All firms regulated by the FCA have to support the FCA Sourcebook’s principle that a firm ‘must pay due regard to the interests of its customers and treat them fairly’.
The TCF (‘treating customer fairly’) principle aims to raise standards in the way firms carry on their business by introducing changes that will benefit consumers and increase their confidence in the financial services industry.
Specifically TCF aims to:
- help customers fully understand the features, benefits, risks and costs of the financial products they buy
- minimise the sale of unsuitable products by encouraging best practice before, during and after a sale
Desired consumer outcomes of TCF
The FCA has outlined six core consumer outcomes that it wishes to see as a result of the TCF initiative. These are:
- Outcome 1 – Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture
- Outcome 2 – Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly
- Outcome 3 – Consumers are provided with clear information and kept appropriately informed before, during and after the point of sale
- Outcome 4 – Where consumers receive advice, the advice is suitable and takes account of their circumstances
- Outcome 5 – Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect
- Outcome 6 – Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint
What TCF isn’t
TCF does not mean:
- creating satisfied customers; a satisfied customer could still be treated unfairly and not know it
- that every firm must offer an identical level of service – the FCA recognises that businesses have different resources and ways of doing things
- that the FCA has the final say on which products consumers should want or be sold
- that customers are no longer expected to make decisions or take responsibility for them
TCF is about a culture – doing business in a way that will help ensure customers get fair treatment.
TCF and your business
The FCA ‘Conduct of Business Sourcebook’ support the principle of TCF, so if you’re following the rules relevant to the mortgage industry, you’re probably already implementing TCF in much of what you do. However, in order to satisfy FCA requirements, you need to take extra steps to show how you’re implementing TCF throughout your business.
Assessing and implementing TCF
The FCA doesn’t lay down any standard way in which TCF should be assessed and implemented, but it has highlighted key areas within the product life cycle where it’s a good idea to have extra checks in place. These include:
- product design
- financial promotion/marketing practices
- the sales process
- information and customer support after the point of sale
- complaint handling
In practice this means identifying potential gaps in TCF practice and developing procedures and checks to plug these in the following areas:
- Staff training/awareness of TCF
- Sales and marketing material
- Product understanding
- Advice and sales process
- Fact find and flow of information to the client (including after-sales)
- Complaint handling
- Remuneration/incentives
- Risk assessment of TCF non-compliance
- Record keeping and Management Information
TCF Info tips and tools to help you
TCF Info has produced a range of checklists, case studies, tips and tools to help you focus on what you need to do.
These are not definitive, nor are they rules, and you’ll need to adapt them for your particular business. Nor are they complete; we’ll be adding new areas in the future to cover all stages of the product life cycle. However, they should go a long way in helping you start to implement TCF in your organisation.
If you’re a sole trader
Treating Customers Fairly applies equally to all regulated firms – irrespective of size, so all of the pages on the TCF Info website are relevant for you.
To get extra tips on understanding how TCF applies if you work as a one-man-band see our page, TCF and sole traders.
Follow the links in the left-hand menu to find out more.