The Financial Services Authority’s (FSA) ‘Treating Customers Fairly’ (TCF) initiative has been given a thorough airing, not only in the pages of Mortgage Introducer, but throughout the industry in the form of market comment and presentations.
Therefore, it was no surprise that TCF was covered extensively at the recent Mortgage Business Expo at Earls Court Two in London.
Speakers at the event covered a wide range of subjects, from the future of packaging to risk assessment, but it was TCF that dominated the majority of the proceedings.
At the recent Moneyfacts conference, it was claimed that TCF was a ‘really sad indictment that the regulator needs to enforce’ by chief executive officer, Paul Pester, who further claimed that the rulings were vague and ‘as regulation is principles-based it is very difficult to establish exactly what they mean’.
However, speaking at the Expo, Nausicca Delfas, head of the TCF team at the FSA, maintained that successful implementation of the initiative was a real priority.
Looking for evidence
Delfas claimed that the regulator was looking for evidence of TCF and was encouraging firms to meet its interim deadline in March 2008. The message from the FSA was clear to firms who do not meet the regulatory deadline, as it will enforce regulatory intervention and will give stronger enforcement on those who fail to comply in time.
Delfas said: “The pace of progress needs to increase. What we have seen mainly has been in the back offices, but there is further to go with customers and ensuring evidence is suitable.
“There is room for improvement on both sides and we are detailing various outcomes, but it is important that there are no hidden surprises for consumers, particularly with research on fee disclosure and early repayment charges when clients are encouraged to remortgage by the intermediary.”
Delfas added: “Many firms ask if they will be alright if they do one thing or another. But firms have to go back to first principles. There is no checklist. Firms have to be satisfied they are meeting the requirements and delivering the outcomes. They also have to be able to prove it.
“For brokers, we have found some good practise and some less good too. We hope all will find the framework useful and we urge you to look at it and talk about whether it will be helpful.”
Looking towards the future, Delfas claimed that the regulator is urgently seeking high levels of TCF that will start to bear fruit and it expects full activity in anticipation of the initial deadline in March 2008, as it is in firms’ best interest too.
In conclusion, Delfas encouraged brokers to ensure they complete Key Facts Illustrations and that they are in place.
In the market’s interest
Another key speaker on TCF was Frank Eve, founder of the TCF forum, who spoke on how lenders support the intermediary.
Eve claimed that lenders were not responsible for the advice process, but it did not mean that they could not assist with TCF.
He said: “There is still a long way to go to reach the targets the FSA has set. It is in the interest of the whole mortgage market that the deadlines are met.”
In another seminar, Robert Sinclair, director of the Association of Finance Brokers, warned advisers to expect a much more proactive regulator with regards to TCF in 2008.
Sinclair said: “The FSA is tooling up for its TCF work. While the Financial Ombudsman Service is laying off staff, the FSA is recruiting and next year every regulated firm will get a telephone call regarding their TCF work. Following these phone conversations, the FSA is intending to visit 4,000 firms who look as though they’re not there with TCF.
“I don’t think the FSA has told firms in simple terms what they should do. It’s said it has given firms all the information they need, but finding that information on the website can be difficult as it is in so many different places.
“Changes to senior management are about culture – do you plan to what the customer wants or to what you as a business wants to achieve? I don’t believe that the FSA has told people what to do and although it has put details on the website, it has obscured it with jargon.”
The customers’ needs
Bearing in mind the needs of the customer when implementing TCF was a key point of Gillian Cardy, chartered financial planner at Professional Partnerships’ seminar.
Cardy said: “Firms must break down every single element of their contact with their clients to come up with a step-by-step approach to embedding TCF. This means looking at all levels of client contact.
“Advisers need to show and tell clients that they have something of value to offer; we devalue what we do if we say things like: ‘I have to go through this because the FSA says I have to’.”
With the industry prepared to comment at great lengths on TCF, and with contrasting opinions on its workings, there is obviously plenty of debate to come in future months. Whether these warnings are in time to make an impact on market adherence to the first deadline is yet to be determined.
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