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June 2008 - FSA says firms must work harder to implement TCF MI

An FSA review of relationship managed firms’ progress with TCF MI (Management Information) found that only 13 per cent had met the March 2008 deadline for having effective MI or other measures in place to enable them to assess fair treatment of customers.

In its June 2008 report ‘Treating customers fairly: progress update’ the FSA is now urging all firms to take action to identify and start using TCF MI that is relevant for their business. We’ve set out some highlights from the FSA findings below. To download the full report, which includes examples of good and poor practices, as well as Case Studies aimed at helping smaller firms, follow the link at the end of the section.

Note that the FSA won’t be reporting on small firms’ progress until after the end of 2008. However it has found much greater awareness and engagement on TCF from small firms than previously and believes that once small firms are engaged they can make quick progress on TCF.  

Firms that met the March 2008 deadline

Of the firms that met the deadline in the recent assessments, many had positive TCF cultural indicators such as:

• commercial strategies that were consistent with fair treatment of customers
• active senior management involvement with TCF
• fair treatment of customers written into personal objectives and reward at all levels within the company
• a policy of listening, learning and responding to customer feedback – including proactive strategies such as feedback forums to check ease of understanding and to assess requirements 

Firms that failed to meet the deadline

Amongst those that failed, typical problems were:

• some had underestimated the scale of the challenge and started too late (for example some staff were unaware of what MI they needed to measure)
• gaps in MI - not all of the consumer Outcomes were being measured
• too much emphasis on existing MI rather than adapting MI to measure TCF Outcomes
• MI demonstrated processes (what was being measured and how) but didn’t always measure TCF Outcomes and/or go on to show what actions were being taken where TCF was at risk
• firms confused satisfaction with fairness 

“For example, some firms measured whether complaints had been answered promptly. This can be a useful indicator of the service being provided however this measure alone does not demonstrate that the Outcome for the customer is fair.”

Despite the disappointing results the FSA believes that, with a concerted effort, around 80 per cent of the firms it assessed should still be capable of meeting the December 2008 deadline for embedding TCF into their business culture. 

Other report highlights:

• process measures are not enough to demonstrate delivery of TCF Outcomes without other supporting evidence
• firms aren’t expected to map and label all their MI against TCF Outcomes but they should understand and be ready to explain which MI can be used to measure Outcomes and how
• TCF MI or other measures shouldn’t require the creation of substantial amounts of new information – it should be cost effective and appropriate to the size and complexity of the business
• customer feedback questionnaires measuring customer satisfaction alone aren’t sufficient – they can only provide useful information on whether TCF Outcomes are being achieved where they gather information on customer understanding of products, services and risks

New case studies and TCF MI matrix offer further guidance

Annex 2A of the report contains some useful small firms’ case study material (including a mortgage broker case study). It also contains a TCF Management Information Matrix which offers at-a-glance examples of the types of MI that small firms are collecting and using to measure their performance against the relevant TCF Outcomes.