Treating Customers Fairly – FSA progress report shows 59% of small firms missed deadline

The Financial Services Authority’s latest progress report on Treating Customers Fairly (TCF) shows that this is being taken seriously by large firms but that compliance is failing lower down the markets.

In this week’s report, the FSA detailed firms' performance against their first deadline of last March - firms had to show that they were implementing the necessary changes in their most impacted business areas. This showed that 93% of major retail firms, 87% of medium sized retail firms and 74% of wholesale firms (where TCF is relevant) met the deadline, but that this compliance was only 41% in small firms.

Sarah Wilson, FSA Director with responsibility for TCF, said: "We are encouraged that senior management in very many firms are showing strong commitment to TCF and are rising to the challenge of a more principles-based approach to regulation." She added, "Following the report we will intensify our supervisory focus on any firm that has failed to sufficiently engage with TCF and include the use of enforcement where necessary. Most particularly, in addition to all that is already available to them, we will increase our efforts to assist small firms. Given their size and structure these firms can make rapid progress if they engage."

The FSA has also announced a new deadline - end December 2008 - for all firms to have completed their work on TCF and from when to be able to demonstrate that they are consistently treating their customers fairly. The FSA said that they were devoting more resource to ensuring the new deadline was met and were developing a framework, for identifying potential TCF risk areas, to use when testing firms.  Supervisors will also include a greater amount of detailed testing in their regular work.

More details will be published in July. Further details on the stages of Treating Customers Fairly can be found in the FSA paper Treating Customers Fairly – Towards fair outcome for consumers.