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FSA to turn Treating Customers Fairly principles into rules

The Financial Services Authority has revealed that it plans to turn its Treating Customers Fairly principles into a set of rules.

The FSA introduced its TCF guidelines in July 2005, signaling a move towards a more principles-based approach to regulation.

But in feedback to its discussion paper on product intervention it published today, it says it wants to create one set of rules for firms, which will incorporate TCF and the FSA’s Principles for Business guidelines.

The FSA also says it remains of the view that a product intervention approach is an essential means of achieving an appropriate level of consumer protection.

The FSA, says: “We believe that it is necessary for us to make changes to our regulatory approach to consider the entire product life cycle, including product governance and distribution standards.

“We are already supervising firms’ product governance under our new intensive approach. In addition, we will take forward a single set of rules and guidance on product governance, including, for example, turning some or all of the TCF material into rules, and will consider additional interventions going forward.”

In January this year it published a discussion paper that explained its proposed new approach to the regulation of retail financial services.

In its feedback, it says: “We agree that the point-of-sale is a critical part of the value chain and is a key determining factor in whether consumer detriment will arise.

“However, we consider that product design and decisions made by product designers about how – and to whom – products will be distributed play a significant role in determining consumer outcomes.

“Our starting point is not a desire to dictate product structures to the market, rather to put right problems where competition and the regulatory approach have been ineffective in delivering on genuine customer needs.”

It says it is looking primarily at the product governance processes employed by firms, whether competition is working effectively for consumers, and whether firms are exploiting consumer behaviour.


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  • Tomand.... 17th June 2011 at 12:38 pm

    Gerry what a pointless comment – how much more do you give away about yourself by calling yourself Gerry? What is anonymous hiding that your so herocially giving away.

    The point I believe he (or she) is making is that now the FSA have seen the utter failure of principles (because as stated above they are a ridiculous concept based on the flavour of the month and the FSA’s interpretation at the time they audit you). They are out of control because instead of getting pulled up and diciplined about allowing it to fail like this they instead just change tack and will put a set of rule in place that most lenders have already had to adopt following an audit and fine.

    The FSA are out of control – they make it up as they go along (almost always after the damage has been done).

    I can’t see the point of your personal attack on anonymous when this person is just clearly frustrated with the industry and the regulator – if he drops the ball he gets a fine – if the FSA does they just change their stance and look like the ‘peoples champion’ protecting the consumer from the evil banks and greedy brokers……give me a break.

  • Jules_London 16th June 2011 at 7:03 pm

    ‘we will take forward a single set of rules and guidance on product governance, including, for example, turning some or all of the TCF material into rules, and will consider additional interventions going forward’
    Never ending changing regulatory environment designed to keep Govt bodies busy – bonuses all round for this pointless merry go round. Hilarious that some here think it is a jolly good idea…

  • salil chaudhari 15th June 2011 at 8:42 am

    Destined to fail. Very few product will filter through the FSA net.

  • chris gardner 14th June 2011 at 5:05 pm

    I find it very hard to find a problem with this. The principles are beyond reproach surely?

  • gerry 14th June 2011 at 4:20 pm

    Anonymous, why is the FSA out of control? this is excellent news for the customer. I note you are too cowardly to print your name. You say “time to get out” I assuime you mean out of the industry. So what are you waiting for, don`t talk about it, if you feel that stongly about it just do it.The industry would be better of without all you anonymous snipers.

  • Dave Espin 14th June 2011 at 3:48 pm

    Horse, stable, bolted…

    This what they should have done in the first place!

    The problem with principle-based regulation is that it is a matter of opinion… and the FSA can reserve the right to express their opinion after everything has gone wrong!

    More clarity at the outset might have prevented some of the problems we are now trying to correct… no, wait, what am I saying? Clarity and the FSA?

  • Lee Parker 14th June 2011 at 3:20 pm

    Management speak at its best. But to clarify the FSA, having exhausted TCF, now get a second bite of the cherry by turning a principal in to something statutory. In our industry this could be conceived as churning. Surely there should be a law against it.

  • Bryan Jones 14th June 2011 at 2:42 pm

    This must surely have to go back to the politicians now because we have very much a philosophical argument brewing here. We have the regulator prescribing product, defining through RDR the distribution routes, and to all intents and purposes, people’s salaries, and also the regulator providing investment advice without responsibility.

    Take for example the issue of “unfair” exit penalties on product. For very illiquid assets, for example, such provisions are essential to avoid a run. And when we talk of illiquid assets, we’re talking potentially about everything – cash deposits are supported not by bundles of notes but by highly illiquid mortgages, and as we all now know, property can be damned near illiquid at times. So indeed are shares when a Lehman Brothers goes down and everyone runs for the exit door. In extremis, no private provider could now underwrite a product with no exit penalties. Certainly as a shareholder of such a business I would consider directors who do to be in breach of their fiduciary duties.

    So realistically, we appear to be bowling headlong for a state-controlled financial services system. That might be the best outcome some might argue, but does it fit with the mixed economy we supposedly have? I’d have thought that this is now the moment to have a Cameron-esque pause, and to consider exactly what the ramifications are, and where we as a nation really want to go. Can Andrew Tyrie pick this one up?

  • AA 14th June 2011 at 2:08 pm

    FSA to turn into Robots.

  • RW 14th June 2011 at 1:51 pm

    It doesn’t seem to have made any difference to the way banks have treated their clients over the years. Well done FSA you do sound good though.

  • Bill Wells 14th June 2011 at 1:46 pm

    TheFSA is completely out of control !!!

    With thousands of people in non-jobs at Canary Wharf, all trying to justify their existence, the continual meddling and ‘changing of the goal posts’ will just get worse and worse.

    Time to get out !