There is confusion about the initiative. This has arisen through the twin evils of complacency and assumption. Some firms thought they had satisfied customers and received a low level of complaints so they must be treating their customers fairly. Others have always been confused about how the principles of TCF apply to them on an everyday basis.
Cynics would say TCF isn’t the most rivetting of subjects but my response is that it is too important to ignore. If you are not factoring TCF into your activities you had better start right now. That sounds like a lecture but wherever you are in the market you have to understand the importance with which the FSA views TCF.
The regulator’s approach to TCF is interesting. Its initial rules-based approach has been changed by the introduction of TCF because the initiative is principles rather than rules-based. This approach by the FSA is to be commended. Instead of being swamped by rules we have guidelines.
With TCF, the starting point is the principle that a firm must ‘pay due regard to the interests of its customers and treat them fairly’, in the words of the regulator.
Underlying this key principle lie further, more detailed principles. These can be summarised as follows:
Products should be designed to meet customers’ needs and fairness should be part of a firm’s culture. Customers should receive clear information and suitable advice and they should receive the product performance and standard of service they have been led to expect. They should not face unreasonable after-sale barriers when they want to change product, provider, submit a claim or make a complaint.
I’d like to think that for most brokers this comes as no shock. But for many firms a big cultural change is needed. This must start at board level and cascade down.
The message from the FSA is clear. TCF is here to stay. To those of you who have embraced it and made the cultural change, you can feel some degree of satisfaction. But to those who are still thinking about it or, God forbid, have not started the journey yet, don’t delay a moment more. Simon biddle