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This Week’s Dilemma

Treating customers fairly is an idea we have all endorsed for some time, but it has only recently become one of the many things that the Financial Services Authority will monitor within regulated firms as part of its remit. This is all well and good but there are no clear rules to define “fair”. The guidlines from the FSA draw a line in the sand that seems to be forever shifting. How do I know that my understanding of TCF will satisfy the FSA?

This question highlights the challenge for all of us authorised by the Financial Services Authority – that interpreting regulation is an art, not a science. Our industry is so diverse that it is impossible to give black and white answers.

The first test is to look at your processes from a personal viewpoint. For example, would you feel happy if your nearest and dearest received the level of service offered? All acti-vities that are carried out in your business should make you proud. Delivering that vision through management down to front office staff is the objective encapsulated within TCF.

Meeting this objective simply means putting customers first throughout the process. If you do that you are meeting all the requirements of TCF.

Start with your staff. They need to be well trained so they understand the products they are advising on. They need to ensure products are affordable and suitable and that customers are aware of the risks. They also need to have discussed how planned changes can affect the suitability of products.

Importantly, all this must be explained in language that customers understand and be backed up with documentation that is consistent with the verbal message.

Also, staff reward should be designed not only around volume but around TCF. In other words, non-compliance should carry financial penalties. Finally, complaints should be dealt with carefully, fairly and consistently.

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