The Financial Conduct Authority (FCA) no longer carries out Treating Customers Fairly (TCF) specific visits, however this does not mean that they think it is any the less important. It does mean that by now they expect the principles of TCF to be embedded in all firms and to be the bed rock of their business models. The principle is to ‘put the customer first’ in everything which we do. Therefore, if during a visit or an interview they get the impression that TCF is no longer a priority, they will certainly investigate further and this is where you will need an FCA compliance consultant by your side.

TCF applies to both Product Providers and Intermediaries. Broadly, the Regulator intends that:

Product Providers should ensure that:

• their products are appropriately designed for the target market
• the marketing material is clear, fair, not misleading, and likely to be understood easily by those reading it
• the product should perform according to the expectations given

An Intermediary’s primary responsibility is to ensure that:

the customer has all appropriate information in an understandable format, which means;

For advice sales:

• the clients’ attitude to investment risk and capacity for loss has been properly established
• the product is suitable for the customer
• the product is affordable
• the post sales service meets the expectations created

The TCF exercise, which all regulated firms should undertake no less than annually, is essentially a “Gap Analysis.” For the purposes of Risk Management, the FCA expectations could be broken down into 6 key areas:

1. Senior Management Responsibilities
2. Communication with Clients
3. The Advice Process
4. The Post Advice Process
5. Disclosure and Payment for Services
6. Staff Competence

The following is a non-exhaustive list for your guidance.

The TCF Outcomes Management Statement

• TCF is central to corporate culture
• Senior management can demonstrate how TCF is embedded in our business strategy
• The fair treatment of customers is central to our Firm’s culture
• Senior management practice what they preach and re-inforce TCF on a day to day basis
• Senior management have undertaken a TCF audit / gap analysis
• An action plan has been agreed and is/has been implemented
• Critical elements of TCF are included within our MI. This is regularly reported and acted on
• Staff routinely share best practice and can explain what TCF looks like to them
• Adherence to TCF practices are rewarded
• Remuneration policy and staff rewards support TCF
• Actions taken demonstrate adherence to TCF obligations are recorded
• Feedback processes are in place to gauge client satisfaction
• Responsibilities for TCF are clear, e.g. for taking action, monitoring results / identifying improvement areas
• Staff are engaged, motivated and trained in what TCF means
• Everyone within the business is truly client focused
• All our people are well trained for the roles they perform

Products and services marketed….meet the needs of identified customer groups and are marketed accordingly 

• Advisers are able to identify target markets for specific products
• Financial promotions are regularly reviewed for relevance and clarity
• Advisers/managers demonstrate their knowledge of products
• The review and sign-off process for advertising and promotions is rigorous
• Confident in our expertise to recommend and manage in our chosen markets
• Promotions are targeted to ensure they are aimed at the right clients

Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale

• TCF principles are reflected within T&C documentation, e.g. observation form
• Content of documentation is not overly technical, e.g. suitability letter
• Clients can clearly see the advice given and why, e.g. it isn’t buried in other documentation
• Clients always understand the benefits of the advice / products recommended
• Clients always understand the limitations and risks associated with the advice / products recommended
• Documentation (such as suitability letters) are always tailored to individual clients

Advice is suitable and takes account of their circumstances

• Attitude to risk is clearly identified, understood by the client, documented, and matched by recommendations
• Advice covers, where appropriate, non-income earning recommendations, e.g. National Savings, utilizing IHT annual allowance, repayment of debt
• Soft facts are always collected on the fact find — not only what, but why?
• Knowledge of adviser / supervisor products and associated advice areas is spot on —this is current and has been objectively assessed
• There is no sales bias
• Clients fully understand the status of the adviser and clearly understands the merits of the different remuneration methods
• `Know your customer’ requirements are fully documented, e.g. limited advice or `client not prepared to disclose’ are the exception rather than the rule
• We take time to understand our clients’ needs
• We regularly review our stance on investment and technical issues
• The fact find document readily captures all of the information we need about the clients circumstances for us to fully advise them.

Consumers are provided with products that perform as firms have led them to expect and the associated service is both of an acceptable standard and as they have been led to expect

• Advice process includes a measurement of client satisfaction
• Service standards (where agreed with a client) are met, e.g. time to write a report
• Ongoing client reviews are always conducted as agreed with the client
• Advice to existing clients is always the same as that to potential new clients, e.g. some advisers would not now recommend WP investments to new clients — what do we do about existing clients with WP investments?
• Client reviews / contact methods are established with each client
• Whatever client contact is agreed, this is followed through for both new and existing clients
• Information is reviewed for relevance, accuracy, and clarity
• Ensure clients expectations match provider service
• Clients regularly complement us on our service

Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint 

• Complaints data / client feedback is reviewed to identify TCF issues
• Staff and advisers know what a complaint is defined as and what to do when one is received
• Service standards are in place and adhered to
• Complaints investigated in a impartial manner without confrontation
• Complaints processes in place and regularly reviewed (as applicable)
• All client data is accurate, up-to-date, easy to use and accessible
• Our database enables most client queries to be dealt with by support staff
• Our software supports the main advice and business process

Download: Treating Customers Fairly FAQs

If you need to create, review or execute your Governance. Risk or Compliance strategy, call us today on 020 8087 2377 or email us.

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