The FSA’s TCF initiative is a core part of its move to more principle based regulation. It is intended to compel firms to review their treatment of customers and to change their behaviour to deliver improved outcomes for consumers so they believe they are being treated fairly no matter which firm they are dealing with. The aim is for TCF to be embedded within the culture of all firms. To meet this end the FSA has identified 6 consumer outcomes which they think TCF should achieve for consumers (the outcomes can be accessed by clicking here). Firms are to assess their behaviour and process to determine if they meet these outcomes. The FSA has issued deadlines in respect of different phases of the initiative; by the end of March 2008 firms are expected to have appropriate management information in place to test whether they are treating customers fairly and by December they should be able to demonstrate to themselves that they are consistently treating customers fairly with management taking responsibility for this.
The nature of principles based regulation means that it does not provide the same degree of certainty of information for firms as detailed rules. Consequently, the FSA is issuing a substantial amount of guidance and engaging in an increased amount of personal contact with firms. In particular, in relation to small firms the FSA is proposing to assess, via phone or face to face, all general insurance firms selling higher risk products. Prior to the assessments the FSA will be holding road shows on TCF. The assessments will be will followed up with full on-site visits to either substantiate the information given to the FSA or to investigate any firms causing concern. In addition, small firms can access relevant tools on the dedicated TCF section of the FSA website which contains examples of good and poor practice, details of updates and developments (See link here.)
The FSA has also identified that not enough is being done by firms to ensure that their Appointed Representatives are treating customers fairly. FSA authorised firms have the regulatory responsibility for their Appointed Representatives, this includes ensuring that they comply with TCF.
The importance of embracing the TCF initiative cannot be underestimated; the FSA has consistently made it clear that it will use the full range of its regulatory tools, including taking enforcement action, against those who are not engaging in the initiative.
