The Financial Sector Conduct Authority (FSCA) has taken the next step in rolling out its proposed new Treating Customers Fairly (TCF) regulatory initiative. To this end, a new self-assessment tool has been published on the FSCA website to enable regulated financial firms to assess their TCF readiness.
TCF is a regulatory approach which will require all regulated firms to consider their treatment of customers at all stages of their relationship with the customer, from product design and marketing, through to the advice, point of sale and after sale stages. Firms will be required to demonstrate that they are consistently delivering the following clear fairness outcomes for their customers. The self-assessment tool, available on the
FSCA's website, allows regulated financial firms (including financial advisers) to gauge their progress in delivering the six TCF customer outcomes. These are:
Outcome 1: Customers are confident that they are dealing with firms where the fair treatment of customers is central to the firm culture.
Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly.
Outcome 3: Customers are given clear information and are kept appropriately informed before, during and after the time of contracting.
Outcome 4: Where customers receive advice, the advice is suitable and takes account of their circumstances.
Outcome 5: Customers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and what they have been led to expect.
Outcome 6: Customers do not face unreasonable post-sale barriers to change a product, switch provider, submit a claim or make a complaint.
The tool consists of questions relating to a number of possible management actions and business processes that firms could use as indicators of fair customer treatment, and calculates the firm's "TCF readiness" score for each outcome, and overall, depending on the extent to which the firm has adopted and embedded the listed actions in the way it operates.
It is important for firms to understand the purpose and limitations of the self-assessment tool. Firms should only use the tool after reading the accompanying document "How to use the FSCA's self-assessment tool" (also available on the website). Importantly, the tool should not be seen as a "compliance checklist" and firms should not assume that achieving a high TCF readiness score necessarily means that they are fully delivering all the TCF outcomes. True success in delivering TCF will require evidence that fair customer treatment is embedded in the firm's culture at all levels, that firms have identified and are managing any risks of unfair customer treatment in their businesses, and that they can demonstrate actual improvements in customer experience.
Not all of the management actions set out in the self-assessment will be relevant to all types of firms, so use of the FSCA tool is not compulsory. However, firms are reminded that, once TCF is fully implemented, they will be required to demonstrate to the FSCA that they have controls and measures in place that provide evidence of the extent to which they are delivering the TCF outcomes. Firms will therefore have to develop their own TCF processes that will be suitable for their business model and customer base. The FSCA recommends that, as part of their TCF implementation, firms carefully review the relevant elements of the self-assessment tool as possible implementation guidance.
This does not mean however that the contents of the tool will form the basis of the FSCA's future TCF monitoring and supervision approach.
The FSCA self-assessment tool should also be of interest to financial services consumers and other financial services stakeholders, as an indication of the types of action the regulator believes financial services firms and advisers should, where applicable, be taking to ensure fair treatment of their customers.