TCF Indicators

In its paper ‘Treating Customers Fairly – Culture (July 2007)’ the FSA identifies key cultural drivers and associated ‘indicators’ and ‘contra-indicators’ (practices that support or pose a risk to a culture of TCF) that it considers likely to significantly influence the behaviour of management and staff and therefore consumer outcomes in relation to TCF. It will be looking at these drivers and indicators during ARROW risk assessments, thematic work and bespoke ‘culture’ visits as part of TCF progress monitoring.

The tables below (excerpts from the report and updated since May 2007) summarise these drivers and indicators – one set for relationship managed and larger firms and another for smaller firms.

For each individual key driver the FSA report goes on to:

summarise its characteristics and associated indicators and contra-indicators
provide examples of good and poor practice that it has found during visits to firms

Both sets of information are provided in user-friendly tables which you can use for ‘gap analysis’ against your firm’s current culture and practice. The FSA “strongly encourages” such a review, which should help you meet the March 2008 deadline for having systems in place to test whether customers are being treated fairly

For the key characteristics and indicators of each driver see Annexes 1 and 2 of the FSA report. For the tables on good and poor practice see pages 9-20. You’ll find a link to the report at the end of this page.

TCF - key cultural drivers and high level indicators and contra indicators

The indicators below are relevant for both relationship managed firms and for larger or more complex firms supervised by the FSA’s Small Firms Division

Indicators	Key driver	Contra-indicators
Fair treatment of customers is central to the behaviour and values of all managers, they communicate messages about the fair treatment of customers effectively and apply appropriate controls and monitoring to ensure that the fairtreatment of customers is delivered by their staff	Leadership	Managers (at any level) cannot explain and/or do not communicate what the fair treatment of customers means for them and their staff and cannot demonstrate that their staff understand what the fair treatment of customers means
The firm has a clear vision which supports the fair treatment of customers. This is reflected within the formulation and implementation of strategic decisions (including change management programmes and outsource arrangements). The firm’s risk appetite reflects customer considerations	Strategy	The firm’s vision is unclear/blurred or contradicts the fair treatment of customers. It does not consider the fair treatment of customers when making key decisions
Decision making at all levels reflects the fair treatment of customers. The firm uses staff, customer and other external feedback where appropriate, with timely action. The interests of customers are properly balanced against those of shareholders (and other customer groups)	Decision making	Minimal evidence that decisions reflect any consideration of the impact on customers. The firm is slow or unwilling to react to customer/staff feedback. Conflicts between the interests of shareholders and customers are consistently and inappropriately resolved in favour of shareholders.
The firm has controls, including management information, that aim to ensure and demonstrate the fair treatment of customers. These controls are integral to the firm’s risk framework	Controls	The firm cannot evidence customer protection through its controls, has minimal management information and does not use this information to improve its treatment of customers
Management make positive behaviours and attitudes to the fair treatment of customers a key criterion in the selection of staff. They also make effective training and the maintenance of staff knowledge, behaviours and values core to the business. Managers use performance management to develop their staff in the fair treatment of customers, identifying and acting on poor performance and rewarding good performance	Recruitment, training and competence	The firm has inadequate arrangements to recruit, train and assess the competence of staff whose actions affect customers. It has little focus on the fair treatment of customers and has a lack of appreciation of how staff competence has an impact on customer experiences. Poor performance is tolerated
The firm’s reward framework (including incentive schemes) throughout the business is transparent, recognises quality and supports the fair treatment of customers	Reward	The firm’s reward framework concentrates on sales, volumes and profit without consideration of quality (i.e. the framework drives behaviours which may result in customers being treated unfairly) and there are no controls that mitigate the risks that arise from this framework

TCF - key cultural drivers and high level indicators and contra indicators for small firms

Indicators	Key driver	Contra-indicators
Fair treatment of customers is central to the behaviour and values of the firm, and management are able to explain what the fair treatment of customers means for their firm and communicate his to their staff	Leadership	The firm cannot explain what fair treatment of customers means or management do not communicate what it means to their staff
The firm aligns its decisions about business priorities with the fair treatment of customers	Business decisions	When the firm makes business decisions they pay no regard to the fair treatment of customers
The firm has controls proportionate to the size and complexity of the business, including management information, that aim to ensure and demonstrate the fair treatment of customers	Controls	The firm cannot show customer protection through its controls and does not collect or use management information to improve its treatment of customers
Management make positive behaviours and attitudes to the fair treatment of customers a key criterion in the selection of staff. The results of effective training and the maintenance of staff knowledge and behaviours can be observed. Management develop their staff in the fair treatment of customers, identifying and acting on poor performance and rewarding good performance	Recruitment, training and competence	The firm has inadequate arrangements to recruit, train and assess the competence of staff whose actions impacts on customers. It has little focus on the fair treatment of customers and has a lack of appreciation of how staff competence has an impact on customer experiences. Poor performance is tolerated
Management operate a reward structure that is transparent and recognises the fair treatment of customers	Reward	The firm’s reward policy concentrates on sales made with commission and bonus payments based only on sales volumes with no measure of the quality of sales i.e. it drives behaviours which may result in customers being treated unfairly

To view all of the tables – including those providing practical examples of good and poor practice for each key driver - follow the link below.

TCF Indicators

TCF - key cultural drivers and high level indicators and contra indicators

TCF - key cultural drivers and high level indicators and contra indicators for small firms

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