TCF reviewed

Do not let falling foul of the Financial Services Authority cause your business to suffer. Treating Customers Fairly features high on the FSA's agenda.

I would draw your attention to the 64-page guidance document that the FSA published in July. This sets out its views and does indicate that there is a good deal of work that still needs to be done. You can download a copy from the FSA website.

I suspect that you adopt many of the TCF principles into your running of the business but they are not recognised or documented as such. The doctrine of 'if it is not recorded, it did not happen' is the order of the day.

You will need to sit down with your co-director and your compliance officer or compliance consultant and review each area of the business, to satisfy yourselves that you are treating your customers fairly and conflicts of interest are identified to ensure no customer detriment.

Just a few areas to look at would include: remuneration policy - are employees given incentives on numbers of sales, or influencing business to certain insurers; binding authorities - are your customers aware that in certain circumstances you are acting as agent of the insurer; do the contracts that you are offering meet your customers' needs and, in the event of an incident would they be able to make a claim; your collection of management information in areas such as business retention, lapses, complaints and claims not met. All of these could provide indicators that something is not quite right; is your advertising clear and not misleading and, likewise, your disclosure documents at point of sale?

As you can see, there is much to consider and the FSA will want to see evidence that you have at least evolved a TCF policy, even if it is still 'work in progress'.

Finally, below is what the FSA says about firms that have not embraced TCF. Note the final sentence with regard to individuals.

"We will continue to consider enforcement action in circumstances where a firm's systems or actions leave open the potential for significant consumer detriment, or where actual significant detriment has occurred. This is much more likely to be our response where firms continue to deny that TCF has any relevance for them or have failed to take appropriate steps to work out what changes may be required and to start implementing them. We will also consider taking action against individuals within the firm if we consider that senior management have failed in their responsibilities."