A Client Centered Approach

Question 1

What is customer service?

Answer 1

• Giving the customer what they want, when they want it. Providing products and services that meet a customers financial needs.
• Providing consistent and on-going backup to customers, including accuracy, reliability and courtesy.

Question 2

Why is customer service important?

Answer 2

• Customer satisfaction - happy customers are enjoyable to deal with
• Quicker to deal with a satisfied customer, rather than one who is making a complaint
• Satisfied customers are an important source of referral business
• Satisfied customers will keep their business with the company. It can be costly to win business from potential customers

Question 3

State areas of customer satisfaction in day-to-day transactions.

Answer 3

• Queue management
• Greeting with a smile & using the customers name: apologise if they’ve had to wait
• Treating the customer courteously
• Thanking the customer at the end of the transaction

Question 4

State areas of customer satisfaction in post-transaction.

Answer 4

• Providing privacy and confidentiality
  
  • ​Verify the customer when performing relevant processes
  • Ensure private info cannot be overheard – take to a private room
  • Ensure confidential info is not left out on e.g. a desk
  • Treat data as according to the DPA 1998
• Consider the image and presentation of the organisation
• Good telephone technique:
  
  • Answer call quickly​
  • Smile on the phone
  • Greet customer with good morning/afternoon + org name + your name + ask how you can help
  • If one needs to transfer call to another colleague explain this to the customer, give name of new person they’ll deal with, ensure customer doesn’t have to repeat themselves to the new person
• Informing the customer of the most suitable way to conduct their transactions

Question 5

How can queues be reduced?

Answer 5

• During busy periods have staff who normally work in back office able to come and serve on the counter
• Having a member of staff “walk the queue.” For example if a customer is in to pay a credit card bill by cheque, the person walking the queue could take this transaction and either process it later, or process it in the back office
• Identify if the customer is aware of other services & delivery channels that negates the need to come to the office. For example ATMs, Drop Box facilities and internet banking services

Question 6

How does one treat the customer courteously?

Answer 6

• Appear attentive:
  
  • Show interest in their conversation. Can do this by paraphrasing/summarising what the customer says
  • Maintaining eye contact with the customer as they speak & nodding is an encouraging non-verbal signal
• Give the customer your name
• Don’t chat to colleagues unnecssarily when dealing with the customer
• Ask the customer if there is anything else you can help them with today

Question 7

What can be done to influence the image and presentation of the organisation?

Answer 7

External Environment:

• This gives the important first impression of the org. Therefore premesis should be clean, free of graffiti and illuminated signs operational

Internal Environment:

• Publicity material on display should be up to date & smartly presented: posters hung straight, leaflet dispensors full and neatly stocked etc
• Well lit office and all the bulbs operational
• Adequate stocks of customer stationary that are neatly displayed
• Signage used should be clear
• Clocks and calenders should tell the right time
• Machinary for customers should be kept clean - ATMs, night safes, non-cash transactions drop boxes etc.
• Clean, litter free customer areas
• Tidy desks with excess papers and files stored out of sight

Question 8

What is a banker-customer relationship?

What are the basic principles?

Answer 8

In essence a banker-customer relationship is a contractual one based in common law.

The basic principles are:

• A contract imposes legally binding rights and duties (or obligations) on both parties
• These obligations/duties on one party confer corresponding rights on the other
• Non-fulfillment of these obligations/duties may result in civil action being brought by the aggreived party

Question 9

When is the banker-customer relationship deemed to begin with regard to:

a. An account holder
b. Any other banking service

Answer 9

a. As soon as the bank opens an account for someone with the intention that the relationship is permanent. In Great Western Railway Co v London and County Bank Co Ltd 1901 it was held that the cashing of cheques over a long period of time for a person who had no account with the bank did not make him a customer

b. As soon as the bank agrees to provide that service for example advice on investments in Woods v Martins Bank 1959

Question 10

What case provides the foundations of the implied banker and customer duties?

Answer 10

Joachimson v Swiss Bank Corp 1921

Question 11

According to Joachimson v Swiss Bank Corp 1921, what are the bankers duties?

Answer 11

1. To receive money and collect cheques for the customer’s account
2. To pay customers’ cheques on demand provided that:
   
   • adequate funds/appropriate overdraft arrangements are available
   • it’s drawn in the proper form
   • payment is demanded at the proper place and during business hours (Baines v National Provincial Bank Ltd)
3. To act in good faith and w/o negligence in refusing to pay a cheque (Davidson V Barclays Bank Ltd 1940)
4. To maintain secrecy regarding all the customer affairs
5. To advise the customer of any forgery of their signature (Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd 1985)
6. To give reasonable notice before closing a credit account so that the customer can make other arrangements and have outstanding cheques cleared without damage to their rep

Question 12

According to Joachimson v Swiss Bank Corp 1921, what are the customer’s duties?

Answer 12

1. To exercise resonable care in drawing cheques. Cheques drawn carelessly may facilitate fraud or forgery and mislead the bank (London Joint Stock Bank v Macmillan & Arthur 1918)
2. To advise the bank of any forgery of his signature, otherwise they may subsequently be barred from denying the validity of the signature (Greenwood v Martins Bank Ltd 1933)
3. To pay charges

Question 13

What are the bankers rights?

What are the customer’s rights?

(as the relationship is contractual, bankers duties (Joachimson v Swiss Bank Corp 1921) confer rights to customer and vice versa)

Answer 13

1. The right to charge a reasonable commission for their services. The banker has an implied right to charge a commission for keeping the customer’s account and for other banking services. Bank charges may be imposed on certain current account holders as outlined in the Terms & Conditions of the account.
2. The right to interest; e.g. on loans. The banker has no implied right to charge interest on money borrowed by a customer - this is normally decided by express agreement or implied from the usual course of dealings between the banker and customer.
3. The right to set off; where a customer has 2 accounts, one in credit and one in debit, the banker can, unless otherwise agreed, set off or combine accounts, thus reducing the amount which the customer owes him or vice versa.
4. The right to return unpaid any cheque which would create an unauthorised overdraft or any cheque which would exceed an agreed overdraft limit.

Customer’s rights aren’t specified but it doesn’t seem unreasonable for the customer to expect the bank t abide by its duties.

Question 14

What case concerns the bank’s duty of confidentiality?
When is disclosure acceptable?

Answer 14

Tournier v National Provincial and Union Bank England 1924

Exceptions are:

• Under compulsion by law:
  
  • Disclosure under compulsion of a Court Order
  • Disclosure to an official who is statutorily entitled to compel disclosure
  • Disclosure where there is an onus on the bank to disclose info
• If there is a duty to the public to disclose: e.g. during wartime, if a customer’s transactions helped the enemy, e.g. to combat money laundering.
• With express or implied consent of the customer: This authority should be made in writing e.g. to furnish an accountant with banking details to fill out tax.
• If the interests of the bank require disclosure: Where there is court action between the bank and its customer some disclosure about the customer’s affairs will be necessary. Were this no the case, then any court action against a defaulting customer would fail as the bank would not be able to explain its position to the court.

Question 15

What is the banker’s lien?

Answer 15

The right implied by law to retain some moveable property belonging to another until some debt due has been paid.

• Special lien: entitles the holder of an article to retain it until payment of the debt which relates to that property e.g. keep a boat that’s been repaired until payment is made.
• General lien: entitles the holder of an article to retain it until some general balance due arising from a series of transactions has been paid, not just the debt to which the property relates.
• Lien of a banker: the banker has a general lien over negotiable instruments (bills, cheques etc.) and securities which have come into their hands in the normal course of banking transactions e.g. if someone borrows £500 from the bank by depositing a security worth £1000, the bank secures a lien of £500 on the security. However the banker does not have lien against articles held in safe custody.

Question 16

What is the appropriation of payments?

What case concerns the the appropriation of payments?

What is the consequence?

Answer 16

• The allocation of funds deposited by the customer to various debts with e.g. a bank. If the customer doesn’t specify which debt they want paid off, the bank may decide. If neither decide then it is decided on a fisrt in, first out basis.
• Clayton’s case: Devaynes v Noble 1816
• This established the principle of ‘first in, first out’, which is best explained by an example. X contributes £10,000 to a fund containing no other money and the next day Y contributes £10,000 to that fund. If the following day the trustee of the fund wrongfully takes £10,000 from the fund the loss would be borne entirely by X.

Question 17

State some retail banking products and services.

Answer 17

• Current Accounts
• Standing orders, direct debits, faster payments
• Basic accounts
• Overdrafts
• Deposit/savings accounts
• Individual savings accounts (ISAs)
• Personal loans
• House purchase loans
• Equity release loans
• Bridging loans
• Electronic funds transfer
• Credit cards
• Term loans
• Self build and property investment finance

Question 18

What are ISAs?

Answer 18

Individual Savings Account

• Can consist of cash or stocks or shares
• No tax liability
• There’s a max annual limit set for the amount that can be paid into an ISA. This is reviewed by the gov annually
• Stocks and shares ISAs can be taken by anyone over 18 who is ordinarily resident in the UK for tax purposes. A cash ISA can be opened by anyone over 16 who is ordinarily resident in the UK for tax purposes.

Question 19

What types of home purchase loans are there?

Answer 19

• Capital & interest mortgages
• Interest only mortgages: tend to be set up alongside some form of repayment vehicle. Once the loan reaches its end, and the repayment vehicle reaches maturity, the capital part of the mortgage can be paid off as a lump sum.
• Current account mortgages: the loan and the current account are amalgamated into one account, so each months salary reduces the total outstanding balance and thus reduces the interest paid.
• Muslim mortgages

Question 20

What are common repayement vehicles?

Answer 20

• Endowment policies
• Personal pension plan
• ISA

Question 21

What are the 2 methods of Sharia compliant mortgage?

Answer 21

Ijara & Murabha

Question 22

What is the Ijara method?

Answer 22

1. The financial institution purchases the property
2. Whilst the customer stays in the property, they make payments to the financial institution that total the purchase price. These payments are scheduled over a period of up to 25 years
3. During the loan repayment period, the customer is also charged rent on the property. This rental amount is reviewed annually and will decrease over the lifetime of the facility as the capital sum outstanding to the lender decreases.
4. Once the customer has repaid the money that was spent on purchasing the property, then the property is sold to them.
5. It can be possible to borrow up to 90% of the value of the property in this way.
6. The precise details and operation of this arrangement can vary from lender-to-lender

Question 23

What is the Murabha method?

Answer 23

1. The financial services organisation purchases the property from the seller at the original price. They then sell it to the customer at a higher price.
2. The amount of the higher price can be paid back to the lender over a period of up to 15 years.

Question 24

What is the disadvantage to the Ijara and Murabha methods?

Answer 24

In both of these methods stamp duty must be paid twice in each transaction.

Question 25

What is an electronic funds transfer? What are the 2 main advantages to the retailer?

Answer 25

Allows the customer to present a card to a retailer and on inserting a PIN, the transaction is authorised. The cardholder's account is debited and the retailer's account is credited. Contactless payments are also being phased in. 1. As they make cashback payments to customers, they are reducing the cash held in their tills which is an added security measure 2. As the retailers cash holdings are reduced, they will have less cash to pay into their bank, thus reducing cash handling service charges that the bank will charge

Question 26

What is an electronic purse?

Answer 26

An electronic purse is a plastic card that is topped up with money, like a pay as you go mobile e.g. Oyster Card. The benefits are: * Customers can only spend what is on the card - good for customers who don't want to go into debt * If the card is lost or stoled, the max exposure to loss is the balance on the card * There's no need for a live link to the customer's bank account at the time that the card is issued - the amount spend can be deducted from the card.