YOUR INDUSTRY
Top 10 Hot Topics
- Consumer Credit Act
- Advertising
- European Credit Directive
- OFT
- Principles-based regulation
- Treating Customers Fairly (TCF)
- Payment protection insurance (PPI)
- FSA
- FOS/FSCS
- FAQs
Your Industry
Current Issues
Treating Customers Fairly (TCF)
The FSA’s TCF agenda has been at the forefront of the move to a more principles-based regulatory regime. FSA’s Principle 6 is: ‘A firm must pay due regard to the interests of its customers and treat them fairly’.
For FSA, TCF is not about firms being nice to their customers, it’s about being fair and developing sound business practices that underpin commercial decisions. FSA has a four stage approach for firms dealing with TCF within the business and expect senior management to take ownership in delivering TCF. The four stages of dealing with TCF are:
- Awareness
- Strategy and planning
- Implementation
- Embedding
In its July 2006 papers on TCF, ‘Towards fair outcomes for consumers’, FSA issued a deadline of March 2007 for all firms to have implemented TCF in a significant part of their business. The paper analysed firms’ progress with TCF and the picture was mixed. FSA said the majority of firms were making good progress, while others were ‘lagging behind’. It also focused on senior management TCF buy-in and said that while the senior management of most firms are showing ‘a commitment to reviewing their practices and introducing changes where necessary’, this was not always filtering through to the customer-facing front-line staff. A readers’ guide on the paper for small firms is available here.
The paper also includes a number of cluster reports for mortgage and GI firms giving examples of good and bad practice FSA has seen in its TCF work.
Considerations for mortgage firms
TCF considerations for management information.
To help AFB members with their TCF responsibilities and the March deadline, a new factsheet will be issued shortly.
The FSA also have a one-page self-assessment toolkit for small firms to determine if they are doing all they can to treat their customers fairly. It is available here.
FSA have outlined six consumer outcomes it would like to see all firms moving towards. They are:
- Consumers can be confident that they are dealing with firms where the fair treatment of consumers is central to the corporate culture;
- Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly;
- Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale;
- Where consumers receive advice, the advice is suitable and takes account of these circumstances;
- Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and also as they have been led to expect; and
- Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.
FSA is currently developing the methodology on how it will measure progress by firms towards these outcomes.
The AFB’s sister trade association, AMI, represents our interets on the FSA’s TCF Consultative Forum and feeds into the regulator’s work and TCF output. We have pressed hard for FSA clarification on the responsibilities for providers (for example, lenders) and distributors (for example, loan brokers). We believe that a more transparent, closer relationship between lenders and brokers will deliver benefits for both and, importantly, consumers. We also feel that historically brokers have been held accountable for areas of the product life cycle which were not their responsibility.
The paper has been designed to help both providers and distributors understand their respective responsibilities. The Discussion Paper is available here.
AFB will continue to offer members advice and information on how firms can embed TCF in their business practices.
Look out for further updates and details in our monthly newsletters and factsheets.
FSA has a dedicated web page on TCF. It includes details of latest publications and key messages coming out of the regulator on TCF
FSA has a list of frequently asked questions on TCF available here.
FSA have a TCF library on its website which includes all reports and information published in relation to the TCF initiative. This is available here.
Sarah Wilson, director responsible for TCF at FSA, gave a speech to the TCF in Retail Finance Conference in September 2006. It focused on delivering improved outcomes for consumers through TCF.
In July 2005, FSA published a paper on what it believes TCF means for small firms.
FSA also offer TCF training for firms. Further details of courses and costs are available here.
FSA held a TCF conference in November 2006. Delegates were invited to participate in a series of polls. The results of those polls are available here.