Starting off with the basic premise that no financial services firm is perfect, but all are striving for perfection, treating customers fairly (TCF) is something that all should have as a central pillar for their business model.
In the last few weeks we have seen the FSA fine a number of mortgage brokers for inadequate sales procedures which meant they could not demonstrate that they had recommended affordable mortgage contracts that met their clients’ needs. These fines came just hours after the FSA’s public censuring of another financial services organisation for poor financial promotions, inadequate sales processes and record-keeping failings.
These recent fines follow heavy financial penalties from the FSA for PPI mis-selling, third party administrators and a number of financial advisers – due primarily to an inability to adhere to basic principles of TCF.
Understanding
It may be stating the obvious but such action would not be necessary if individuals had achieved reasonable levels of understanding of the principles and practice of TCF.
How can this be achieved?
Our Certificate in Regulated Customer Care (CeRCC) not only provides formally assessed knowledge and understanding of the principles and practice of TCF, it also serves as useful evidence of the action taken to embed TCF at all levels in an organisation – particularly useful for an FSA visit!
Until all financial firms wake up to this fact, as many thankfully have, the FSA will rightly continue to take robust action.
Data security
One particular area of concern in relation to TCF is data security. The FSA recently urged firms to change their attitude to data security following a review of systems and controls for data security at 39 firms including banks, building societies, insurance companies and financial advisers.
Philip Robinson, FSA Director for Financial Crime and Intelligence, said: “Customers have a right to be confident that firms are doing everything reasonably possible to keep their personal and financial details safe.
“Some firms have made progress by adopting good practice while others need to do more in this area to ensure that they are treating their customers fairly. Firms getting data security right is a key priority for the FSA and we expect the industry to raise its standards.”
The FSA is addressing data security risks with firms through ongoing supervision and is increasing its visits to small firms to review their systems and controls. It is also publishing a factsheet to help senior management at small firms understand their data security responsibilities.
CeRCC
The FSA does not expect firms to be perfect, but it will certainly have serious complaints about those who are making no real efforts to move in that direction. Gaining the appropriate training in this area is one way in which such commitment can be demonstrated.
To successfully complete CeRCC, candidates must be able to demonstrate an understanding of the Data Protection Act, Freedom of Information Act and the Privacy and Electronic Communications Act, all of which have significant impacts on this area.
Put simply, CeRCC more than adequately addresses the issues highlighted by the FSA and should be considered as an option for those wanting to ensure they have a thorough understanding of the legal and regulatory requirements in this area.
However, firms and individuals should be undertaking such training not just because it helps meet regulatory requirements but because it adds value to their organisation by ensuring customers are treated fairly at all times.
CeRCC is particularly valuable in that it is designed to:
· Increase the skills and confidence of those dealing with customers so that they are aware of the factors which may influence dealings with individual customers so that customers are treated fairly, appropriately and equally
· Provide those dealing with customers with a framework of knowledge and understanding of the issues relating to Treating Customers Fairly upon which they can draw to identify potential problems and determine their approach to customers
· Enhances the experience of customers in the quality of service received; transparency and clarity of transactions and the resolution of difficulties
· Provide a formally assessed body of knowledge and understanding which, along with workplace assessment, can develop and maintain good practice in treating customers fairly.
On completion of the CeRCC module, candidates will be expected to demonstrate knowledge and understanding of:
· the different types of customers and their range of backgrounds, characteristics, requirements and needs;
· the FSA's concept of TCF, its scope and relevance, and the benefits of implementing a TCF culture at all levels in an organization;
· the status of TCF within the financial services legal and regulatory framework, including the role and objectives of the FSA and how TCF fits into FSA principles and conduct of business requirements;
· the responsibilities of firms in relation to TCF and how it impacts on customer relationship management, quality of service, and staff training, competence and effectiveness;
· the implications of addressing TCF in practice, in areas such as product design, customer communication before and after point of sale, and complaints handling.
