TCF Info feature for Mortgage Solutions

The consumer media is currently full of headlines heralding economic uncertainty in 2008. And while many of these headlines can be a little overblown, what they do tell us is that the value of impartial professional financial advice will be immeasurable in the coming year – which provides a great opportunity for mortgage advisers. To make the most of this opportunity, intermediaries need to ensure that their house is in order, a key theme of which will undoubtedly be Treating Customers Fairly (TCF).

The Financial Services Authority (FSA) considers TCF to be a key Principle of its regulatory regime. To encourage the application of that Principle and a move towards embedding TCF into firms’ ‘business as usual’ culture, the FSA has announced two TCF deadlines for 2008.

By the end of March the FSA expects all firms to have appropriate management information (MI) or other measures in place to test whether they are treating their customers fairly. Following on from this, by the end of December 2008, all firms are expected to have completed their work on TCF and be able to demonstrate that they are consistently treating their customers fairly

With the March deadline fast approaching, you should ready to provide the relevant MI information if called upon to do so by the regulator. So are you prepared?

The MI data you collect as part of your TCF strategy must be able to help you measure performance against your firm’s stated objectives in relation to TCF, internal service standards you’ve set that are relevant to TCF and the FSA standards that aim to protect the interests of consumers.

The data relevant for TCF in your business will depend on its size and how you operate in the mortgage market. While it’s down to the management of your firm to decide what MI is needed, the FSA has identified sales, after sales service, complaints handling, marketing, advertising and financial promotions, culture and values, business strategy, product design and governance as areas that are potentially relevant.

You therefore need to decide which of these areas are relevant for TCF in your business, what you need to measure in order to assess TCF performance within each of those areas and start gathering the data if you’re not doing so already. TCF shouldn’t require you to collect substantial amounts of new MI – for the most part you’ll simply need to think differently about the data already available to you.

To support your MI data you’ll need an MI plan. The complexity of this will vary according to your business size, but it should document which MI you’re collecting, why, how, and how frequently. It should also show who will receive it and - cruciallly - how issues raised by the MI will be prioritised, escalated and followed up.

The FSA will be 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 this would include regular meetings between middle and senior management to discuss current MI, including TCF MI or the inclusion of a TCF ‘MI pack’ in regular senior management/board papers. Firms should also ensure that TCF MI is 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 periodically to 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.
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.
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.

Of course, MI is just one aspect of implementing Treating Customers Fairly within your business and come December you will need to prove that you have instilled the Principle throughout your daily activities. Developing a culture of TCF will benefit your business, your customers and ultimately the industry, which is why a number of lenders have backed TCF Info (www.tcfinfo.co.uk), a website dedicated to supporting intermediaries in treating customers fairly. The free site provides an impartial and easy to read reference point and is written in plain English with downloadable content. It provides checklists, tips and tools to help all intermediaries large or small.

So whether you need information to ensure you are prepared for the upcoming MI deadline, or you need further guidance on TCF, a visit to www.tcfinfo.co.uk could help you find what you are looking for.

Alex Hammond, PR Manager at Kensington, which is one of the lenders that backs the free intermediary resource www.tcfinfo.co.uk