Financial products taxing consumers mentally, financially

Financial customers in South Africa feel emotionally, mentally and financially overwhelmed by the products and services offered by the industry.

This is according to research outcomes detailed in the Financial Sector Conduct Authority’s (FSCA) first-ever Financial Customer Behaviour and Sentiment Study, which was released on Thursday.

The FSCA study – which looks to understand how customers engage with and perceive the local financial sector – found that on a broader level, customers of the sector were generally pleased with the service and product offerings they received.

However, on a deeper level, those surveyed expressed difficulty understanding financial products and services, while some found them to be too costly. More than 50% of customers above the age of 41 and younger than 60 reported that financial products were just too expensive.

Further, it is apparent from the research findings that customers struggle to understand the terms and conditions that come with the financial products they take. The understanding gap is wider for people under the age of 30.

“Further to the above, most customers report at least one product and/or service that they do not fully understand,” the FSCA said.

“The least understood are store cards, insurance, medical aid, credit cards, and funeral policies.”

Women mistreated

The latest research found that customers generally shared the sentiment that financial institutions either always treat them well (33%) or mostly treat them well (42%).

However, more concerningly, the data collected suggests the country’s financial sector may, at times, fail the test of treating unmarried women fairly.

The FSCA flagged this as concerning because unmarried women were the only group that stood out for reporting “poor treatment” by such institutions, with about 12% of these women citing bad treatment.

“When probed further, they reported that their financial institutions were dismissive of the complaints that they made or were unwilling to answer their questions.”

Married women also cited some difficulty with service, but fortunately for them, they had husbands who seemed to come in handy.

“Married women report finding it extremely difficult to switch products. In engagements, they reveal that they sometimes struggle to resolve complaints themselves but note that their husbands were subsequently able to resolve them.”

Lifelong customers

Despite some of the highlighted service hiccups in the financial sector, it does not seem like it will ever want for customers, mainly because most respondents believed that the products offered by the sector met their needs well (68%), with only 2% of customers saying the products serviced their needs poorly.

Another aspect keeping customers around, however, is the difficulty they face when cancelling or switching their products.

A total of 45% of customers found it difficult to switch financial products as associated penalties and dismissive staff were key barriers to re-evaluating one’s relationship with some products and institutions.

However, the study did note that some customers would rather remain in a less-than-satisfying relationship with institutions than go through the admin of searching for new institutions or products.

“Switching products and/or services or providers, or exiting a relationship with a provider, generates a cognitive load,” the FSCA said.

“This means that even if customers are not fully satisfied with a product and/or service, the effort required to find and engage in an alternative may outweigh their discomfort/dissatisfaction.

“As a result, some customers open a new account or buy a new policy without cancelling a previous one. Instances of extreme annoyance may, however, lead to cancellation, which the qualitative research suggests is then usually a spur-of-the-moment decision.”

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