A well prepared service level agreement is essential in protecting the professional relationship between clients and businesses.
Not only are financial advisers facing an ever mounting barrage of legal and regulatory requirements, they are also experiencing increasingly assertive clients, ready and willing to lodge complaints with the ombudsman. In this environment, having clear service parameters in the form of a properly drawn up service level agreement, has become imperative.
“Complaints occur when there is an expectation gap,” says Richard Rattue, managing director of Compli-Serve, a provider of professional compliance support and services to financial professionals. “Being able to deliver to your clients is key to success.”
An SLA defines the relationship
A service level agreement (SLA) sets out the expectations between the client and the provider, helping define the relationship between the two parties. It is the cornerstone of how the service provider sets and maintains commitments to the client, and is essentially a binding contract.
“An SLA incorporates clearly defined undertakings and deliverables, thus reducing the chances of disappointing a client,” adds Rattue.
Clearly defined duties and obligations
Under the FAIS General Code, it’s important to ensure that the relationship with the client is documented to an extent that both parties are aware of their duties and obligations to each other.
The SLA is a two-way street and allows the provider to set out what they expect from the client, for example, through disclosure, reading the documentation supplied, or by informing the provider on any change in financial circumstances.
A good SLA should address:
- What the provider is promising.
- How the provider will deliver on those promises.
- Service costs
- How delivery will be measured
- Limitations of use by the consumer of the service
- What happens if the provider fails to deliver as promised
- How the SLA terms may change over time.
The challenge for a smaller financial service provider (FSP) is to get the relationship right between what is promised and the FSP’s resources. “An SLA can’t be created in a vacuum and must be designed with the available infrastructure and resources in mind,” says Rattue.
Keep your SLA flexible
Rattue advises using a segmented service model. Some clients need higher levels of availability and are willing to pay more for it.
As the services and offerings of the Financial Services Board change, the SLA may change to reflect the improvement and/or changes.
“The SLA should be reviewed every 6 months and updated accordingly,” adds Rattue.
Segmenting service offerings with different pricing for different service levels benefits both provider and client, in that the provider widens its target market and the customer only pays for what he or she needs.
Rattue advises consulting a professional to draft an SLA.