Some days just lend themselves to idly watching television – I like to call these days ‘the weekend’. On one such ‘weekend’ I stumbled across the Comedy Channel which was screening Raw, the seminal 1980s stand-up show by a ‘little known’ comedian called Eddie Murphy.
Now Eddie was in full flow and, in between the expletives, he was doing a ‘bit’ about the women he had recently been stepping out with. He argued that, in today’s world, just spending time together or thinking about your partner wasn’t enough anymore. Instead he compared, and indeed blamed, their attitude on the Janet Jackson song, What Have You Done For Me Lately? So when Eddie said: “Baby I love you’, the answer he got was “Yes, but what have you done for me lately?” He would reply with “You’re the only thing on my mind,” and they would say: “So what have you done for me lately?”
Now, you might be wondering, what does this all mean for mortgage advisers? Does he have a point? Well yes I do. In talking to a number of members over the last month or so there is a widespread feeling that the FSA’s ‘Treating Customers Fairly’ (TCF) principle is its very own What Have You Done For Me Lately? question. So when advisers say to the regulator, “I’m complying with all your rules, I’m running a compliant business, I’m making regulation work for me”, the FSA draws their attention to principle six and says: “Yes, but what have you done for me lately?”
Principles-based approach
The FSA’s principles have of course been around for quite a while but it’s the TCF one that is making all the news. This is because the regulator wants to move away from the way it has previously regulated – detailed, prescribed rules – and instead opt for a more principles-based approach. TCF is a prime example of this and for many firms it will be their first introduction to such an approach.
The obvious, and most repeated, statement I have heard regarding TCF is the “Of course I treat my customers fairly, otherwise they wouldn’t be my customers,” one, closely followed by the “It doesn’t apply to my firm”, denial. Sorry to put a dampener on things but yes it applies to all firms and the FSA wants to see what your firm, and particularly the senior management of your firm, is doing with regards to ‘embedding’ TCF in your business.
Now is the time for action. As Eddie Murphy found out, thinking about something or having it on your mind, just isn’t enough anymore. Partners want proof. And considering your ‘partner’ in this case is the regulator, it wants proof that you’re doing more than just ‘thinking’ about the TCF principle and what it means for your business.
Not enough hours in the day?
There are obviously problems for smaller firms in terms of time and resource with regards to TCF – if you’re a sole trader or two-man band you might feel there aren’t enough hours in the day to implement TCF while doing your day job. But, help is at hand. The Association of Mortgage Intermediaries (AMI) has produced a factsheet for its members, aimed specifically at smaller firms looking to implement TCF principles successfully in their businesses.
The factsheet is not an exhaustive guide, and I don’t have the space to outline all its contents here, but it will certainly get you underway and allow you to outline specific areas of work that will need attention. It is split into sections and gives an introduction to TCF while looking at specific areas of your business and possible pointers to delivering TCF effectively in: marketing and the sales process; the back office; and management relationships with third-parties such as lenders. Each section is covered by four questions: what is the topic about and why is it important; what are the key issues you need to bear in mind; what are you trying to achieve; and what areas should be addressed and what action needs to be taken.
As previously mentioned, TCF is considered the responsibility of the senior management of a business. The FSA has made this very clear and it expects senior managers to paint a clear picture of what TCF means within the business, how it will be delivered and how ‘buy in’ has been achieved by other members of staff. TCF is deliverable throughout the firm’s culture, strategy, processes and systems and the FSA feels it is only senior management, with their significant level of influence, that can bring about the necessary change.
Benchmarking
The factsheet also includes an exercise for firms to benchmark how they’re doing in terms of TCF delivery. Firms can fill out a chart which covers the following areas: governance and senior management; management information; remuneration; involving your customers; and improving the process. By filling in how your firm scores in each area, performance is rated, progress can be monitored and a gap analysis achieved on your firm’s implementation of TCF.
TCF should not be the cause of wailing or gnashing of teeth but it does require preparation, a look into your current business practices and a commitment to constantly evolve and update. AMI’s factsheet should be your first port of call and through it your firm should be able to access the key issues and apply them across the whole business.
It will certainly enable you to answer the TCF question – what have you done for it lately?
AMI members can access the TCF factsheet on the publications section of its website at: www.a-m-i.org.uk/closed/cug/publications.asp
