Sustainable customer remediation & successful Agile teams

Our client is a Fortune 50 multinational financial services company with 268,000 employees, 69 million customers and more than $1.8 trillion in assets.

Client challenge

Our client discovered that over a four-year period, about 2.8 million of its customer auto loan accounts had been improperly charged for auto insurance. Some customers who were charged for insurance they did not need were forced into delinquency – or even vehicle repossession – as a result of these errors.

This client had engaged a third-party firm to manage Collateral Protection Insurance (CPI) for its auto loan accounts. CPI is a common practice, as it allows lenders to protect themselves in cases where customers do not have their vehicles insured. The premise is straightforward: any customer who secures an auto loan through a bank agrees to maintain insurance on the vehicle. In a case where a customer does not hold insurance for the vehicle, the bank holding the auto loan can purchase insurance on the customer’s behalf and charge it to the customer’s loan account. In most cases, CPI is significantly more expensive than insurance a consumer could purchase in the marketplace.

As the CPI program administrator, this third-party firm reviewed customer accounts, validated whether these customers had insurance, and then purchased CPI on behalf of some customers. Unfortunately, this firm inaccurately identified whether customers were insured and applied insurance where it was not required. Worse, sometimes impacted customers were not notified, so they had no way to recognize the error and request it be corrected.

The customer impact of this issue was broad and varied; more than half a million customers were affected. Some caught the errors early and complained to our client. Others had automatic loan payments set up and – because customer payments were applied first to the insurance costs and then to the loan costs – did not realize the bank considered them delinquent on their loans until their vehicles were repossessed. Bank leaders needed a solution to do right by these impacted customers and prevent these errors from repeating in the future.

Our solution

Leaders at our client identified the issue of improper insurance charges, notified regulators, and halted the bank’s CPI program as well as its relationship with the third-party administrator. This client then engaged Turnberry to evaluate the scope of this problem and stand up a comprehensive, sustainable remediation effort.

First, Turnberry consultants worked to identify the scope of impact and build the client’s response plan. Second, Turnberry deployed a process design and execution group: a team of senior and junior consultants who developed and implemented remediation processes for CPI-impacted customers. Finally, Turnberry supported the formation of a third-party remediation oversight function; this system facilitated customer-reported claims of harm or inappropriate applications of CPI.

Turnberry’s process design and execution group worked with client SMEs and leaders to build and train three Agile teams to support the remediation effort. Each team was made up of both Turnberry consultants and client-badged employees, allowing our client to benefit from Turnberry expertise while also building process knowledge internally.

These integrated Agile teams managed remediation in three key areas.

• The bankruptcy and third-party vendor support team worked with customers who had active or recently closed bankruptcy cases and built a system to facilitate these customers’ claims.
• The business integration team supported the required remediation efforts for existing bank processes, such as updating customers’ credit reports.
• The remediation payment and notification team managed customer data and payment and notification audits. Between 2017 and 2020, this process design and execution group identified the scope and processes for remediation, managed all notifications and customer payments, and delivered responses to regulators.

The response group’s success lay the foundation to establish the client’s new Enterprise Customer Remediation Center of Excellence. Based on the target operating model the Turnberry teams established, this sustaining organization will execute all future customer remediation efforts for our client. Turnberry’s access to high-performing talent allowed us to build an effective response team that began executing quickly, and our emphasis on training paved the way for this client to establish a quality, sustaining customer remediation organization.