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| John Tiner |
TCF, or Treating Customers Fairly, is a key element of the UK's Financial Services Authority (FSA)'s retail regulatory agenda – and one that will spearhead the FSA's commitment to principles-based regulation – so said their Chief Executive, John Tiner, in the keynote speech last week to the Asset Management Conference, held last Thursday in London.
The FSA's aim is to ensure an efficient and effective retail market along four "pillars" - improving the consumers' financial capability; providing simple, understandable information; having well managed and capitalised firms who treat their customers fairly; and taking a risk-based approach to supervision. Tiner said "TCF is at the core of our regulatory approach for the retail market and we will continue to embed it within all aspects of our regulatory and supervisory approach. This includes aligning all relevant thematic work with our TCF priorities and taking forward work to review firms' own assessments of progress with their TCF initiatives."
TCF implementation will follow a committed principles-based approach and the FSA does not intend to provide detailed rules. Tiner went on to say "In the spirit of principles-based regulation, the primary means by which we will see the success of TCF is the real difference it makes to consumers of retail financial services." Providers and distributors of retail financial services must look at their own processes and measure the impact on consumers through broad principles – fair treatment must be at the centre of the firm's culture, products should target the correct consumer groups, clear information and advice should be provided, products should perform as the customer has been lead to believe, and there should be no barriers to changing product or provider.
The FSA has set a deadline for firms to reach the implementation stage of their TCF work in a substantial part of their business by the end of March 2007 – in just over six months' time. A progress report was published in July and a Consultation Paper is to be issued this week. In the meantime, the FSA has fined two firms in the past month: the IFA Langtons, including in its comments that the firm "failed to appreciate the requirement for senior management to review its approach to TCF and, as a result, the compliance function failed to appreciate the need to formulate a TCF policy"; and Carphone Warehouse where they failed "to apply the TCF principle in a practical and timely manner".
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