The Financial Conduct Authority (FCA) is the independent body responsible for regulating the conduct of financial services firms to ensure that consumers are protected and the economy is maintained. As part of their supervision, the FCA requires businesses to establish and implement measures to conform to the authority's 'Principles for Businesses'. Companies regulated by the FCA must also make use of Management Information (MI).
How can MI be used?
MI is information that is collected during a period of business activity. It can be about customers, staff, calls, visits, meetings, sales, opinions, parts of a process, or predictions. This information is not just based on numerical (quantitative) data. Comments or opinions (qualitative data) are also considered MI. Combined quantitative and qualitative data can provide a comprehensive, balanced view of the company's performance. All information relevant to an organisation, regardless of the type of data or source, can be described as MI.
Why is it useful?
MI is a very helpful way to analyse trends, which helps businesses to forecast the future and solve any problems before they occur. The FCA requires their regulated firms to use MI to monitor the outcomes they are achieving for customers, which means evaluating both consumer treatment and expectations. By using MI in this way, you can improve your service and business performance.
Who is relevant to?
It's also important to note that MI is still relevant for indirect contact with clients, as you and your organisation are responsible for treating customers fairly, even if you do not communicate with them directly. To do this you must request regular and structured MI from distributors and third-party administrators (TPAs), to ensure that they are treating customers fairly on your behalf.
The principles of good MI
For MI to be effective, it must be accurate, relevant, timely and consistent. The FCA outline a set of principles that businesses should use to ensure that management makes good decisions about the way that customers are treated. A useful acronym to help you to remember the principles of MI is CART:
- Consistent: This means evaluating MI on a period-to-period basis, allowing managers to spot trends and make sound decisions
- Accurate: MI data must be accurate, with commentary contributed by the right people. For example, a report on the number of sales for a product could include commentary from the sales manager. This would provide additional information, such as how the data was collated and key considerations when reviewing the data i.e. putting the data into context.
- Relevant: It's also important the MI is relevant to what a manager can directly influence, or escalated to someone else who can take the relevant action.
- Timely: Finally, MI should be available promptly after the relevant business activity to enable managers to act efficiently.
Why is MI important?
MI is an efficient and effective way for businesses to identify potential issues before they cause problems for the business. This forward-looking approach saves businesses time and money, as they do not need to waste as many resources on resolving problems or remedying customer complaints. In this way, MI measures should be integrated into companies' working culture. This will ensure that staff fully understand how to use MI, including how to implement plans and processes to mitigate potential problems. Effective MI is also important for a business to determine whether their customers are receiving fair treatment, which means comparing the data to the FCA's 'Six Outcomes' for 'Treating Customers Fairly' (TCF). Implementing MI is also essential to conform to the FCA's regulations, which means avoiding any non-compliance fines or prosecution.