The majority of advisers believed that existing documentation will be sufficient to prove they are correctly implementing TCF into their work practices.
The research, which was undertaken in early February 2007 amongst 50 small directly authorised brokers, aimed to find out what progress brokers are making towards the end of March TCF deadline set by the FSA, for reaching the ‘implementing’ stage of their TCF work.
As well as revealing that only 6% of brokers were aware of the FSA deadline, the research also confirmed that most were happy to rely on existing paperwork to prove they were properly implementing TCF. Most brokers also felt that TCF would result in an increase in costs, but would also encourage lenders to provide an improved level of service.
In July 2005 the FSA identified 4 high level stages for all firms: basic awareness of TCF; strategy and planning; implementing; and embedding. The FSA said a firm would be at the implementing stage when it is:
• developing plans & processes
• allocating TCF resources and responsibilities, and
• creating capability among its staff
The FSA also pointed out that a firm will have reached the fourth and final embedding stage when it is following up on implementation; continuously monitoring its TCF performance and committed to maintaining standards in the future.
Justine Tomlinson, marketing director at Mortgage Next, said: “The results from our survey are concerning. The vast majority of brokers could not tell us the deadline for reaching the implementing stage and most felt that existing documentation would provide sufficient evidence that they have an effective TCF strategy in place.
“However, we cannot lay the blame for this with small firms. The FSA has created a massive communications gap, choosing to directly communicate key messages to larger firms whilst expecting small firms with limited resources to update themselves. More than ever the FSA needs to support networks and service providers who are well placed to bridge this gap.
“The FSA is clearly placing a lot of emphasis on principles based regulation this year. In April it will be assessing the industry’s progress on the implementation of TCF, which will involve the publication of a major qualitative survey of 700 firms. The FSA has clearly stated that 'We expect senior management to take responsibility for ensuring that their firms treat their customers fairly, including identifying risks, having appropriate systems and controls in place to mitigate these risks, and ensuring these are effective. Where we detect a breach which requires enforcement action we will consider taking action against individuals within the firm if we consider that senior management have failed in their responsibilities.' Brokers cannot pretend they have not been warned."
