Ch 13- CUSTOMER SERVICE Flashcards
What does customer service refer to
The broad activities that a company and its employees undertake in order to satisfy its customer
What is the main aim of good customer service
The customer will continue to do business with the company and also speak positively about the company to other potential customers
What is customer service a combination of
It’s a combination of marketing,strategic planning ,research and systems
In terms of insurance who is a customer
The one who buys insurance product
An insurance customer may be divided to
An insurance customer may be divided to an Internal and External customer
Who are external customers
Any person/businesses who are not employees of the company and are in the position to buy/use the company’s products or to advise others to use or buy its products
Best name for external customers who buy and use insurance products are know as
They are namely commercial customers and consumers. Consumers are an insurance company most important customers
What are the other types of external customers apart from commercial customers and consumers
- Brokers
- Agencies
- third party administrators
- investors
Who are internal customers
Employees of an insurance company who receive service from other employees of the company
How are employees of the company also customers
They invest time and effort in exchange for opportunity to earn a living
Employees of an insurance company are also known as
Stakeholders
Importance of customer service covers three key areas which are
- Consumer Awareness
- Customer Expectations
- Competition
What has given consumers more rights
EU Directives, unfair contract conditions, introduction of codes of conduct and the consequent Legislation
Why is climate insurance as a product susceptible to potential disputes
This is due to its intangible nature, and the fact that the policy as a legal document can’t be worded in a very simplistic way if it’s to reflect what are often complex situations
What type of service do customers expect from insurance companies
They expect value added services i.e 24 hrs helplines,complaint-handling mechanism for disputes and uninsured loss recovery services
In the height of intense competition what element will make the difference and bring back customers and keep them
Customer Service
Every organisation in this competitive world needs to consider
- develop the customer skills of its employees
- build employee confidence and professionalism
What is the most viable customer service activity
Policy administration function
The wide variety of activities under customer service include
- agents that provide service to customers in their home
- enabling customers to conduct their business with the company with freephone number
- setting a telephone network allowing customers to obtain information and conduct business 24 hours
- interactive websites and apps supplying company facts,its activities and products and services
- establishing complaint-handling mechanism
- providing fast turnaround on new business applications
What will codes of conduct or customer care charters set out
They set out the levels of service and standards that the customer can and should expect from the organisation concerned
What is powerful business strategy
providing quality customer service
Customer service can be a strategic weapon, how does it reduce cost
It reduces an organisation costs by helping it retain its customers
How does an insurance contract treat quality control and quality of service standard
They are treated as part of the product and not something distinct from it
What are the main advantages of providing quality customer service
- Customer Loyalty
- Attract new Customers
- Attracting and retaining high quality employees
- Differentiating a company from its competitors
- Improving the company’s profitability
- Increase productivity
- Improving the working environment
What does customer loyalty to an insurance company mean
It means that a customer is more likely to renew/increase their covers on the polices that they currently have, and are more likely to buy additional covers from the company
What will customer loyalty to an insurance company not mean
This does not relieve an insurer of the need to remain competitive
Why is it vital for insurers to instill loyalty in their customers
- It costs on average 4 or 5 times more to acquire a new customer than to retain an existing one
- Future underwriting results are more predictable if the underlying portfolio of risks remain fairly constant
If insurer is losing a substantial proportion of its policyholder each year and replacing them with other then
Their is increased volatility in the whole portfolio of b’ness
How is an insurance company able to differentiate itself and its products from its competitors
By offering quality customer service
As quality customer service improves then what else will improve
Productivity will also increase as customers complaints decline and errors minimized
Many motor policyholders will be quick to move from on insurer to another for a few pounds without caring for good service or not, when will this happen often
When the cover and service have not been tested in a claims situation
What are the benefits of an insurer in placing their business with an effective, efficient,professional and profitable insurer
- speedy claim settlement
- fast and efficient service, free from errors and delay
- accurate and effective assistance and advice
- value added benefits 0.
Companies will use the objectives stated in their customer service strategy to develope
Performance standards or service level standards
What is a performance standard
This is a stated level of performance against which actual performance can be measured
What is performance standard defined as
This is the minimum level of service quality and quantity that a customer service system must reach in order to meet customer service objective
The customer service standards must be
- measurable
- realistic
- understandable
What are internal standards
These are standards developed inside the company, based on the company’s own customer service system
Why do companies use internal standards
This is because
- they are easy to gather
- they can compare current performance with the past performance
- reflect actual procedures/practices followed in the companies that have developed them
What do industry standards allow
It allows company to compare itself to other companies in the same business
What are the important two items relating to staffing
- Recruitment
- Training of staff
How does the FCA define competence
Having the skills,knowledge and expertise to carry out a function without the need of supervision
When PRA is considering higher level of governance issues what key feature do they consider
They consider effectiveness of training and its link to competence
On measuring competence what are authorized firms required to maintain
They have an obligation to maintain a register of those who are competent and must be able to demonstrate the means by which competence has been measured
Who should provide detailed training about the company’s product
It should be carried out by company expert and backed up by reference manual
What are the frequency of appraisal
The frequency should not be less than annually and should relate to actual performance against agreed standards
Which principle in the PRA Rulebook and FCA Handbook contain the fair treatment of customers
Principle 6:
Firm must pay due regard to the interests of its customers and treat them fairly
What is one of the primary areas of any monitoring of firms undertaken by the FCA
Fair treatment of customers
What is the FCA’s Firm Supervision Framework designed to do
It assess a firm’s conduct risk and asks if the interest of customers and market integrity are at the heart of how the firm is run
What are the FCA outcome based principles for firms to fulfill their obligation on treating customers fairly
-Outcome 1-Consumers can be confident when dealing with a firm where fair treatment of customers is central
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 appropriate information and are kept appropriately informed before,after the point of sale
-Outcome 4- Where consumers receive advice, it has to be suitable and take account of their circumstances
Outcome 5- Consumers are provided with products that perform as firms have led them to expect
Outcome 6- Consumers don’t face unreasonable post-sale barriers imposed by firms to change products/switch provider/submit a claim or complaint
Minimum requirement for claims handling procedure required by the FCA to insurance firms is set out in the
Insurance: Conduct of Business Sourcebook (ICOBS)
FCA rules for claims handling re applicable to
Insurers, but intermediary must meet the terms of these rules for any delegated authority
How must insurers carry out claims
Claims must be handled promptly and fairly
What does the consumer Act 2015 state about claims
That claims made by a consumer are dealt with in reasonable time
According to the ICOBS situations that it considers unreasonable for the insurer to reject a claim to consumers (not commercial client) are
- non- disclosure, where policyholder did not reasonable expect to disclose material fact
- non-negligent misrepresentation of material fact
- breach of warranty/condition unless the circumstance of the claims is connected to the breach
According to the insurance Act 2015 situations that it considers unreasonable for the insurer to reject a claim to commercial client are
- duty of disclosure was neither deliberate or reckless
- breach of a warranty which now suspends rather discharge insurer’s liability under the policy
- breach of warrant where the warranty relates to a risk that is irrelevant to the type of loss actually occurred
When acting for a client in relation to a claim, what is an intermediate required to act
They are required to act with due care, skill and diligence
Prudential and conduct of business regulation of intermediaries is carried out by
the FCA
an authorized firm can in connection with any claim, put itself in a position where their own interest/interest of any person they are acting for, conflicts with the duty of any client when
- a proper disclosure was made to the client of all information needed to put the client in a position where they can give informed consent to the arrangement
- the authorized person has obtained the client’s prior informed consent
The requirement to avoid conflicts of interest is in which Principle of Businesses
Principle 8
A firm must manage conflicts of interest fairly both between itself and its customer and between customer and another client
In the case of conflicts of interest between insurer and client, how will the intermediary act
they must decline to act for the client or insurer unless
-Disclosure and informed consent are sufficient to enable them to reconcile the conflict
-Where the intermediary is an agent of the client in connection with claims handling
-where Intermediary is and agent of the insurer, by being provided delegated authority in regards to claims handling
-
In conflict of interest situations where the intermediary is an agent of the insurer and has delegated authority, what will the intermediary need to consider
They will need to consider whether they are at risk of putting themselves in position where they can’t act without some breach of duty either to the insurer or the client. They must consider if disclosure and consent is enough toe reconcile the conflict
The FCA rules that in situations where disclosure and consent is unlikely to be enough to end the conflict, what shall the intermediary do
If the intermediary is to act for the insurer due to profits share arrangement with the insurer, then the intermediary shall inform the client of the fact in relation to the claim
What shall intermediary do if it receives notification of a claim for a policy they have arranged and the insurer hasn’t given them authority to deal with the claim
- Promptly forward the notification to the insurer
- Immediately inform the client that they can’t deal with the claim
What is a notification of a claim
This is a demand made on an insurer to pay/provide a benefit that was insured under the policy
how can claim notification be done
-submitting a claim form or giving equivalent advice orally
What is not an example of a claim notification
- An equiry on whether a particular loss is covered
- Whether a claim can be made under a policy
What is considered prompt response to receiving a claim
-Within five business days
The information that must be provided after submitting a claim notification
- that the claim relates to a risk that is clearly not covered under the policy if its the case
- the action will be taken by the insurer, and when the action will be take
- if the insurer will be appointing any other party to contact the retail customer- the name of this party/its function/the work it will carry out in relation to the claim
Which legislation enforces Insurer should settle a claim promptly within a reasonable time, found in all insurance contracts
Enterprise Act 2016
What constitutes as a reasonable time
Time includes investigate and asses the claim
What are the relevant issues on constitute of reasonable time include
- type of claim
- size and complexity of the claim
- compliance with regulatory rules and guidelines
- factors outside the insurer control
What is the insurer required to proof if the insured wishes to claim damages for late payment
IT should prove that on the balance of probabilities that it has been caused to suffer a loss as a result of the delay, aw well as quantum of that loss
What is the limitation period within which an insured can claim damages for late payment
It has to be one year from the date of the last payment by the insurer in respect to the relevant loss
complaint is defined as
An oral/written expression of dissatisfaction, whether justified or not from on behalf of a person about the provision of/failure to provide financial service
How should a firm treat a non-eligible complainants
They must have in place and operate appropriate procedures for registering and responding to the expression of dissatisfaction
An eligible complainant is defined as
- a consumer
- a micro-enterprise < 10 persons and a turnover or balance sheet not exceeding 2 million pounds
- Charity with annual income <1 million
- a trust with net asset value of < 1 million
Complaints from eligible complainants are subject to
They are subject to FCA complaint handling rules and the eligible complainants have right of access to the FOS
All complaints files for general insurance must be retained for how long
For at least three years from the date of the complaint
As an absolute minimum the complaints files must include
- the name of the person dealing with the complaint
- the complainant name
- the capacity(eligible or non-eligible)
- the substance of the complaint
- any redress offered
- all correspondence and files relating to the complaint
According to the FCA every complaint is acknowledged
Promptly in writing
If complaint is not resolved within 8 weeks after receipt of the complaint then
Then a written response must be provided
A final response must
- accept the complaint and offer appropriate redress or remedial action or
- offer redress or remedial action accepting complaint
- reject complaint and give the reason why and
- enclose a copy of the FOS explanatory Leaflet or
- inform the complainant if they are dissatisfied with firms response they can refer complaint to the FOS within 6 moths
A Written response must state
- explain why it’s not in a position to make a final response and indicate when it expects to be able to provide on
- inform them that they may now refer the complaint to the FOS
- enclose a copy of the FOS explanatory leaflet
The FCA expects within a period of how long should almost all complaints be handled
Within a period of 8 weeks
What factors does the FCA consider when assessing how well a firm has responded to complaint
- quality of response compared to the complaints resolution rules
- the speed with which the response was made
When does a firm become relieved of further compliance of complaint handling procedures
once the complainant has accepted the response even with the firm properly advising them of their right to refer the matter to the FOS
What is the Financial Ombudsman Service
This is a free, independent and impartial service that deals with certain disputes between individual consumers/small business and financial organisation
Membership of FOS is compulsory to
All Authorized Firms
The Dispute Resolution;Complaints (DISP) source-book
Found in the FCA handbook,it contains full rules and guidance relating to complaints handling and on the operation of the FOS
According to the FOS what is the list of eligible consumers
- consumers
- guarantor
- micro-enterprise with < 10 employees turnover/balance sheet < 2 million,
- charity of an annual income < 6.5 million
- small business, annual turnover < 6.5 million and < 50 employees and balance sheet < 5 million
- trustee of a trust with net asset value < 5million
- Consumer buy to let consumer (CBTL)
Before a complainant can take their complaint to the FOS what must they ensure
They must ensure that they have exhausted the internal complaint procedures within intermediary/organisation and are still not satisfied with the outcome
Any legal proceedings that are underway based on the complaint must
They must be withdrawn prior to the complaint approaching the FOS, as the FOS will not become embroiled in legal proceedings
When can the complainant refer their complaint to the FOS
Within the earliest of;
- 6 months of the date of the firms letter advising claimant of its final decision
- 6 years after the event complained about
- 3 years after the complainant knew or should’ve known that they had cause for complaint
When can the FOS review a case outside the time limits
In exceptional circumstances like cases involving pension transfer and if the organisation agrees
How many days does the FOS have to answer a complaint
90 Days
When will the FOS treat a party in contempt of court
Parties that fail to produce necessary information or documents
How are most FOS disputes resolved
Through Mediation or Informal adjudication by caseworker or adjudicator
If both or either party appeal to the initial outcome then the case will be resolved by
It will be resolved by the panel of ombudsmen making a final decision
How will the FOS reach its decision
It will reach a decision based on what is fair and reasonable in all circumstances
The FOS is not bound by
the law or legal precedent
When making judgment what is the aim of the FOS
To ensure that customers are treated fairly and the law is not an excuse to avoid paying fair claims
How many ways can FOR redress be offered
A Money Award or Direction Award
What does the money award entail
Telling the firm the specific amount it should pay the customer to cover an financial loss they have suffered as a result of the problem they have complained about
The maximum award FOS can require a firm to make a complainant is
- pounds 350,000 plus interest,costs and interest on costs for complaints about action/omission by firms on/after 01/04/2019
- pounds 160,000 plus interest,costs and interest on costs complaints about action/omission before 01/04/2019 but which were refereed to the FOS after 01/04/2019
- pounds 150,000 plus interest, cost and interest on costs for complaints referred to the FOS before 01/04/2019
What happens if the FOS recommend a higher figure
It will recommend a higher figure of appropriate but will not be binding on the firm
What does direction award entail
Telling a firm what actions it needs to take to put things right for its customers
Who is a respondent
This is a firm about which the complaint is made
After a direction award is made what shall be done next
This decision with reason must be notified in writing to the complainant and the respondent
If the complainant does not respond to the FOS’s decision letter then
It is treated as a rejection and the respondent is not bound by the decision
The FOS is funded by
- a general levy paid by all firms
- a case fee payable by the firm to which the complaint relates
Under the GDPR the data subject have a right to
- right to be informed
- right of access
- right to rectification
- right to erasure
- right to restrict processing
- right to data portability
- right to object
- right in relation to automated decision making and profiling
What is data portability
the request a copy of personal data held on them, which must be supplied in a format that allows future use
