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FSA/PN/088/2007
26 July 2007

The Financial Services Authority (FSA) has today issued its latest publications to support the delivery of the Treating Customers Fairly (TCF) initiative, which continues to be a key priority for the FSA's work in the retail market.

The first publication looks at firms' culture regarding treating customers fairly and highlights examples of good and poor practice seen in firm visits and the FSA's own TCF experiences. It also introduces a framework – first outlined in the TCF progress report in May 2007 – which will be implemented within the ARROW risk assessment process. The framework enables supervisors to assess the risk firms' culture presents to the delivery of TCF in a more structured and in-depth way. This will include spending more time talking to middle management and front-line staff. The FSA has also developed a simpler management behaviour framework for smaller firms.

The second publication is designed to help firms develop and use management information (MI) to demonstrate that they are treating their customers fairly. This guide summarises messages from other FSA publications and includes new case studies and examples of good and poor practice. Further material will be issued to support firms in meeting the March 2008 deadline for TCF MI.

If the FSA is satisfied that a firm has robust systems and controls and the senior management are reviewing and using reliable management information which demonstrates that they are treating their customers fairly, the FSA will significantly reduce the level of testing carried out on the firm’s culture regarding treating customers fairly.

Sarah Wilson, Director responsible for the Treating Customers Fairly initiative, said:

"Treating Customers Fairly is an ongoing priority for the FSA. It is only through establishing the right culture that senior management can convert their good intentions into actual fair outcomes for consumers.

"Our culture framework is a useful tool for FSA supervisors to identify how firms' culture can impact on their customers. It will help us, and the senior management in firms, to understand some of the root causes of unfair outcomes and therefore reduce the risk that customers are treated unfairly.

"We strongly encourage firms to consider the issues we have identified and to think about how to use the framework to review their culture regarding treating customers fairly.

"We know that many firms find identifying, collecting and using management information for TCF challenging. We have issued material on MI and intend to continue to work with the industry to take this forward and to provide additional useful material ahead of the March 2008 deadline."

Notes for editors

1. The Culture Paper [PDF] can be found on the FSA website.

2. The Management Information document [PDF] can be found on the FSA website.

3. The FSA issued a progress report [PDF] in May 2007. As part of this, the FSA set the following deadlines:

   • for all firms to have appropriate management information or measure in place to test whether they are treating their customers fairly by the end of March 2008; and

   • for all firms to have completed their work on TCF and be able to demonstrate that they are consistently treating their customers fairly by end of December 2008.

4. Consumer outcomes.
   
   Firms should be focused on delivering the six TCF consumer outcomes:

   1. Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture
   2. Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly
   3. Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale
   4. Where consumers receive advice, the advice is suitable and takes account of their circumstances
   5. Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and also as they have been led to expect
   6. Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.

5. More information on the ARROW risk assessment process [PDF]can be found on the FSA website.

6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.

7. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.