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Overview

In our latest paper 'Treating Customers Fairly - Towards fair outcomes for consumers' (published in July 2006) we set out to:

• explain the outcomes for consumers that we are looking to achieve through our Treating Customers Fairly initiative;
• provide an update on the progress firms are making with delivering these outcomes, based on firms' own assessment and the findings of our work; and
• outline those areas where further work is required and how we will take this work forward.

Key Messages

• The TCF initiative aims to deliver six improved outcomes for retail consumers – firms should be focused on trying to achieve these outcomes.
• Firms should by now be seeking to make TCF an integral part of their business culture. TCF is a continuous process - it is not something that firms can implement and then forget about.
• There is mixed progress to report among firms implementing their TCF strategies – some are making good progress (with a high level of commitment shown) but others are lagging behind.
• A majority of firms say that they are implementing TCF programmes, but even in these cases we have found that the high levels of senior management commitment to the fair treatment of customers are often not yet reaching the front-line of firms' activities.
• An example of where there is still some way to go is in Quality of Advice - where firms need to improve the way they give financial advice to retail customers in order to reduce the risk of mis-selling.
• For the minority of firms lagging behind in their TCF work, we have set a target - we expect all firms to have reached at least the 'implementing' stage of their TCF work in a substantial part of their business by the end of March 2007. We will be using this as a benchmark when reviewing firms' progress.
• Next year, we expect to start seeing measurable change in outcomes for consumers – both through management information implemented by the industry and in our own firm-specific and thematic supervision work.
• We expect to continue to bring enforcement action in respect of matters relating to TCF.
• We will provide support, for example through training and targeted communications to continue to help firms implement TCF.
• We will invest further in our own internal systems and training to help ensure that our supervisors have the tools they need to facilitate firms' efforts to implement TCF.
• We welcome the work of many trade associations in helping to translate the concept of Treating Customers Fairly for their members through Good Practice Guides and case studies etc.

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Outcomes for Consumers

We are working towards achieving several outcomes for consumers. These outcomes will mean that consumers:

• deal with firms where the fair treatment of customers is a key part of the corporate culture;
• are marketed and sold retail products that have been designed to meet their needs and are targeted accordingly;
• receive clear information and are kept suitably informed before, during and after the point of sale;
• receive suitable advice which takes account of their circumstances;
• receive the product performance they have been led to expect by firms they deal with - and the service is both of an acceptable standard and as they have been led to expect;
• do not face unreasonable post-sale barriers imposed by firms when they want to change product, switch provider, submit a claim or make a complaint.

We will measure the success of these outcomes through use of:

• our day-to-day supervision of individual firms;
• any TCF or other thematic work;
• our Financial Capability baseline survey (and its repeats);
• our consumer surveys; and
• relevant data provided to us by the FOS or directly by firms – Management Information (MI), complaints data etc.

Progress so far:

• In many firms, senior management commitment is real and progress is evidently being made to translate this to all aspects of the corporate culture and product-life cycle.
• However, there is some way to go before the senior management commitment seen and the work invested in the TCF initiative overall fully reaches the front line and is translated into significant improvements across the full range of outcomes for consumers.
• We have published the findings of our thematic work over the last 18 months, often with associated good and less good practice. In many cases, this has led to the industry taking action to address these issues and change their behaviour.

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What we will do next

• We will work to embed TCF within all aspects of our regulatory and supervisory approach.
• We will provide support, for example training and targeted communications, to continue to help firms implement TCF.
• We will invest further in our own internal systems and training to help ensure our supervisors have the tools they need to help firms implement TCF and to form the types of judgement that more principles-based regulation requires.
• We will carry out targeted work on those aspects of the consumer outcomes where we are less well-informed, notably on product design and the cultural elements of TCF.
• We will also take forward work to assess firms’ own assessments of progress with their TCF initiatives. We will be looking to firms to demonstrate – for example using their own management information – how they are building TCF into all that they do.
• Some firms may continue to deny TCF has any relevance for them, or fail to take appropriate steps to work out what changes may be required and start implementing them. Where this happens, we will be more inclined to instigate enforcement action if a firm's systems or actions leave open the potential for consumer detriment or where actual detriment has occurred.

Previous publications

See the TCF library for previous TCF publications and other relevant documents.

 

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