TCF: Firms are still struggling to adhere to the initiative despite industry acceptance
Many firms have embraced the Financial Services Authority's (FSA) treating customers fairly (TCF) concept, but the industry still has a long way to go, according to a report from the regulator.
In its latest annual report, the FSA revealed that it has seen an overall improvement in the treatment of customers across major firms in the sector and was "encouraged by increasing evidence of senior management engagement with this issue." The report stated that both medium and smaller firms have now begun to focus on TCF issues, and that "some firms are beginning to accept that TCF has a role in the development of new products." However, it cautiously added that, "there is still a long way to go" until all companies are treating customers fairly and revealed that firms are still struggling to consider TCF in measuring their performance.
Many SMEs also believe close contact with customers guarantees adherence to the initiative, although evidence has shown this belief is unfounded.
After visiting 25 small firms, the FSA found that almost all of them had problems in a number of areas, including record-keeping, provision of suitability letters and the charging of fees or commission.
Moreover, in four of these firms, the regulator judged that the failings in relation to the operation of their business were so grave that they put their customers at "serious risk." In response, the FSA published a paper last month, entitled Treating Customers Fairly - Building on progress, in which it suggested how firms can adopt the TCF concept more successfully by taking the customers' point of view.
"We have seen examples of firms that have not gone much further than an initial consideration of how treating customers fairly works. We expect senior management to take the lead and make practical changes to the way they do business," said Oliver Page, director at the FSA and head of the TCF work.
