Demystifying regulation

The introduction of the Financial Services Reform Act (FSRA) has changed not only the technical and educational requirements for doing business, but also the need to meet client expectations and deliver service satisfaction without bureaucracy.

The key message from all of this regulation is that the real quality revolution is well and truly on. This means that while we’re designing the processes to meet the expectations of the regulators we must do the same to ensure that it doesn’t impact negatively on client relationship management.

Some of the fundamentals are:

• develop a clear communication process;

• demystify the regulatory imperatives for the client;

• process the imperatives not the client; and

• reduce the service timeline with efficiencies.

Develop a clear communication process

As is often the case when a business is highly focused on administrative streamlining it forgets to communicate the changes to clients effectively. The administrative changes create confusion among clients and the business begins to be at odds with client expectations.

The business must bring into play a series of communication tools that allow the clients to familiarise themselves with the changes as they occur.

This gives a gradual change effect to the relationship and allows the client to see what is happening and more importantly why.

Sometimes a simple newsletter or client bulletin issued on a more frequent basis may be sufficient. The important thing is identifying a process suitable to your client base and then implement it.

Once you’ve implemented the process, create a communications champion to carry it out. While these people are usually only found in large organisations, a part-time champion in a smaller organisation is better than ad-hoc approaches.

Demystify the regulatory imperatives for the client

Regulatory imperatives are there to improve the quality of service to your client, not confuse them, so keep your communications simple. Most communication gurus will tell you that assuming an average age of 12 years among your audience will help keep your concepts and explanations simple.

Explaining why certain rules apply in doing business can be a negative experience in the context of relationship building, it can often lead to questions that remain unanswered (mysteries) and this leads to uncertainty in the relationship.

Consider using a communication specialist who has little or no technical jargon in their vocabulary to prepare communications for you.

Process the imperatives not the client

In working to meet the expectations of industry regulations some organisations become process mad and this overshadows their client focus. The danger is that the client becomes part of the process and used merely as a commodity in that process.

Following the compliance route does sometimes over focus the organisation into treating the compliance as the primary objective, which can lead to creating a process that alienates the client relationship. Once again communication and dialogue are critical.

Under the financial services model the correlation between compliance processes and relationship management excellence is in the ability of the organisation to manage the flexibility that is required to meet all expectations.

The tip here is to devise the processes for meeting compliance, but then test them by matching their deliverables against the service expectations of the client base.

Reduce the service timeline with efficiencies

In many organisations service quality and technical quality (competence) are mutually exclusive.

However, research shows that the delivery of quality service to clients must be linked to competence and capability in order to improve client satisfaction and increase loyalty. A business out of focus in any of the three will always struggle to meet service expectations of its client base.

Once again building efficiencies within the parameters of compliance enables the organisation to deliver service within the timeframes expected.

This eliminates the possibility of having to apportion blame to compliance for poor service performance.

The tip here is to look at response methodologies and client service processes within the organisation. Simplifying, coordinating and collaborating become key ingredients in promoting efficiencies.

Training staff in client satisfaction initiatives and policies is important. Horizontal communication within the organisation is as important as external communication. This includes promoting latitude of decision making among staff interacting with clients and efficient use of technology to empower staff and clients in order to anticipate and resolve service problems.

The challenges that regulations and compliance bring to organisations in meeting client relationship management expectations in the financial services industry have the potential to destroy ‘relationship intimacy’ and negatively impact satisfaction and therefore loyalty.

However, blaming compliance and regulatory regimes for this breakdown will never justify the end result — unhappy, disloyal clients.

Organisations need to work hard at creating loyal clients regardless of the environment in which they operate.

The environmental forces and the organisation’s management of the client relationship will determine whether you have hostages, defectors, mercenaries or loyalists as the majority of your client base.

Max Franchitto is the managing principal of MGFConsulting Group.