Here’s a quick question for you: how long is your attention span these days? I remember from my old school and college days that it was said that a student’s attention span was approximately 15 minutes; after that the teacher or lecturer had a minimal chance of getting the necessary information across.
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Nowadays, we live in an age of information overload where we are bombarded with acres information. It is therefore unsurprising that many of us have had to become masters of the ‘scan’. This involves a heightened version of skim-reading in which we have to pull out the relevant information in nano-seconds. It is why we often only read the headlines of news stories – this being a short-hand way of knowing that something has happened without knowing all the facts.
Losing the real story
Unfortunately, the problem with all of this is that the real story is lost – if we are all too busy to delve into the actual issue then how can we hope to use that information to change or develop. In the mortgage market the ‘scan’ is much used but I would warn against simply relying on the headlines when it comes to meeting your regulatory responsibilities.
For instance, the headlines from the Financial Services Authority’s (FSA) recently published ‘Treating Customers Fairly’ (TCF) Initiative: Progress Report’ all focused on the small number of intermediary firms who were deemed to have met the regulator’s TCF deadline. But this misses the real detail and the real significance for mortgage brokers. In just focusing on the numbers who didn’t hit the deadline we lose sight of the practical help that should be used to ensure future deadlines are met.
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For those that have had their heads buried in the sand, the FSA’s deadline of 31 March 2007 was the time when firms were supposed to have implemented TCF in a significant part of their businesses, and the FSA was using this deadline to ‘stimulate action in firms’ that may have been slow to buy-in to the TCF initiative.
Within the report, the FSA expresses concern at what it sees as the slow level of progress made by smaller firms – 41 per cent of small retail firms met the deadline with the sectors broken down as follows: financial advisers – 52 per cent; general insurance brokers – 45 per cent; mortgage brokers – 22 per cent.
Urging engagement
While we are pleased that many advisory firms did meet the deadline we were disappointed that a substantial number of smaller intermediary firms were deemed to be off the pace. AMI has urged its members to engage with the information coming out of Canary Wharf and put this information into practice – firms have often complained about a lack of communication from the FSA on what they should be doing to implement TCF and we are also pleased that the regulator has committed to strengthen its communications with small firms.
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While 22 per cent is not a number to swell with pride over, AMI has repeatedly pointed out that failing to meet the deadline does not automatically mean that small firms are not treating customers fairly; neither does it mean those firms who have met the deadline have no more work to do. In this review, meeting the deadline shows that the firm has a plan for how it intends to meet the FSA’s requirements. To this extent, the review focuses on process, not outcome.
It is also worth pointing out that the FSA may have given a large firm many action points that could take months, or years, to correct while a broker firm may only have a small number to address. The FSA points out that firms failing to make the deadline did so because of slow progress rather than ‘failing to engage with TCF at all’. It also believes small firms are in a position to make very quick progress in implementing TCF – the point should be made that firms who were judged not to have hit the deadline may not be too far behind if they quickly engage with the findings.
Improving development
Examples of good and bad practice are most useful in allowing smaller broker firms to see where they may be able to improve their TCF development. On the FSA website a number of good and bad practices uncovered by the regulator in the course of its TCF review are published. They cover management behaviours, sales and advice and complaints handling.
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The FSA has always been firm in its belief that TCF should be driven from the top down – firm’s senior management have always been the focus of any review given that without their buy-in it was highly unlikely that the overall TCF culture would be changed. The following examples of good practice show the difference senior management can make to a firm’s TCF development. These include:
- Conducting a gap analysis, benchmarking itself against the six consumer outcomes.
- Presenting TCF policy to staff and testing their understanding of it.
- Encouraging staff to give feedback on areas which could be improved.
- Regularly monitoring commission claw backs for each adviser.
- Appointing a TCF ‘champion’ to review practices and align with consumer outcomes.
