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PMR's Editorial philosophy:
"It is only by standing on the shoulders of
giants that I have been able to see further."
Sir Isaac Newton,
1642–1727
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Management Update
Are South Africans getting a fair deal?
Jayne Mammatt, Senior Manager, Governance & Sustainability, Ernst & Young
South African businesses should not underestimate the importance of understanding actual incidents and behaviours that cause customer dissatisfaction in service encounters. With numerous complaints about poor service delivery, are local consumers getting the same protection as their international counterparts?
There is tendency for businesses to be preoccupied with making profit at the expense of good customer relationships.
A sustainable business is one that maintains sustainable relationships with customers. A sale is only one aspect in creating this relationship. It goes beyond the simple selling of a product or services and then walking away. It incorporates how you design and promote your product. By dealing with customers fairly, you make them more valuable to the business. Customer satisfaction is inherently linked with loyalty.
Our international counterparts have regulations in place to enable them to enjoy better consumer protection such as the concept of Treating Customers Fairly (TCF) which was developed in the UK by the Financial Services Authority (FSA). It was introduced to help restore customer confidence in the financial services sector whose image had suffered in recent years.
The FSA in the UK has stipulated that fair treatment must push for organisations to provide full disclosure of material information to customers, honour representations and assurances where these have created a legitimate expectation in the mind of the consumer; and act with integrity and good faith.
South Africa can learn from the mistakes that UK firms have made and avoid the scandals that have plagued their financial services industry. Although consumer activism is still relatively new in South Africa and with the Financial Services Board (FSB) publicly showing disapproval of practices such as bulking, recent corporate scandals suggest that we still have a long way to go in addressing the protection of consumer rights.
Although South African legislation or the FSB has not enforced the implementation of TCF within the financial services industry, current legislation such as the recently implemented National Credit Act (NCA) allude to the types of regulations that may follow in the future. The NCA was introduced to encourage responsible lending and correct the imbalances that existed between consumers and credit providers.
TCF is fast becoming a focus area of the financial services industry, with many firms voluntarily adopting TCF as it gives firms the opportunity to reassess their values, enhance their control processes and deliver ‘best-in-quality’ service to customers.
Adopting a ‘treating customers fairly’ approach will give companies a competitive advantage in addition to protecting the customer. It has real and tangible benefits in the areas of improved customer service, increased sales and customer retention, which all translate to increased profits. TCF provides firms with the opportunity to build customer’s trust by ensuring that their needs are met, thereby ensuring the sustainability of the firm.
Companies need to understand and adapt to changes in the environment in which they operate. Businesses do not exist in isolation and have an impact on, and are impacted by, the environment. Customers are part of this environment and businesses need to understand that they are intrinsically linked to the sustainability of a business.
Tel: +27 (11) 772-3349
Email: jayne.mammatt@za.ey.com
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