Q&A with Leon Isaacs: Author of the Remittance Customer Charter

Q&A with Leon Isaacs: Author of the Remittance Customer Charter

The international and UK press has widely covered the release of the Remittance Customer Charter. Editor Meena Kansal talks to the man behind the Charter, Leon Isaacs, CEO of Developing Market Associates and a member of the UK Remittance Task Force.
Isaacs explains, “The Remittance Customer Charter is one of a number of schemes put into place by the UK Remittance Task Force, a private sector body set up by the UK government’s Department for International Development (DFID), to improve trust and transparency in the marketplace. The aim is to ensure the customer is given all the relevant information before they make the transaction, so they know the total cost, not only the fee but foreign exchange rate and any other charges, how long it will take, where it can be collected, and quite importantly, procedures followed when the transaction cannot be completed. The information in the Charter needs to be given to customers prior to making the transaction and once it’s complete, the information needs to be given in writing, as a written confirmation of the transaction. There will be a physical charter in locations so that when customers see the charter, they know they can expect a certain level of standards.”

MK:What is the potential impact of the Remittances Customer Charter on the industry?

LI:“Most of the contents of the charter will be required under English law in Nov 2009, when the Payment Services Directive (PSD) comes into being. So the Charter puts the industry ahead of the legislation, and it’s a good public relations act for companies. At the moment, about 18,000 locations out of 35,000 in the UK have signed up. Coinstar, MoneyGram, the Post Office, the UK Money Transfer Association, ChequePoint, Ria Envia, all the major players have signed up other than Western Union and we are hoping they will soon do so. Hopefully, over time, customers will start looking for the Charter sign indicating that the organisation has signed up to the Remittance Customer Charter. If its not there, they should be asking why it’s not there. It will have some impact on the regulated businesses but it will take some time to have full effect.”

MK:Will the Charter do enough to address the consumer issues in the remittance arena to win back customer confidence? Does the Charter do enough benefit to the money transfer operators (MTOs) to justify the additional costs of implementation?

LI:“On its own, it does impact customer issues, but it’s not a total solution. It won’t address First Solution type problems – those issues can be addressed adequately by the PSD because that will provide some form of financial protection for customers. The industry has no willingness to take out general business insurance to cover customers but the Charter should show that those who sign up want to be open and transparent. I would think of the Charter as a step in the right direction.
“Many companies are already compliant with the Charter anyway, so there shouldn’t be any real incremental cost. If they’re not complying with it now, it’s a heads up that they will have to become compliant in the next 18 months, so in that sense it’s quite timely. Because the MTOs will have to go through a process to actually get the Charter, they should start to be seen in the community as a business that provides money transfers at a certain expected standard. It will take maybe six months for awareness to develop and customers to start asking why the operator does not sign up.
“It may benefit the smaller MTOs more since it’s an endorsement of their policies and standards which may be more difficult for them to achieve through the mainstream due to lack of marketing power compared to some of the larger players. On the other hand, these MTOs may be strong enough in their own community and not see a reputation benefit in adopting the Charter. Where it may help more is in attracting new customers, either first-time senders or people looking to switch operators, since the information will provide a comparison and come into the decision making process.”

MK:It seems to be an attempt to help the private sector regulate itself. How will you ensure that the standards are being complied with?

LI:“To be able to sign up to the charter, you need to complete a self-declaration that says you are able to comply and you have to demonstrate that. The process does entail a certain amount of work for a company. After that, the Task Force will conduct some spot checks and there is a website and helpline where customers can complain if they feel that the Charter standards are not being honoured. We are working with the financial ombudsman service, an official UK body, on doing more monitoring of actual compliance. There is currently enough monitoring of businesses and services by sources like the World Bank and we may link up the Task Force and the Charter with these other projects. It may not be as intensive as what the Revenue and Customs are doing for anti-money laundering. One of the issues for the remittance customer base in the UK is that their needs seem to fall under the jurisdiction of number of different organisations and nobody except the DFID is championing them. If you look at what happened with Northern Rock, for instance, as compared to First Solution, though there is clearly a large difference in scale, the issues are probably not that different. Yet, the government has taken two quite different approaches to the situations.”

MK:Are you working with other countries to create similar sets of standards there?

LI:“Though the Task Force is a UK body, we have sent the charter to some countries and are waiting to see whether the charter is going to be adopted by any of them. From a global viewpoint, it’s quite an essential marketing activity for MTOs to undertake and when the PSD comes, it’s going to affect 27 EU countries. While it is logical for other EU countries to adopt something similar, not many of them have Task Forces yet and leave these changes to the open market. The challenge is that MTOs only ever seem to work together if a regulatory change is threatened and it’s in their interest to improve customer service. It will be nice to see that change to some extent where they are voluntarily signing up for at least a minimum level of service standards.”