The regulator has insisted that in a principles-based environment, it is senior management who play a fundamental role in ensuring the right ethos is in place, but it will be looking to those within the company to see if this attitude has transcended down.
Speaking at the FSA’s Summer School in Cambridge, Sarah Wilson, TCF & insurance sector leader, said: “Where appropriate we intend to integrate the culture framework into our ARROW risk assessments and thematic work. This framework will enable supervisors to assess TCF culture in a more structured and in-depth way. It will include spending more time talking to middle management and staff, to assess how well the TCF visions and values of the senior management translate into fair consumer outcomes and to consider the potential risks that might exist towards delivering these outcomes.”
Wilson said the FSA wanted to keep assessing the market to see how far away full embedding of TCF was ahead of the December 2008 deadline.
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She also insisted that firms should be looking at other legislation, such as the Retail Distribution Review and Markets in Financial Instruments Directive, and proactively gauging their impact on TCF.
Bill Warren, associate director at the Regulatory Alliance of Mortgage Packagers, said: “This is quite a challenge and I think it needs someone, depending on the size of the firm, to be a ‘TCF champion’ and make sure it all happens. If firms make someone fully responsible for it, they can keep track of everything coming out of the FSA and Europe. Otherwise, firms will struggle.”
