At the time of writing the December TCF deadline is less than 3 months away, this is the date imposed by the Financial Services Authority (FSA) for “Management Information” (MI) to be available from mortgage broker firms to demonstrate that the regulated individual or firm is treating their customers fairly in accordance with the FSA’s principles.
There are a number of sources of information available to advisers to assist with the understanding and preparation for the TCF deadline. The two best known are the FSA Website itself, www.fsa.gov.uk, and www.tcfinfo.co.uk. These sites help advisers understand what is required to prepare their business by introducing working practices and systems that facilitate good TCF practices. [And don’t forget about the Mortgage Introducer website. Ed]
It has been written many times that TCF is by no means a new idea; in fact successful financial intermediaries have been treating their customers properly from the day that they went into business. The principles of TCF are essential for customer satisfaction, customer retention and to facilitate word of mouth referrals. After all who would recommend a broker or firm that had failed to treat a client well? In a sense, the philosophy of TCF is a firm’s method of gauging how well they are regarded by their customers.
Looming deadline
So if TCF has always been a part of a successful brokerage’s every day practice why is there such a fuss about the looming deadline? The simple truth here is that while brokers have been truly excellent at actually treating their customers fairly, they have been truly awful at documenting what actions they have carried out; and in some cases what advice they have given. So therefore, in the vast majority of firms, TCF will not be so much about adopting new ways of dealing with their customers, it will be more about comprehensively documenting what advice they have given and what steps they have taken to keep their customers informed of the progress of the applications, before, during and after the advice has been given; and indeed after the mortgage has completed in their aftersales follow up.
The new TCF MI requirement is going to be implemented at a time when the mortgage market is undergoing huge challenges, with fewer lenders, fewer products and as a result fewer brokers trading. However, one small silver lining, is that in the quieter times brokers that are in business for the long term have time to properly implement their TCF MI strategy in the next few weeks.
Proper record keeping is not a difficult process to implement at all, put very simply, it means that a firm needs to be making file notes as a case progresses, scanning documents, saving letters generated on all PCs, logging phone calls to clients, solicitors, estate agents and of course the lenders. In some cases recording the call as well would be prudent. KFI and IDDs produced by the sourcing software should be saved and stored with the client details. The advice should be followed with product confirmation letters and aftersales satisfaction survey letters. All of these small TCF steps need to be implemented for each and every enquiry and successful client transaction and because of this an automatic diary is essential in ensuring that advisers and administration staff actually do carry out the steps every time. Once the various steps have been completed for each enquiry and successful case, a reporting system with date and check boxes helps a firm track the steps taken, and will then facilitate the MI reporting demanded by the FSA TCF rules.
It is possible that all of this could be done in a paper system, or by using various Microsoft products such as Outlook, Word and Excel; however, none of these systems are integrated, which means that advisers would have to re-enter details into each program, plus the sourcing software time and time again. If paper files were used, MI reporting would be a very tedious and slow process with the inherent potential for inaccuracy, a factor that is unlikely to escape the FSA’s notice and subsequent displeasure!
Software systems
The adoption of a proper dedicated back office software is the only realistic way to ensure that every part of the process is actioned and documented, and that a true reflection of this activity can be produced as a report literally with one click of a mouse
There are a number of systems available on the market, some are web-based and some are installed locally on the adviser’s laptop, PC and/or Server. Whichever system you choose make sure that data AND documents can be exported to AND from your choice of sourcing software to avoid the need for re-keying. Don’t delay, the FSA deadline of 31st December approaches and the FSA staff are gearing up to visit your offices in the new year. So make sure that you do disappoint them by having a fully integrated back office and TCF system, with “no case to answer” on TCF and compliance. Good Luck!
