With the first of the Financial Services Authority’s (FSA’s) ‘Treating Customers Fairly’ (TCF) deadlines looming, speculation is growing as to whether mortgage intermediaries will be ready in time.
Back in November, the industry watchdog announced that while senior management in many firms were taking TCF seriously and there were signs that some firms were building fair treatment of customers into their culture, they also stressed that there was little evidence that firms’ work on TCF was translating into improved outcomes for retail consumers.
It went on to say that the pace of progress must be increased to ensure that its 2008 deadlines were met. Whatever the outcome, firms should be TCF fit for management information as a minimum by 31 March, or face the wrath of the FSA.
A recent survey conducted by West Brom revealed that 83 per cent of the 920 intermediaries questioned would have their data in place in time for the end of March deadline, by which time they need to have management information initiated to test that they are treating their customers fairly and that TCF is integrated into the culture of the firm.
At the time, 5 per cent of those surveyed admitted that they still had significant work to do before the end of March. Furthermore, nearly eight out of 10 advisers would encourage the naming and shaming of companies who did not comply with the TCF principles.
If not, why not?
To be honest and I know that this may sound harsh, for those firms that are unlikely to meet the FSA’s deadlines, I cannot help thinking, if not, then why not?
At the end of the day, not wanting to sound like a Marks & Spencers advert, but, ‘these are not new deadlines, they are just the next in a series of deadlines’ and ‘this is not a new principle, it has been principle six since the UK mortgage market was first regulated’.
The regulator has made it clear that those firms that miss the deadline and fail to take their obligations seriously will face more regulatory intervention.
According to the FSA, the purpose of the deadlines is to provide firms with a unique opportunity to achieve real cultural change and a major shift in consumer outcomes, benefiting the public and the industry.
The huge benefit that I see for intermediaries is the opportunity to set themselves apart from the competition, which given the current market conditions, can only be a good thing. It gives them the chance to demonstrate that they have the best interests of their customers at heart, by not only saying they are doing something, but recording it with evidence.
Let’s not forget that these guidelines apply to all businesses within the financial services sector, so from your local high street bank to your home insurance provider, as consumers, we all have an added incentive to ensure that we get TCF right.
How many times do we hear from our colleagues, friends and family about phone calls to financial service providers that have taken 30 minutes as opposed to five? When a simple phone call ends in frustration, an increased telephone bill and quite possibly, increased blood pressure.
Mostly they culminate in ‘not being able to get through’, or worse, ‘not being able to talk to a human being’. These are everyday frustrations consumers suffer by not being treated fairly by companies who are, at the end of the day, earning them a pretty penny.
Additionally, ticking the TCF box on a form does not necessarily mean that you have carried out your commitment. Brokers should also consider their obligation to their client once the mortgage requirements are done and dusted. What about aftercare and
consultation? If TCF is carried on throughout the life of the mortgage, the client will thank the broker for it and will, more than likely, give them repeat business in return and possibly a referral. It makes sense that by treating your customers fairly now, you are preserving the success of your business in the future.
No shortage of information
So, what is out there in the way of information to support intermediaries and get them ready for the first of the two deadlines that is fast approaching?
No one can argue that there is a shortage of information available on TCF, with the FSA providing a raft of information on its website at www.fsa.gov.uk, and the Association of Mortgage Intermediaries (AMI) having embraced the subject by making suitable literature available for members to download from its website at www.a-m-i.org.uk.
I definitely support the view that those that fall short of the FSA’s requirements should be ‘named and shamed’ and that firms should not be afraid of blowing the whistle on those that don’t comply and meet the necessary deadlines.
At the end of the day, those that fail to deliver in line with the regulator’s expectations, will get a negative reputation in the market, making it harder not only for themselves, but will also tarnish the hard-earned reputation of the intermediary sector.
Unfortunately, some may learn the hard way, and those brokers and lenders who fail to ensure that their products are clearly labeled and do not take the customer’s individual situation into account are the ones who will be caught out.
Time flies
While December’s deadline, when firms should be consistently evidencing good outcomes for consumers, may seem like a lifetime away, we all know how quickly time passes and before we know it, it will be here.
And, so for those firms that may be struggling to keep up with the FSA’s requirements and adhering to the six consumer outcomes, then perhaps it is time to admit defeat and look at other options.
That said, if the firm was looking to outsource their compliance, they should go into it with their eyes wide open, ensure that they fully convey their requirements in order to ultimately achieve the support that they are looking for. In my experience, if it sounds too good to be true it usually is.
Firms that are a part of a network should be ahead of the game in all aspects of compliance and not least TCF. Appointed representatives should regular updates in terms of TCF, by various mediums, including quarterly seminars, face-to-face visits, e-mail updates and newsletters.
At the end of the day, the FSA and indeed companies that are in this business for the right reasons want to see customers treated fairly all of the time. This philosophy needs to be a firm part of every culture, to ensure that the industry’s watchdog doesn’t come a-knocking this time next year.
