate.

The performance of products is determined by the sales of each individual product

Indicative sales will be monitored to assess whether the performance of certain products is broadly in line with customers’ expectations and whether the warranties continue to meet the needs of the target market.

It is always emphasised that a Warranty is a fixed term and the factors included in any early redemption value will be fully explained to customers should they need to redeem their product before the full term.

All customers will be able to access details of their warranty by telephone or (in due course), at any time, via the internet. The customer would have received a hard copy of the policy wording t point of signing with the Dealership.

Customers are encouraged to provide feedback, positive or negative, to CPS and/or distributors and CPS’s website includes a customer feedback function for this purpose.

Such feedback provides an invaluable source of TCF data and will be summarised for inclusion in the TCF MI pack.

The overall performance of customer-facing staff is also considered on a regular basis by the TCF Management Committee. This includes the provision of customer feedback summaries to the Committee, to be included in the TCF MI pack. Any negative patterns or more general concerns will be considered and dealt with by the Committee and, if necessary, escalated to the Executive Risk Committee.

Outcome 6 - Consumers do not face unreasonable post-sale barriers imposed by CPS to change product, switch provider, submit a claim or make a complaint.

CPS recognises that TCF is as important after a product is sold as prior to the sale of a product.

Customers are made clearly aware of the options available to them to cancel.

Customers are able to request a pro-rate refund of warranty policy at any time.

CPS does not enforce any minimum period requirements on claims on their products. Customers are free to switch to a different product at any time without unreasonable costs or barriers.

CPS recognises that, on occasion, a customer may wish to make a complaint in relation to a particular product and/or service.

CPS has a clearly documented complaints process which is readily available to customers (and, where appropriate, distributors) via the CPS website or on request from the customer services team. Any such complaints will be handled in accordance with CPS Complaints Handling Procedure.

In summary, this Procedure seeks to ensure that complaints are handled fairly, efficiently and by individuals at an appropriate level of seniority.

Customers have recourse to the Financial Ombudsman Service if their complaint is not satisfactorily resolved.

Key TCF tools

Key tools to be utilised by senior management include:

  • Leadership – senior management clearly communicates to the rest of the business and outsourced service partners the importance of TCF and how the TCF outcomes should be considered in all decision-making processes. All staff are encouraged to challenge policies and procedures in order to improve the outcome for customers.
  • Strategy – the impact of the fair treatment of customers is considered as an integral part of all strategic plans.
  • Decision-making and challenge – the TCF outcomes are factored in to all relevant decision-making within the business and challenged to test that they satisfy all TCF requirements.
  • Controls – relevant and high quality TCF MI is captured across the business and is regularly reviewed and analysed to identify any potentially poor TCF practices.
  • Performance management – TCF-related objectives are part of all role profiles at both the recruitment stage and on an ongoing basis (including as an important aspect of the annual appraisal process). Regular training is a key aspect of ensuring that staff are fully aware of the TCF requirements.
  • Reward – measurable TCF objectives are built into all performance contracts and incentive schemes.

Implementing TCF through the cycle of the product

To a large extent, the life cycle of a product from start to finish can be mapped to the six key TCF outcomes. The life cycle can be broken down into a number of stages and Castle Trust treats each stage separately in terms of its dealings with customers:

  • Product design and governance (see “Outcome 1” and “Outcome 2”):

Product design, including updating existing products, will always take into account the need to treat existing and future customers fairly.

  • Identifying target markets (see “Outcome 2”):

Products are market tested with potential customers in the target markets before launch to make sure that they are clear, easy to understand and meet possible needs.

  • Marketing and promoting the product (see “Outcome 2” and “Outcome 3”):

All literature is written in clear English and articulates the options available to customers, including cancellation rights.

  • Sales and advice processes (see “Outcome 2” and “Outcome 4”):

Sales and customer facing staff receive comprehensive training and testing to ensure good understanding and consistency of information delivered to customers; and CPS does not provide advice to retail or professional customers; however, where advice is given by distributors, CPS will use reasonable efforts to ensure it is suitable.

  • After sales information and services (see “Outcome 5”):

All customers will receive regular updates and will also be able to access details of their Warranty Policy by telephone or (in due course), at any time, via the internet.

  • Complaints handling (see “Outcome 6”):

CPS has a clearly documented complaints process which is readily available to customers; and partners who have recourse to the Financial Ombudsman Service if they fail to receive satisfactory resolution of complaints from CPS.

  • No unreasonable post-sale barriers (see “Outcome 6”):

CPS acknowledges that complying with its conduct of business obligations and statutory regulations is a key step towards delivering TCF.

Information

  • CPS recognises that all product-related information provided to distributors must be clear and intelligible.
  • CPS appreciates the importance of maintaining a consistent dialogue with its distributors and that regular communication between distributors and their customers is equally important.
  • CPS offers training and education on Products to all those distributors who wish to receive it.
  • CPS endeavours to ensure that any distributor selling CPS Products are doing so in accordance with the TCF principles.
  • Those responsible for distribution and customer services ensure that no advice has been offered by CPS or, where applicable, any outsourced service provider.


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