TCF centre

With TCF being a key focus for our industry, we've developed a section of the site that is dedicated to keeping you informed and up to date with the latest information and developments on TCF.

Here you can access the latest TCF reports from the FSA, as well as summary factsheets which details the key TCF implications & considerations for both providers and advisers.

• Origins of TCF

The FSA's TCF initiative is central to the delivery of their retail regulatory agenda, as well as being a key part to their move to a more principle based form of regulation, as set out in the following FSA principals:

Principle 2 - A firm must conduct its business with due skill, care and diligence.

Principle 3 - A firm must take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems.

Principal 6 - A firm must pay due regard to the interests of its customers and treat them fairly.

Principal 7 - A firm must pay due regard to the information needs of its customers and communicate information to them in a way that is fair, clear and not misleading.

July 2007 saw the FSA publish Policy Statement 07/11 - Responsibilities of Providers & Distributors for the Fair Treatment of Customers, which set out the FSA's response to the Discussion Paper of the same title published in September 2006.

The FSA see TCF as a step towards re-addressing the perceived imbalance in customer financial capability in understanding the complexity of financial services. To provide specific guidance around bridging the imbalance the FSA created their Six Customer Outcomes.

• Understand what the FSA expects

The FSA expects all registered firms to collect management information to demonstrate that they are treating their customers fairly.

In short the FSA are looking for firms to demonstrate that:

• Senior management have instilled a culture in the firm whereby they understand what the fair treatment of customers means; where they expect their staff to achieve this at all times and where errors are promptly found by firms, put right and learned from.
• They are appropriately and accurately measuring performance against all Customer Outcomes materially relevant to their business and be acting on the results.
• They have no serious failings - whether seen through their management information or known to the FSA directly including areas of particular regulatory interest such as Payment Protection Insurance.
• What should TCF MI deliver?

With the advent of ever-increasing sophisticated systems and platforms we now have a wealth of information available for analysis and more manageable processes for MI reporting. But what type of management information (MI) should be collected and analysed which would help firms to demonstrate that they are satisfying their TCF obligations ?

• Good MI should enable business owners to make good decisions. It should generally focus on how far a firm is delivering outcomes rather than just measuring the process itself.
• The MI should identify areas of risk within processes which could potentially have a detrimental impact on policyholders.
• It is one thing to collect MI but without actively analysing and using information to review processes and test whether customers are being treated fairly this simply becomes a tick box exercise which benefits no-one.
• There needs to be confidence in the measurement that a given process provides the desired outcome.

Measuring outcomes

• Read the FSA's Treating Customers Fairly, guide to MI
• Read the FSA's Treating Customers Fairly, guide to measuring outcomes
• Understanding risks and creating actions

A possible approach to managing TCF within your business is to carry out a risk assessment. This approach uncovers risks and identifies possible indicators of under performance. This should then lead to a set of appropriate actions to resolve these issues. Critically, the collection and analysis of TCF MI is important to assess whether these actions are improving customer fairness. The following guide explains this process and may be a useful business tool.

• Understanding risks and creating actions (PDF)
• Choose the most suitable product for your clients

Customer Outcome four tells us that clients should be provided with advice which takes account of the client's circumstances.

This means that when recommending products, your clients should be provided with all the information necessary to help them to make an informed decision. As part of this, when you identify and promote product benefits, you should also draw their attention to any risks or potential pitfalls.

Customer Outcome five tells us that products and services you recommend should perform as they have been led to expect.

Therefore, it is essential that your clients are given information which ensures they have a realistic expectation of our product performance and service delivery.