TCF MI – key principles

Key priciples of good MI

• MI should be collected during a period of business activity and produced and monitored regularly.
• MI may include quantitative (numbers) or qualitative (opinions, commentary) data about any of the following:
  • staff
  • calls
  • visits
  • meetings
  • sales
  • opinions
  • parts of a process
  • predictions
• It should be:
  • accurate (correct numbers, supported by any relevant qualitative information)
  • timely (available sufficiently quickly to enable managers to act on it)
  • relevant (something that can be escalated or acted upon if required to improve outcomes)
  • consistent on a period to period basis (to enable managers to spot trends and take appropriate action)

TCF MI - key requirements

• The existence of processes and controls in support of TCF isn’t alone sufficient to demonstrate TCF – you need to be able to evidence through MI that these are being followed and acted on.
• TCF MI should enable you not only to measure performance but also to:
  • identify potential risks of unfair treatment- see our MI checklist for examples
  • tell you how far your firm is delivering the six consumer outcomes
• For small firms in particular, it may be a summary of what you know already, but presented in way that allows management to spot trends and take action in response
• For examples and illustrations see page 8 and pages 12-14 of the FSA report.

Measuring TCF success against standards

To be able to demonstrate TCF success through MI you’ll need to:

• identify which measurements are relevant for TCF within your business
• for each activity set a ‘standard’ which you consider demonstrates fair treatment of customers and delivery of the six consumer outcomes
• regularly assess MI results against these standards and take action where required
• For an example see Illustration 4 on page 15 of the FSA report.

TCF MI performance indicators

Green, amber and red indicators in MI reports can provide an ‘at a glance’ view of TCF performance and risks. In particular, an amber indicator can be used to highlight a potential problem early on – enabling early action to solve it. The FSA quotes this approach as good practice that it has found in some firms.

TCF MI during periods of change

The FSA accepts that as firms go through periods of change or improvement, existing processes which are at variance with TCF principles (such as remuneration schemes) may take time to adapt. In these situations it will support a committed but graduated approach to improvement, to include realistic targets that will help the firm fully meet the December 2008 deadline for full TCF implementation. However it will also expect to see interim TCF MI put in place to protect customers’ interests during the period of change. See page Illustration 2 on page 13 of the report for an example.

Using TCF MI – a ‘five step’ approach

In the run up to March 2008 the FSA will be increasingly looking for evidence that MI is communicated and used by the right people and in the right way. To help you achieve this target it suggests the following five step approach:

1. Ensure that TCF MI is seen

• TCF MI should be seen, understood and (where necessary) acted upon by the level of management for whom it is relevant.
• At the same time, senior management must be kept fully informed – either through duplicate MI or through higher level MI.
• Good examples of the above include:
  • regular meetings between middle and senior management to discuss current MI, including TCF MI
  • inclusion of a TCF ‘MI pack’ in regular senior management/board papers
• Firms should ensure that TCF MI is also seen throughout the business – for example regular features in staff newsletters which report how the firm is performing against TCF expectations will embed TCF as ‘business as usual’.

2. Ensure that TCF MI is challenged

• In smaller firms, managers need to periodically review and sense-check samples of TCF MI information to satisfy themselves that the data is correct and relevant.
• Similarly, large organisations need to ask internal audit to periodically review the information that feeds into the MI reports.
• Where relevant, management should consider whether additional or alternative MI might provide more meaningful information or align better with outcomes.

3. Ensure that TCF MI is analysed and monitored

• Managers are expected to analyse TCF MI consistently and in some detail against the standards and expectations they have set – and in so doing focus on the quality of TCF consumer outcomes.
• Where MI doesn’t indicate the route cause of a problem, more detailed MI analysis will be required - for example a review of MI by product or sales consultant may pinpoint the root cause of a high level of cancellations.

4. Ensure that TCF MI is acted upon

• Firms must be able show how they have acted to remedy any incidences of or risks to unfair treatment of customers as revealed by their TCF MI.
• In large firms, because remedial action won’t necessarily rest with the area which gathered the MI, effective internal communication of TCF and effective channels to allow escalation of TCF risks is vital.
• See Illustration 6 on page 16 of the FSA report.

5. Ensure that TCF MI is recorded

• Firms must not only record their TCF MI results, they must also keep records to evidence who saw them, how often the results were reviewed and (if relevant) challenged, and of when/how they were acted upon to resolve TCF problems.
• Where remedial action is taken, this is likely to require its own set of MI to measure/prove its effectiveness.
• See Illustration 7 on page 18 the FSA report.