July 31, 2007 / 7:00 AM / 12 years ago

Lack of information leaves firms failing TCF

LONDON (Citywire) - While senior management understands the importance of treating customers fairly (TCF) it is failing to implement it throughout the whole of their firm says the regulator.

In a progress report on the implementation of TCF into the culture of adviser firms by the Financial Services Authority (FSA) it highlighted that it had seen “more example of poor practice than good’. It also said that ‘middle management are often failing to deliver fair consumer outcomes within their business areas…often due to senior management not giving middle management enough direction, and also failing to monitor them”.

It saw a lack of time and resources dedicated to TCF and few companies adding TCF-related objectives to staff performance management meaning that staff below senior management were unaware of how the new principles would affect their roles or the business. Firms were also struggling to collect enough management information (MI) which details general information on the day to day working of the firm such as complaints handled, advice given and telephone calls received.

Sarah Wilson, FSA director of TCF, said: “In adviser firms the senior management understand TCF and the need to implement it but it has not filtered down to other members of staff or into the culture of the company. There is a gap between the commitment of the firms to implementing TCF and what the consumer is receiving as the end result.

“There is also a great challenge for firms in collecting MI to show how they are completing TCF. They tell us they have satisfaction statistics but in financial services in particular there is a difference between a customer that is satisfied and one that has been treated fairly. The customer may be satisfied with the advice or product but hasn’t understood fully the process which means they have not been treated fairly.”

The regulator has said that it will now send in supervisors to talk with all staff members, not just senior management, to see how far the principles have filtered down. It will also expect firms to be able to show how they are using MI to monitor the business and keep detail information on the products sold and complaints handled. Those advisers who show strong MI and understanding of TCF will benefit from less intrusive testing by the FSA.

Paul Willans, Mazars Financial Planning chief executive, is aware of the duty of senior management. “Our philosophy and strategy is lead by TCF but for us to turn it from a concept to a strategy we had to engage with staff on all levels and make sure that it is a part of the processes we use and the advice we give.

“We have proper processes for logging any communication with clients that is available for all members of staff so they understand how MI works and is used and everybody understands why it is important.”

c Citywire Financial Publishers Ltd 2007.

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