Are you being served? When commitment to customer service falls short

A sure way to measure customer care is to look at how companies react when they have failed to give good service. Our anonymous adviser offers contrasting examples and bemoans the FSA’s lax TCF approach to closed insurers.

In my experience, the way a company reacts to something going wrong is the most efficient way to measure its commitment to customer service, and two recent examples have only further reinforced this view.

The first example relates to an annuity application to MGM where, having originally advised us that it had written to the ceding scheme to request funds, it then realised it had not and had mislaid the file. That was hardly auspicious, but MGM then prioritised a team to locate the file and prioritised the processing and request for funds.

This alone would have been worthy of praise but MGM also contacted the ceding scheme and persuaded it to prioritise the transfer of funds, which was done the same day it received the request. As a result our client has not been inconvenienced and MGM’s standing has risen significantly in our eyes because we know it is a company we can trust to do its best for our clients.

Less helpful behaviour

I would like to contrast this with another annuity case in which NPI was the ceding scheme. The client had a S32 with guaranteed minimum pension (GMP) benefits and NPI required £116,000 of a £140,000 fund to meet the GMP liability, meaning it would only pay £24,000 as a tax-free lump sum.

We were able to obtain a quote in which only £97,000 was required to meet the GMP and therefore asked NPI to confirm that it would pay £35,000 tax-free cash, a simple enough question. But NPI took its time answering. It was a month and a half before we obtained an answer, and that was only because we persevered and refused to accept being ignored. NPI finally admitted the reason it they had not answered the question was that no-one at the company knew the answer.

The inevitable complaint to NPI to recover the income lost by the client was declined. NPI admitted causing a delay but claimed this had not delayed the transfer of funds (perhaps someone can explain this logic to me). The complaint has now been sent to the ombudsman.

Drawback of closed insurers

What this demonstrates, if further proof was required, is that closed insurers have no interest in either providing an acceptable level of service to their policy holders or accepting the blame for their failings.

Former US President Theodore Roosevelt once said: ‘Speak softly and carry a big stick.’ The FSA prefers to use strong rhetoric but appears to have mislaid its stick when it comes to closed insurers. Treat customers fairly is a big stick and we have to hope that the FSA learns how to wield it.