Restaurants, and Retail Outlets have customers. Private Banks, Lawyers and Solicitor have clients. So what's in a name?
Turn to any dictionary and a "customer" is defined as a person or business who buys goods or services. This is a simple definition which describes a transactional relationship.
Surely the point of the FSA's TCF push is to remove the old style sales process and look more towards having a relationship built on trust and professionalism?
I didn't study Latin at school but apparently the word client derives from the Latin word cliens denoting a person under the patronage and protection of another. Check out the dictionary definition and in its simplest form a client is a person using the services of a professional person and in fuller versions a person that depends on the protection of another. The word client implies a duty of care and suggests a longer term relationship.
In a bid to reduce the rulebook to a simple set of principles, which some commentators think is more about cost cutting at the FSA than a method to raise standards, is the regulator sending mixed messages by not being clear in their own communication?
Launching TCF would have been difficult enough but in the middle of a credit crisis the FSA are coming under increasing pressure from the media and Government. In normal circumstances TCF would be a positive initiative to raise standards. No one outside of the industry would take any notice of it and quietly we would see a series of industry wide improvements. Now, as the credit crunch bites the media are looking critically and the Regulator and asking searching questions. With mortgage fraud and defaults under the spotlight TCF has become the FSA's chief weapon.
The FSA won't adjust their TCF strategy now as too much money has already been spent. They also won't change the name. Even if they want Advisers to have client relationships they will insist on calling them customers and potentially cheapen the public perception of our industry. What the Regulator will do is to push another agenda under the cloak of TCF.
Last week I attended an FSA TCF validation audit as an observer. It is here that the Regulator will fight the battle against mortgage fraud and financial crime. Twenty Five percent of Firms will be selected for these visits over the next three years and this is the hand to hand combat between Auditor and Adviser. The test of if the Adviser is treating people as clients and building a long term professional relationship or if the Adviser is treating them as customers and simply selling products to them.
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