Brokers must mind the gap with TCF

Brokers were told to cotton on quickly to the importance of the regulator's theme of 'treating customers fairly' after low numbers acknowledged its importance in a survey.

Dr Sandy Scott, director general of the Chartered Insurance Institute, delivered the message, adding: "Only 25% of brokers surveyed in October said they thought this theme was important and only 2% were using gap analysis to ensure its delivery - but gap analysis is precisely what the FSA expects."

Scott also warned against the temptation to delegate embedding TCF and that it should be assigned boardroom responsibility.

He continued: "TCF is high on the Financial Services Authority's agenda and is one of chief executive John Tiner's causes and, in his mid-term report, he said: "The intermediary market could do better." This goes to the heart of regulation and all Arrow visits will have a TCF theme."

Regarding the variable application and far reaching nature of TCF, he said: "Brokers must adopt the same standards with shareholders and stakeholders as TCF is all-embracing."

Scott suggested quality management information and checking that staff were incentivised appropriately were also key. He concluded: "There have been many studies showing the correlation between TCF and profitability. For example, reducing customer defection by 5% impacts profits by 25% and, typically, 1% of the customer base creates 30% of profits, but most firms do not know who those customers are."