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You must prove you really care

With several weeks now past since the Financial Services Authority’s deadline for embedding treating customers fairly principles, has the culture of your business changed? Can you prove it?

I am sure had the Association of Mortgage Intermediaries produced statistics confirming that just 19% of its members had embedded TCF it would have caused our regulators much concern. But with about half of those replying to the AMI survey confirming they were in the process of embedding TCF or had already done so, this still apparently leaves many with their heads in the sand.

Doubtless appointed representatives of networks and those using the services of compliance solution providers will have been provided with the necessary guidance and tools to cover the requirements of establishing a TCF strategy. But what of the many firms that have yet to act? My guess is the ” If you spend time on any TCF initiative then document it. You will have to demonstrate TCF is ingrained throughout your business model”majority of those will be the one and two-person directly authorised firms.

I doubt any firm would deliberately set out to treat a customer unfairly but the requirement is now about the brokers’ ability to prove they treat customers fairly.

The principle of TCF is about proving customer fairness and this is different from customer satisfaction. It affects every process and every stage of your business and firms will need to look at customer surveys, complaints, management information, systems and controls, practices and procedures and so on. But then all of this must be recorded. Firms must be seen to have achieved TCF. If you spend time on any TCF initiative then document it. You are going to have to demonstrate TCF is ingrained throughout your business model.

Here are a few simple TCF initiatives:

– Revisit the Mortgage Code of Compliance Board mortgage checklists if you have stopped using them. They provide documented evidence that your customers understand the product they are buying.

– It is difficult as a one-man band to monitor your own sales call, but with the client’s agreement recording a client meeting then looking back and reviewing it could potentially provide ideas for improvements.

– Have a look at the website link at Outside of the FSA’s site it is the most helpful TCF site I have found.

Financial promotions and information provided after the point of sale have been identified by the FSA as areas where firms have struggled to prove TCF. Reviewing persistency, lapses, or cancellations are good for post-sale analysis and can be easily documented. If you do not have a TCF manual which documents all of your initiatives then I would suggest this as a first step.

Smaller firms should realise TCF initiatives are their own responsibility. It would not be a surprise if following some well publicised rebukes and financial penalties the safe haven of network membership becomes even more relevant for small firms to consider.


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