StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Financial Services in the UK - Essay Example

Cite this document
Summary
From the paper "Financial Services in the UK" it is clear that generally, in the UK the financial service industry felt the changes since the volume of transactions increased quickly which consequently increased the number of customer complaints and disputes…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.2% of users find it useful
Financial Services in the UK
Read Text Preview

Extract of sample "Financial Services in the UK"

Organizations across the world encounter many circumstances in which the entities must provide service to its The people that support business organizations, the customers, are entitled to be treated with the utmost respect. People are very protective of their financial assets because money moves the economy and it needed for people to increase their standard of living. An industry in which customer service is critical in order to run a profitable business is the financial service industry of the United Kingdom. The United Kingdom has booming financial sector due to the emphasis the government has placed on showcasing the strengths of this industry which has powerful entities with worldwide recognition such as the London Stock Exchange (LSE) and the an affluent population of 60,609,153 which has one of the highest real gross domestic product per capita in the world at $30,821 (CultureGrams, 2008). Preventing customer complaints and resolving them in a civilized manner is a critical success factor for companies in this industry in the UK. This essay studies customer service, customer complaints and the application of contract laws related to disputes between customer and firms in the United Kingdom. The financial services industry is a business whose worldwide market value is worth trillion of euros (Plunkett Research, 2008). This industry is composed of different segments which generate sales most of which are service oriented. The different sectors within the industry include commercial banking, private marking, equity market, consulting, financial planning, brokerage, real estate, and insurance among other financial services. In the United Kingdom the capital hub for financial activity is London, followed by Scotland a region in which 108,000 people or 10% of the working population are employed in the financial service industry that generated in 2007 nearly 7 billion euros in economic activity (Sfe, 2008). The people working in the financial services industry depend on customer retention in order for firms to build a portfolio of clients that bring recurrent business to firms. Just like in other industry a customer comes back and recommends the services of a store or company only if they are satisfied with the product they receive. It is essential to provide service to customer and to build a customer total quality program based on a strategic view that the customer is the most important stakeholder of the company. All business process must be geared to satisfy the needs of the customer and systems must be in place to ensure customer satisfaction is achieved. Since is impossible to satisfy everyone companies in the financial service industry must have protocols in place to handle customer complaints to ensure these events do not escalate to full blown dispute. Disputes have the negative consequence of potential causing larger financial losses that the financial service in dispute, the loss of clientele and it hurts the reputation of a firm which is bad for public relations and has long-term marketing repercussions. A dispute can rise without a company being at fault and out nowhere. Companies in the financial service industry must follow the prime rule of customer service “the customer is always right.” If this rule is followed as a platform for a strategic customer service plan in order to create a corporate culture in which all the member of an organization creates a products and services based on the needs of the customer base utilizing mechanism such as feedback in order compile input directly from the source. The philosophy is a theoretical approach, if a customer is wrong and the potential payoff loses in a resolution is or the customer claims are to outrageous to concede to the request then obviously the financial service must hold and battle for the firm’s right and monetary interest. In order to achieve and prevent disputes the employees of the company must be trained to prevent claims from occurring by providing excellent customer service. Customer service has three dimensions that must be considered in order to create a preventive plan to diminish the amount of claims and disputes of customers. The three dimensions are the actual product or service, the presentation and financial transaction, and the after the sale service stage. The product itself determines the demand for the product and the type of clientele that will be attracted to purchased the financial service. A defective product is an unwanted item that must be eliminated in order stop an array of disputes that will come with damaged goods. The second dimension is the service provided and the delivery pitch that is used by the salesperson to sale. The employees of the company must have excellent communication and human relations skills as well as intricate knowledge of business law in order to use this resource as a protective tool that gives the company a legal basis to lower the risk of financial losses associated with dispute events. The third dimension is the after the sale service. This type of customer service is a strategic choice that increases the chances of business growth since its output benefits include higher customer retention, word of mouth advertising opportunities, higher revenue per sale, and the ability to build up a clientele base faster. A financial services company needs a clear plan of action that must be followed by its staff to deal with customer relations. Here are some basic rules to handle customer complaints: 1. Implement business practices that anticipate customer complaints 2. Listen closely to the voice of the customer 3. Encourage customer to express themselves verbally 4. Don’t make excuses about the reason the problem occurred 5. Reassure customer the issue with be resolved promptly and that they are valuable assets of the company 6. Create systems that allow customer to provide feedback about their experience doing business with the company 7. Do not argue or belittle the customer’s complaint 8. Keep records and documentation of all customer complaints (Professor, 2008). Training and development is a business function that the HR staff and the managerial staff of financial service company must emphasize. As part of the training section which these companies must provide to the staff is a solid foundation in business law with emphasis in contract law and the legal framework applicable to the United Kingdom and the European Union. The skills that must be developed in the financial specialist working in the industry are communication, good manners, patience, human relations, verbal and written cognitive abilities and skills. The majority of conflicts in customer relation come from the following sources: errors, being misled, unfair treatment, excess costs, being mis-sold, and dishonesty (Professor, 2008). These are the primary reasons why regulatory agencies and the government created acts and laws for consumer protection. A contract is an agreement between two or more parties that have the mental capacity to understand the terms of the legal document (Toro, 1998). In Europe the EC Treaty laws provide protection to customers in all industries throughout continental Europe. There are different laws that formulate a legal framework of customer protection legislation. The Consumer Contracts Regulation of 1999 in Section 5(1) says that contract between a contractor or seller with a costumer is considered unfair if it causes significance in the party’s rights and obligations arising under the contract, to the detriment of the customer (Opsi, 2000). The Unfair Contract Terms Act of 1977 protects British costumers. Section 2(2) of the Act mentions negligence liability. Section 2(2) says in case of other loss or damages, a person can not exclude or restrict his liability for negligence as so far as the terms or notice satisfies the terms of reasonableness (Filodirito). Section 6(2) of the Act creates liability if the service or goods do not meet reasonable quality standards. Section 11(3) of the Unfair Contract Terms Act of 1977 covers contractual notices from businesses to clients. Section 11(3) says in relation to a notice (not being one having contractual effect), the requirement of reasonableness under this act is that it should be fair and reasonable to allow reliance on it, having regard to all the circumstances when liability arose or (but for the notice) would have risen (Filodirito). Generic benchmarking is a research technique in which researchers utilize to investigate the best practices in other industries to formulate ideas. In the retail industry the world’s leading ecommerce auction company, EBay Inc., which in the 4th quarter of 2007 generated global sales of 2.18 billion dollars and whose virtual platform provides access to all nations across the world has a semi-automated ADR system that allows the company to resolve conflicts among customers (EBay, 2008). Negotiation is the tool that allows business to find resolutions to disputes which are undesirable events that are not good for business or the public relations corporations. Contractual law applies the same for ecommerce based business under the statutes of the country in which the business operates (Reed & Sheed & Morehead & Corley, 2005). EBay generates revenue by action as an intermediary in the problem among the two parties, the seller and the buyer, which are both customers of the company. EBay is the agent that intervenes to find a solution to the conflict. The ADR system of the company has an algorithm which starts by the party filing a claim regarding a financial transaction. The claim can be filed only if the person pay through a financial service subsidiary of the company called Paypal, the world’s leading online banking firm which operated in 100 countries including the United Kingdom. The next steps of the ADR algorithm if the parties are not able to negotiate a resolution themselves within 15 days are illustrated below. Dispute escalates to a claim Seller responds to claim Buyer receives seller response Paypal Dispute Resolution specialist makes decision which is final ruling Case Cloes (Paypal, 2008). The Paypal specialist acts as an arbitrator between two parties which makes a final judgment for one of the two parties. The buyer and seller contract the clients of EBay signed includes a clause with the mandatory ADR system to resolve disputes among parties. The EBay system to solve conflict could be utilized by a typical financial service company in the United Kingdom such as Merrill Lynch. The company and its clients could enter into an agreement to have an agent to be the arbitrator to solve certain types of conflicts among the two parties. Not all disputes would be eligible for such treatments, more complex matter would follow the typical routes that the consumer protection laws of the in the UK mandate. The United Kingdom already has a free system in place that can be used as an ADR called the Financial Ombudsman Service. It is an independent service for settling disputes between financial services and their customers established by Parliament in 2001 (Financial-Ombudsman, 2008). The service is free for customers and provides the flexibility in cases were the customers are not satisfied with the decision the matter can be taken to the court system of the United Kingdom. The Financial-Ombudsman service can be used for the following financial products and services: banking, insurance, mortgages, pensions, savings and investments, credit cards and store cards, loan and credit, hire purchase and pawnbroking, financial advice, shares, stocks unit trusts and bonds (Financial-Ombudsman, 2008). The OFT is the United Kingdom’s leading authority at protecting consumer rights and fostering competition whose mission is to make markets work well for customers since its inception into the UK’s legal system in 1973 (Oft, 2008). The institution helped UK customers in many ways. They protect the rights and battle against firms that practice deceptive and coercive trading practices that lead to market inefficiencies and by empowering customers to seek greater service, value, quality and fair pricing practices. In January 2008 the OFT targeted banks with abusive overdraft banking charges. The banks involved in the controversy claimed they were within their rights to seek high compensation from financially irresponsible customers who attempt to pay with money that they don’t have a end up placing their checking accounts at a negative balance. Brian Doctor and employee of the OFT said “prices charged by banks in these circumstances are not prices in ordinary language – they are not services normally understood.” (Pollock, 2007). The Financial Services Company is an independent regulator in the United Kingdom not associated with the local government that was given statutory powers by the Financial Services Act 2000 (Fsa, 2008). Its policy is set by the FSA Board and the administration of the agency is the responsibility of the executive. Another law that protects customers in the UK is the Codes of Good Conduct. The financial services industry’s consumer service variable is highly correlated to the sales of a company. Customer service is the business mechanism that minimizes the number of complaints that lead to claims and disputes between the two parties. In the United Kingdom there is a legal framework composed of consumer protection laws. The company’s in this industry rely on negotiation and contract law to resolve issues with customers. One of the most effective agencies in the UK that provide a free ADR service to resolve differences between companies and their clients over a business transaction is the Financial Ombudsman Service. In the 21st century the international business community has evolved due to the acceleration of speed of the information highway. In the UK the financial service industry felt the changes since the volume of transaction increased quickly which consequently increased the amount of customer complaints and disputes. A customer relationship management (CRM) system is great solution to increase the quality of the service while at the same time lower labor costs associated with this business activity. The simplest and most effective way to prevent these unfortunate events is to have excellent communication with the customers. A CRM an information system geared towards storing, compiling and analyzing customer information to improve a company’s level of service. Automated systems such as PayPal arbitrage system are modules that can be added to a CRM to speed up the process of solving problems with clients. The CRM can also help relations with other important stakeholders such as suppliers with are another risk group which can initiate a dispute with the company. The financial service business will continue to evolve with new innovative product and services. The industry has to do a better job of education its client base to improve financial literacy among the population. A customer base focus is the best strategy to improve customer relations which leads to higher levels of profitability. References CultureGrams World Edition (2008). Country Profile: United Kingdom. Retrieved February 8, 2008 from CultureGrams database. Ebay.com. Retrieved February 10, 2008 from http://www.ebay.com Fidilirito.com. Unfair Contract Terms Act 1977. Retrieved August 4, 2007 from http://www.filodiritto.com/diritto/privato/civile/unfairtermsacr1977.htm Financial-ombudsman.org (2008). Retrieved February 10, 2008 from http://www.financial-ombudsman.org Fsa.org. FSA grants waiver to firms on complaint handling. Retrieved February 10, 2008 from http://www.fsa.gov.uk/pages/Library/Communication/PR/2007/090.shtml Oft.org (2008). Retrieved February 9, 2008 from http://www.oft.org Opsi.gov (2000). Sale and Supply of Goods Act 1994 (c.35). Retrieved August 4, 2007 from http://www.opsi.gov.uk/acts/acts1994/Ukpga_19940035_en_2.htm#mdiv3 Paypal.com (2008). Retrieved February 8, 2008 from http://www.paypal.com Plunkett Research (2008). Banking, Credit and Insurance Industry Trends. Retrieved February 9, 2008. Pollock, I. (2008). OFT may comprise over bank charges. BBC News. Retrieved February 10, 2008 from http://news.bbc.co.uk/2/hi/business/6989510.stm Professor (2008). Classroom Lectures. Reed, P., Shedd, P., Morehead, J., Corley, N. (2005). The Legal and Regulatory Environment of Business (13th ed.). New York: McGraw Hills Companies. Sfe.org. Scottish Financial Enterprise. Retrieved February 8, 2008 from http://www.sfe.org.uk/info/overview_scottish_financial_industry Toro, J. (1998). Business Law Course: Part I (9th ed.). Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Financial services in uk Essay Example | Topics and Well Written Essays - 2500 words”, n.d.)
Financial services in uk Essay Example | Topics and Well Written Essays - 2500 words. Retrieved from https://studentshare.org/miscellaneous/1544289-financial-services-in-uk
(Financial Services in Uk Essay Example | Topics and Well Written Essays - 2500 Words)
Financial Services in Uk Essay Example | Topics and Well Written Essays - 2500 Words. https://studentshare.org/miscellaneous/1544289-financial-services-in-uk.
“Financial Services in Uk Essay Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.org/miscellaneous/1544289-financial-services-in-uk.
  • Cited: 0 times

CHECK THESE SAMPLES OF Financial Services in the UK

Corporate Governance in Financial Services in the UK

From the paper "Corporate Governance in Financial Services in the UK" it is clear that there should be an independent body of auditors appointed by the shareholders at the beginning of every financial year.... The financial crisis in the uk was caused, to a substantial extent, by weaknesses of the corporate governance arrangements.... esides, the corporate legal system in the uk is company-based and the directors are elected to represent the shareholders (Rahman, 2009, p....
5 Pages (1250 words) Essay

Strategy in Action. Zurich Insurance

The mission statement of Zurich Insurance is as follows: “We're working to become the uk's leading provider of financial services, giving you customer service you've never experienced before.... urich Insurance is an international company that is engaged with the rendering of financial services related to insurance-based sector.... Vision Zurich Insurance is an international company that is engaged with the rendering of financial services related to insurance-based sector....
12 Pages (3000 words) Essay

Financial Services Regulation in the UK

The paper "Financial Services Regulation in the uk" states that financial services, referring to the services offered by institutions such as banks, insurance and mortgage firms play such important roles in the economy of a country that they need to be effectively regulated.... Financial Services Regulation in the uk For financial accountability, reliability and the credibility of financial services, countries have established various organisations and implemented a number of methods by which the players in the financial and banking sectors are regulated (Andenas & Chiu, 2011)....
9 Pages (2250 words) Essay

Recent Organizational Innovations such as TQM and BPR

TQM is able to transform the work environment as it ensures quality for products and services in which workers and the management has to participate keenly.... It deals with procedures that affect customers for services and commodities in terms of delivering quality products and services (Knights & McCabe 1998, p.... TQM allows each employee an opportunity to participate in quality improvements of products plus services (Tuckman 1994)....
8 Pages (2000 words) Essay

Response to Changing Perspective of Service in Financial Services Sector

viva is the biggest insurance group in the uk and it is the world's sixth largest company in the insurance industry with market leadership in general insurance, fire insurance, pension, long term savings and fund management with worldwide operations.... The FSA has announced several measures to improve corporate governance in the financial services sector.... inancial Services Act 1986 has been replaced by the financial services and Market Act 2000 with a view to tightening the controls on the financial services industry....
3 Pages (750 words) Research Proposal

International Retail Restructuring and Divestment: the Experience of Tesco

The Tesco company is the market leader with a wide range of stores in the uk.... The first part of the strategy is to grow in the uk market (Desjardins, 2005).... The company wants to grow the core market of the uk.... The Tesco company initially started off with products such as beverages and food and later the company diversified into the various sectors of electronics, clothing, financial services, retailing, etc.... The business tactics that were designed to support this strategy was to expand the staff base by 20,000 in the next two years, implement new promotions for its products and services, and even to restructure all its store designs....
6 Pages (1500 words) Case Study

Lloyds TSB Brand

LTSB is a subsidiary of LBG and offers a wide range of banking and Financial Services in the UK and worldwide.... Since the economy is coming out of recession, therefore, various changes are taking place in the uk financial environment and it is expected that such changed will also influence the organization.... Market penetration appears to be the current strategy of LTSB in the uk market.... The environmental analysis shows that recent global financial crisis of uk has put a great pressure on the financial companies like LTSB....
18 Pages (4500 words) Research Paper

Customer Relationship Management in the Banking Sector

What is the main difference in the application of CRM as a tool for customer retention between private and public sector banks in the uk?... To study and review the literature on the rate of implementation, concept and application of CRM in uk based banks.... The paper "Customer Relationship Management in the Banking Sector " is an outstanding example of a management research proposal....
8 Pages (2000 words) Research Proposal
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us