TCF MI – Sales Advice – Case Example

Background

ABC Mortgages is a mortgage broker with six sales consultants. The firm sells mortgages and MPPI on an advised basis – offering a range of, on average, 10 mortgage products and 5 MPPI products at any given time.

In order to measure and evidence whether its sales advice is suitable and takes account of its customers’ circumstances (TCF outcome 4) the firm decides to collate and analyse the MI set out below:

across the business as a whole, and
in relation to individual sales consultants

Mortgages (volume)

MPPI (volume)

Product

Product

Actual sales against target (%)

Actual sales against target (%)

Self cert/Full Status

Commission rate/incentive

Commission rate/incentive

Premium type (single/monthly)

Extended tie in

Insurance cancelled within the cooling off period

Completion (yes/no)

Insurance declined

Weeks between offer and completion

Early redemption (during penalty period)

Sorting and reviewing its sales figures using these different criteria – and by sales consultant - allows the firm to spot trends which could indicate the risk of unsuitable advice and therefore unfair treatment of customers. (Please see our MI checklist for the TCF risks associated with these characteristics, and for other criteria that the firm could use. Also see the later section below on how an Excel spreadsheet is used to collate these figures.)

An example of MI leading to corrective action - Sales consultant ‘B’

ABC’s MI for the last review period shows that one consultant (‘B’):

is constantly exceeding sales targets
has turnaround times for completion that are very short compared with the average
is selling much higher than average self certification mortgages
has an MPPI cancellation rate of 75% whereas the company average is 40%

A review of his files (triggered by the MI trends) shows that:

a large number of customers sold self certification mortgages could have proven their income and most were employed, so had unnecessarily paid a higher interest rate
many of the MPPI policies were cancelled in the cooling off period because the customer already had appropriate cover

Sales consultant B is called in for an appraisal. The cases are discussed in relation to TCF and suitability of advice. A program of remedial action is discussed and agreed, including a customer exercise.

Consultant B is required to attend a refresher MPPI sales training course and a TCF regional workshop specifically focusing on suitability of advice. In the short term all of Consultant B’s cases are checked by the Sales Director before offers are made.

The next month reveals that consultant B’s MI is in line with the benchmarks expected and therefore the firm is able to demonstrate/evidence to the FSA that they are achieving Outcome 4.

The firm continues to monitor the MI on a regular basis.

How the firm tracks and acts upon its sales MI

Consultants’ sales are tracked on an Excel spreadsheet which is updated each time a sale is made.

The spreadsheet contains a separate page for each consultant into which the sales figures and the types of data shown in the table above are entered
As the figures are entered and the numerical totals updated, simple bar and pie charts simultaneously update to provide an ‘at a glance’ view of current sales trends by volume, product type and the other types of data shown in the table
As the spreadsheet updates, the sales results and other data for that particular sales consultant are also automatically collated onto an overall summary spreadsheet which highlights key trends for the firm as a whole.
All of the above data is reviewed on a weekly basis.
Statistics showing unexpected trends trigger file reviews and discussions with consultants on individual cases.
Where relevant this leads to follow up training and/or the setting of revised targets for further review - any resulting training is also logged in the Training Log which provides its own MI.
Thereafter continued monitoring of trends assesses the effectiveness of any change in sales practices and whether other follow up action has improved TCF standards – with further corrective action being taken if required.
All of the above is documented and discussed at monthly management meetings and forms part a regular TCF MI report where further required actions and outcomes are also documented.

TCF MI – further practical examples from the FSA (opens new window)