Treating Customers Fairly

Introduction

One of the regulator’s statutory objectives is consumer protection and the principle of Treating Customers Fairly (‘TCF’) is reflected in PRA and FCA Principles for Firms, Principle 6 (‘Customers Interests’). This states:

‘A firm must pay due regard to the interests of its customers and treat them fairly’.

Treating Customers Fairly is not a new initiative. All authorised firms are covered by the Statements of Principles for Businesses (‘PRIN’). Increasingly firms’ compliance with regulatory requirements are measured less in respect of compliance with prescriptive rules but more in relation to whether such actions, behaviours and/or outcomes are in accordance with the regulator’s expectations under the Principles, including TCF.

What is the regulator looking for?

The regulator expect firms to be focused on delivering six TCF outcomes:

  • Consumers can be confident that they are dealing with firms where the fair treatment of customers 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 their 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.
  • Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.
How this impacts on a firm and how it is implemented depends on the nature, scale and complexity of it’s business, the profile of its clients, and its perceived risks to consumers and/or the financial markets. It is a continuous process and the firm’s compliance with the TCF principle should be reviewed regularly. The regulator looks for TCF to be part of a firm’s overall culture and considered routinely as a matter of good business practice.


What are firms required to do?

There are four key elements of TCF:

• Awareness
• Strategy and Planning
• Implementing
• Embedding

Awareness includes ensuring that your senior management and staff are aware of the concept of TCF and that you can evidence it has taken steps to ensure that the firm complies with this principle.

Strategy and Planning means that:

  • the firm has defined what TCF means in relation to the activities that you undertake
  • that you can evidence that you have assessed all the appropriate areas of the firm where TCF should be considered and specifically carried out a TCF gap analysis.
Implementing includes that where gaps or improvements have been identified, actions are taken to address any issues, with deadlines and responsibilities agreed to implement these changes. It also includes identifying appropriate management information to measure the firm’s compliance with TCF.

Embedding includes ensuring that all staff are aware of the firm’s approach to TCF, that the firm regularly reviews its TCF approach and uses management information available to assess the firm’s compliance. It also means considering TCF in relation to any new business initiatives.

Specific areas you need to consider include:

  • Firm’s Culture, including Leadership
  • Business Strategy and Decision Making
  • Product Design and Distribution
  • Sales Process and Advice
  • Communications, (Internal and External)
  • Management Information and Record Keeping
  • Complaints and Customer Satisfaction
  • Staff recruitment and training
  • Remuneration and Incentives

How can we help?

We can help firms in a number of different ways including:

  • carrying out an independent TCF gap analysis
  • assistance on carrying out remedial action required under the firm’s own internal TCF gap analysis
  • carrying out TCF senior management and/or staff training
  • guidance on the TCF assessment process including the areas that the FCA will want to discuss and the types of evidence they will expect to see
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