31 March sees the first deadline for TCF implementation, with intermediaries expected to be able to show evidence ensuring that their clients are satisfied with the service given. The FSA deems that TCF is ‘central to the delivery of its retail regulatory agenda as well as being a key part of its move to more principles-based regulation’. This is followed by a further deadline in December, where intermediaries must show that a TCF ‘culture’ is embedded within their business.
The FSA said that TCF ‘underpins the delivery of our statutory consumer protection objective and times of market turbulence are when consumers need protection the most. Today’s market offers an excellent opportunity to embed a new TCF culture, sending out immensely strong messages to staff and customers. Against this background – and despite the pressures faced by firms – we think it is essential for firms to press on with meeting the TCF deadlines.”
So what stage is the industry at with the deadline looming so close? Mortgage Introducer sought out opinions from across the sector.
Paul Holden, sales director for Mortgage Stream, said: “People have put time and effort into compliance and it has been quite positive. However most brokers are entrepreneurs and in some cases they may resent being told what to do, so there may be reluctance to do anything that pushes it.
There is a hardcore of people that need to be convinced that they need to evidence TCF – whether it is on paper or with a software package. It doesn’t need to be any more than a diary entry, as long as you show evidence that you have made the effort. If you can’t, the regulator will come down on you like a ton of bricks. It is not too late to do something, even after the deadline, as it will never be too late to start making the effort to be more compliant.”
Evan Owen, director of the IFA Defence Union, said: “The law says everyone is entitled to ‘legal certainty’. This TCF initiative is an unashamedly gold-plated version of the EU Unfair Commercial Practices Directive. The regulators will be having a field day, hundreds if not thousands of regulated firms will be fined, publicly admonished and/or have their ability to trade removed on a whim; even those who have built up a business over many years by treating their clients fairly so that they come back again and again. The FSA needs to prove TCF is an essential part of regulation rather than being demoted to simply rubber-stamping EU directives.
“Without legal certainty there is no defence against the regulators. We would welcome an approach from an aggrieved firm that can prove it has been treated unfairly by the regulator.”
Polly Hughes, head of marketing at Mortgages plc, said: “TCF has to be embedded in every financial company’s culture and, in order to successfully do so, the drive and enthusiasm for this initiative has to come from the very top – the directors. If staff see directors championing the cause, they will also throw their weight behind it.
“At Mortgages plc, we have taken a number of very practical steps to embed TCF into our business. For example, TCF is included in every member of staff’s performance objectives. TCF is evidenced across the business and this can be seen in various different ways. For example, in product development, we developed a TCF score card to assist in demonstrating that new products take TCF into consideration.
“The senior management team has also identified a number of key performance indicators to enable us to review if the company is actually meeting the principles of TCF. This encapsulates issues such as product performance, specific consumer research, complaints, customer feedback and staff training.”
Kay Leslie, Pink Home Loans’ network services director, commented: “Our involvement in the Association of Mortgage Intermediaries’ working party has helped us to provide our appointed representatives with a valuable tool which allows them to collate essential evidence on how they treat customers fairly, should the FSA ever visit.
“All our business development managers and field compliance officers have also been trained to complete the forms should our intermediaries require any assistance. Feedback has been very positive.”
Wayne Dewsbury, sales director at Direct Financial Services, said: “It is a tough one to call from a packager perspective. We don’t deal with the customer directly but I think that some are more ready than others. Some in the broker market haven’t proposed it and others have looked deeply into it, but the message seems to be ignore it at your peril.
“We know what the FSA is asking for but from what I have seen people are unsure of what to do. Once advisers start to be monitored we will have a better idea.”
