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One! “Treating Customers Fairly”

Stuart JohnsonHead of Distribution

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Background

One of FSA’s principles for businesses

“A firm must pay due regard to the interests of its customers and treat them fairly.”

Therefore it is for all firms to decide how to address and implement TCF

INCLUDING YOU!

Treating Customers Fairly

Principle – not Rules based

Also other Principles too

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What TCF is NOT

• Being “nice” to customers

• Making less money and having lower profits

• Doing the same as everyone else

• Searching for bespoke products for each customer

• Being responsible for customers

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Structure of the TCF process

What does TCF mean?•Ensuring senior management understanding•Defining strategy and principles•Defining fairness

Gap analysis•Assessment of risks to fair treatment of customers•Identification of areas not meeting TCF obligations

Action planning•Prioritising tasks•Securing resources and responsibilities•Defining measures•Management information

Implementation and monitoring•Tracking progress•Making changes•Monitoring outcomes and delivery•Identify remedial action

Lesson learned•Review actions•Communicate

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Progress so far

• Be encouraged and pleased with progress

• AMI survey • 95% of members either very aware or aware of TCF• 47% reported had built TCF into their operations

• FSA researchMixed progress among firms, some good examples but:

• 47% of self cert cases brokers had failed to assess affordability

• 36% of cases where reasons for choice of self cert not given or unclear

• 80% of ‘sub prime’ cases lack of evidence to show how the product met customer’s needs and circumstances

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Product Life Cycle

Address fair treatment of customers through the product life cycle:• Product design• Identifying target markets• Marketing and promoting• Sales and advice process• After sales information• Complaint handling

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Pay attention to the following

Take care with your communications• Clear, Fair and not Misleading

With Advice Process ensure that you:• Meet the customers’ needs• Do not expose a customer to unnecessary

risks or costs• Make costs transparent• Define standards of training for advisers and

monitor sales quality

Complaints• Establish a complaints policy that is proactive

in communicating and obtaining feedback. • .

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Some Examples

Not taking advantage of the relative weakness of a customer Be clear about any fee

charging policy and variations for different ‘types’ of client

Consider how you use technology to support your day to day operations

Select product providers who demonstrate support and commitment to your TCF strategy

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Your Principles

Keep these things in mind:• Have documented, written procedures for

sales process, after sales service, complaints procedure

• Be able to prove a monitoring system which you use to check these processes are being carried out

• Show an analysis of that monitoring system and adjust if the original processes have failed in any way.

• Make sure you record how you act on any gaps you find

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Summary

• Good Compliance = Good Sales?

• Establish a Plan and evidence actions taken

• Communication, Sales Process and Complaints

• Document, Monitor, Adjust and Record

• Use AMI and FSA resources for guidance

• Good progress but more still to do

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One! “Treating Customers Fairly”

Stuart JohnsonHead of Distribution