It seems to be no one really knows the answer. The question was put to the Financial Markets Authority asking them to explain what a good customer outcome for a KiwiSaver member looked like.

The simple answer is that the KiwiSaver fund had to do what the label on the tin said.

FMA chief executive Rob Everret said it's ensuring "that the customer clearly understands what they’re getting into and the product performs as expected and promised".

That's very simplistic and probably nothing near what KiwiSaver providers think is now considered a good customer outcome.

The more I thought about this the more I struggled with the answer. 

Cigarette packets these days are pretty clear around what the product does. And the pictures of rotten teeth, diseased gums, etc aren't very pretty.

So you could have a KiwiSaver fund which says what it does, but it may not be in the member's best interests. Just because it does what it says isn't a good customer outcome.

That suggests that making sure KiwiSaver members actually understand what's written on the tin is a key part of the problem. Again good examples from the fast moving consumer goods sector are country of origin and lists of ingredients. 

But then again I listened to The Co-operative Bank chief executive David Cunningham at the Future of Financial Services conference a couple of weeks ago.

His line was that this "conduct and culture" issue is actually a product issue. His proposition was that banks have created poor products which don't provide good customer outcomes. But are more about bank profitability.

One of his three examples was the savings accounts where customers basically get no return if their balances are below a certain level, but once the balance gets above a certain level these are more rewarding and benefit the customer.

Coming back to KiwiSaver I doubt there is a manager which says making sure the funds do what's on the label is sufficient to pass the good customer outcome test.

Indeed at ASSET's recent Round Table our managers said it includes understanding the customer's position and making sure that it is appropriate was a key point. There were many other ideas included in what made a good customer outcome.

I had this discussion with an insurance company too. They felt it was very unclear what the FMA considered a good customer outcome. Is it just making sure a claim is paid if it meets the policy wording? They didn't know.

If the regulators are going to keep insisting on "good customer outcomes" (and no one would say that's not an appropriate thing) then they need to do a lot more work explaining what they mean.