In its review of how well the market was implementing TCF earlier in the year, the FSA found that 93 per cent of the major retail firms were on target, but only 22 per cent of smaller advisers were up to scratch.
For small firms, the key is being able to understand how TCF applies to their own business. Guidance from AMI will obviously be helpful, while there are other organisations trying to do a similar job.
The TCFinfo website has been established by a number of lenders and the not-for-profit initiative is being co-ordinated by Frank Eve Consulting. Frank Eve says: “Checklists of questions covering the areas in which TCF is required are included.” The idea is to highlight the areas in which firms have trouble understanding how the principles work in practice and help firms make positive steps to put their house in order. As Eve says: “Checklists, tools and tips can all be very helpful.”
The bottom line is that everyone in the industry has a vested interest in making sure the market meets the TCF deadlines. If lenders expect the brokers they deal with to supply business that has come through a compliant TCF channel, then it is only right for them to help in achieving this standard.
It is also important that lenders can prove to rating agencies that their lending policies are watertight and highlighting the TCF work they do is a way of doing this.
For brokers the obvious advantage is that acting compliantly will keep the FSA at bay. It should also help create a well run and client-focused business that is in a better position to generate referrals and expand.
Alison Beech, business development director at Rooftop is under no illusion as to the importance of getting TCF right.
She says: “It allows us to shape the industry and to keep the FSA away. The regulator wants us to take ownership and drive this issue.” Initiatives like TCFinfo and the AMI working party are helping to deliver the kind of information that will empower the industry.
Now it is up to each and every firm to engage. Whether the FSA has been overly ambiguous is a moot point. Whether brokers like or dislike the regime is irrelevant.
Everyone needs to be compliant and without engaging with the issues at hand, it will be impossible for any firm to prove its credentials when it comes to TCF. In the long run this will lead to enforcement action and unwanted interference from the FSA.
Impossible to ignore
Despite the criticism the regulator has forced, most accept that it has done a good job and that it is prepared to work with firms who show a willingness to work with it.
Just because the market does not like the workload that has been created, does not mean it can avoid it. The sooner firms get past this hurdle the sooner they will make progress.
Michael Coogan, director-general at the Council of Mortgage Lenders, equates being TCF compliant to drawing a picture. The point is not that every picture drawn will be the same, but that they will be similar.
By then working with the FSA and fine-tuning what has already been done, it will be possible to come up with something that satisfies everyone. Coogan says: “It is all about drawing a picture to the FSA of what a firm is doing. Evidence is key.”
Making use of the information available, giving direct responsibility for TCF to individual parties and communicating with the regulator are all going to be essential for those looking to complete their masterpiece. Those who have not started have a long way to go.
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