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Dangerous road to client irresponsibility

There was a time when marketers’ jobs were uncomplicated. Having designed products for particular markets there was seldom criticism if sales exceeded the ex-pected volumes.

Sure, they might get a bit of stick from internal colleagues. The guys from the finance department might argue the initial price was set too low and that a higher price with fewer sales could have generated more profit.

Manufacturing and distribution departments might come under workload pressure and criticise them for misreading the likely demand.

But none of these complaints would cause the marketers to lose much sleep and the problems would soon be forgotten as the corporate body rejoiced in its success.

I can’t see a motor manufacture worrying unduly if it predicted sales of 10,000 cars and ended up having to ramp up production to satisfy de-mand for 50,000.

Yes, the price might rise over time to make more profit and damp-en down demand so that manufacturing and distribution could catch up, but in reality the delivery dates would be extended.

But this doesn’t apply to the world of financial services, where the role of marketers has become more complicated.

This is because of the Treating Customers Fairly initiative.

The Financial Services Authority suggests that if mortgage marketers embrace the spirit of TCF fully, in any situation when sales exceed anticipated de-mand, the possibility of mis-selling should be investigated before anyone cracks open the champagne. The argument goes like this.

If lenders predict a certain level of sales for, say, a sub-prime product and sales exceed its expectations, it could be that poor training or less innocent reasons led clients to buy something that is inappropriate for their needs.

In practice, this means that lenders not only have to review their internal sales, they have to keep an eye on their distributors’ methods too.

Let’s take the motoring analogy further and apply the same theory to car manufacturers.

Let’s say it was expecting a particular level of sales for its 4×4 vehicles, but in the end sold five times the amount predicted by its marketing plan.

The FSA would say it should look at its own and its distributors’ marketing and sales procedures to make sure no-one ended up with cars that weren’t suitable for their needs. Can you imagine Ford or Peugeot doing this?

Don’t get me wrong. I empathise with the regulator’s attempts to challenge the traditional thinking of marketers, but how much further should they go to mollycoddle consumers?

After all, customers already receive detailed Key Facts Illustrations before buying mortgages.

Going too far down the current road will mean that consumers would be able to abdicate all re-sponsibility for the products they buy.

Although lenders and brokers are easy targets, the FSA should be putting equal resources into educating consumers.

Better informed clients are more likely to buy the right products and are less likely to be hoodwinked by rogue salespeople.

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