Patrick Gale, Chief Executive at Sesame, said: “Advisers are at different stages in their TCF preparations, and whilst the overall signs are positive, we do hear of some firms who believe that TCF does not apply to them. However, the FSA’s message is clear: unless firms can demonstrate that they are embracing TCF, they face the threat of enforcement action. TCF is at the forefront of the FSA’s move to principles-based regulation, so there is a lot riding on this from the regulator’s perspective.”
Gale said he was particularly concerned about small directly regulated firms. He continued: “The FSA does make allowances for smaller firms in terms of how elaborate their TCF strategy needs to be – but this is not a ‘get out of jail free’ card. The FSA believes that firms ignoring TCF tend to be the same ones that lack proper systems and controls across their business. If firms ignore TCF, they are inviting the FSA to scrutinise these controls, and to take enforcement action if they are not deemed up to scratch.”
Gale said that for firms embracing TCF, feedback has been positive. He commented: “We appreciate that the regulator is imposing this work at a busy time for advisers, which is why it is important to look at the positive aspects. At the heart of TCF is the opportunity to run an efficient and customer-focused adviser practice, where future risks are mitigated by reviewing advice processes and business controls.”
Last month Sesame launched a TCF evaluation tool that enables advisers to undertake a gap analysis and automatically generate an action plan to address any issues. Over 1,400 adviser firms are using the new interactive service, which is being reinforced by face-to-face regulatory support. This initiative from Sesame forms part of its ongoing work to help drive up standards of professionalism and good practice across the industry. Gale explained: “Our message to advisers is don’t bury your head in the sand over TCF. The good news for all advisers is that there is now practical support available that will help you to independently check the progress of your firm and identify any potential gaps.”
AIFA Director General Chris Cummings said: “TCF is the first visible sign of the regulator’s move towards a more principles-based regulatory regime, and it is good to see firms such as Sesame helping advisers by offering solid practical support. In April the FSA will publish its views on the proportion of firms who have met the March deadline. In order to make this assessment they are conducting telephone surveys and visiting some of these firms to verify the information provided. No one should be in any doubt about the seriousness of the regulator to take enforcement action against firms who they believe are ignoring TCF.”
Sesame member Paul Dodd, principal of Paul Dodd & Company in Leeds, has recently reviewed his business using Sesame’s TCF evaluation tool, and commented: “Like other advisers, I believe we have always treated our customers fairly, in pursuit of good business practice. However, there was no framework in place that monitored and measured this. Whilst it initially felt like yet another distraction from our core aim of looking after the needs of our clients, it was only by undertaking this review that we have been able to really demonstrate fairness. In the process, we have also seen an opportunity to improve our business and the standards we strive to achieve.”
