How to ensure you are treating customers fairly

Nov 29th '19

The Financial Conduct Authority’s (FCA) Treating Customers Fairly (TCF) rules sit at the heart of the regulator’s requirements.


With its focus on consumer outcomes, the ethos of TCF is central to the FCA’s work to ensure a fair deal for consumers.


Fair treatment means ensuring your promotions aren’t unfair or misleading. It means having small print that’s fair and financial promotions that pass the regulators ‘fair, clear and not misleading’ test.


Here we look at why fair treatment of customers is in the news right now, and how Compliance teams can help to ensure their businesses treat all their customers fairly.


  • Unfair treatment hitting the headlines

The fair treatment of customers has been in the headlines in recent months.


Earlier in the year, the collapse of London Capital & Finance put misleading promotions in the spotlight while last week, fairness was again making news, this time when the FCA fined asset manager Janus Henderson £19m for misleading 4,700 retail investors and charging them unfair fees.


The Janus Henderson fine was the result of the firm’s parent reducing the level of active management of its Japan and North American Funds – but without informing its retail clients of the change. For the following five years, retail investors were charged the same level of fees as before the investment strategy change.


Announcing the fine, the FCA’s executive director of enforcement and market oversight, Mark Steward, said ‘The FCA requires firms to treat all its customers fairly, not just some customers. In this case, retail investors paid fees for active investment management they did not receive.’


  • How can you ensure your firm treats customers fairly?

Complying with the FCA’s TCF rules means taking a number of steps:


  • Advice and financial promotions need to be suitable for your audience. This is particularly important if you work with vulnerable consumers.
  • Whether you are producing adverts, brochures, webpages, emails or other digital marketing, your work needs to comply with the regulator’s financial promotions rules. Understand these requirements and make sure you put them into practice when writing, reviewing and approving promotions.
  • Ensure your promotions and client communications include the right disclaimers, displayed with the required prominence.
  • Make pricing fair and clear, and be sure not to exaggerate the performance of a product. The financial promotion rules, as well as more specific requirements under MiFIDII and PRIIPs, mean that data included in any promotion, including on performance and fees, needs to be completely accurate.
  • Ensure your adverts meet the requirements, not just of the FCA, but of the ASA and CAP, who regulate all advertising in the UK. Read this blog on how to avoid producing misleading adverts for more on this.
  • Make sure your team works with the business to ensure financial promotion copy meets FCA requirements around clarity and substantiating claims.
  • Ensure that the Compliance team always provides the requisite sign off for client communications and financial promotions. Introducing an element of automation to your compliance processes can help to mandate Compliance team review and approval, reducing the risk of potentially unfair content slipping through.


How can we help you?          

LS Consultancy has wealth of experience in reviewing financial promotions and can do so on a one-off or on an on-going basis.


We are also skilled in reviewing and assessing your financial promotion procedures and can assist you to establish the necessary framework to help future compliance with regulatory requirements.


Explore our full range today.


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Remember: Not everything is black and white when it comes to Financial Promotions, and many of the rules are open to interpretation. If you are unsure how your activities fit within the rules, please contact us.


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