The Association of Mortgage Intermediaries (AMI) has attacked the Financial Services Authority (FSA) for being too ambiguous in relation to its ‘Treating Customers Fairly’ (TCF) requirements.
Regulatory deadlines are looming in the coming year and there is a lot of work that many brokers still need to get to grips with if they are to meet them.
By March 2008, the regulator requires that all firms have measures in place to test whether or not they are treating their customers fairly. By December next year, firms must then be able to actually prove they are indeed treating their customers fairly.
Asking for too much?
The problem for brokers is that, while it is easy to believe they are doing a good job for clients, proving it is a different matter entirely. This is why AMI wants the FSA to be more specific in what brokers should be doing to implement their TCF strategies.
It is all very well spelling out where practitioners must get to in terms of compliance and stating the sort of outcomes that clients should experience, but without giving guidance on how to do it, some feel the FSA is asking for too much.
However the problem, as far as the FSA is concerned, is that each and every firm is different and that it is simply not possible to tell firms individually what they should be doing.
From the regulator’s point of view, firms need to discover this for themselves and can only do so by really engaging with its principles, looking at how they apply to their own processes and procedures and examining how clients’ experiences stack up with what is required.
In practice, the whole situation is a bit like the argument over whether the chicken or the egg came first. Firms do not have specific details of how to implement TCF, but unless they start trying to implement a strategy they will not be able to get to the bottom of what is actually required.
The thinking from Canary Wharf is that more than enough has been done to spell out what firms need to be looking at and that it is time for them to take responsibility for their own operations.
Nausicaa Delfas, head of department, TCF at the FSA, is in no doubt that the ball is now firmly in the market’s court. She says: “Firms should have all of the information they need on TCF. It’s over to them now and it is time for them to deliver.”
Delfas believes that if firms take the time to really investigate their performance in light of TCF, then it should become apparent where they still need to do work. She adds: “Firms have to go back to first principles. There is no checklist. Firms have to be satisfied they are meeting the requirements, delivering the outcomes and be able to prove it.”
Even for firms that have made significant efforts in this area and are now delivering the kind of service required, Delfas warns that they should not be complacent and must realise that when it comes to actually proving they are TCF compliant there is likely to be more work involved than they at first thought. Page 2
