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The FSA says lenders should work with brokers when it comes to treating customers fairly and the TCF Lender Forum could help them to do so, says Frank Eve

The Financial Service Authority’s approach to its Treating Customers Fairly initiative arguably makes lenders more responsible for ensuring brokers treat customers fairly when selling their products.

But the evidence suggests that many brokers are not embracing TCF. While accepting the need to communicate the principle to distributors, lenders face a problem when TCF conflicts with their criteria. They are not responsible for advice so they need to draw a line between their responsibilities and their intermediaries’.

In November 2005, eight lenders from the specialist lending sector joined together to launch the TCF Lender Forum. This recognises the need to educate brokers and provide TCF best practice examples. It is based on the belief that pooling resources to provide a neutral source, sponsored and supported by lenders, can provide a solution.

In June 2006, the forum launched its website. This can be found at and is designed help intermediaries with TCF. The website has been highly successful, with over 7,000 intermediary visits per month and 500 intermediaries registered to receive regular newsletters.

It features a survey that intermediaries visiting its pages are asked to complete. This gives the forum an up-todate picture of brokers’ progress in terms of implementing the principles of TCF, bearing in mind the regulator’s deadline is the end of this month.

The FSA recently published a discussion paper, DP06/4, which deals with the provider/distributor relationship. The regulator has indicated that providers and distributors of financial products have differing but interlocking responsibilities when it comes to TCF. It says they should work together to give consumers the best deals.

The paper is designed to help both groups understand their respective responsibilities while helping to improve cohesion, confidence and efficiency in their combined distribution efforts. It clarifies the FSA’s view of what the TCF principles for business mean in a practical sense, but does not include new rules.

TCF is a key element of the FSA’s strategy of making the retail financial services markets work more effectively, and is a core component of the regulator’s shift towards principles-based regulation.

The environment has changed with the publication of DP06/04. The onus on lenders being seen to help – but not be responsible for – intermediaries has increased. The lending industry’s reputation could be at risk of collateral damage if intermediaries are not ready for the implementation of TCF. Lenders are expected to help them.

The TCF Lender Forum (and its associated website) is something that can be delivered quickly to intermediaries on behalf of lenders, and ticks many of the FSA’s boxes. More lenders should consider joining the forum to boost the impact of the TCF message in the marketplace. Doing so would show the FSA they are genuinely committed to helping intermediaries successfully implement TCF throughout their businesses.


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