TCF (Treating customers Fairly) was introduced to make firms focus on how they treat their customers and in particular ensure customers are treated fairly. If you are a CeMAP student you can expect a few questions to arise from this area
All authorised firms must comply with the 11 principles for Business and while quite a few of them are relevant to how firms treat their customers it is principle 6 that is most associated with TCF and for CeMAP Study and Exam purposes it makes sense to have a good understanding of this. You will normally come across this when you start studying CeMAP 1 unit 2 of UK financial regulations.
Principle 6 states that a firm must pay due regard to the interest of its customers and treat them fairly.
TCF means treating customers fairly, irrespective of how they contact you or what product they have. It needs to be embedded within a firm’s culture
How should firms deal with TCF on a daily basis?
Firms are required to adopt TCF as their guiding principle so it becomes part of their culture. Everyone should be part of it from the board through to the senior management and all the way through the organisation.
The responsibility for implementing TCF lies with a firm’s board and senior management.
Areas where a firm could consider embedding TCF:
– Corporate strategy and culture.
– Product design and governance.
– Financial promotions
– Sales and advice.
– Consumer information and services
– Complaint handling
– Firms need to be polite and professional. They will need to be clear and transparent with customers however, that doesn’t mean a customer will always they always get what they want.
TCF is based on principles rather than rules. The regulator has therefore defined 6 consumer outcomes. It is important to pay attention and learn more about how these outcomes can be applied practically for your CeMAP Study and exams
- Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture. A good example is how we reward staff. This should not just be with pay but with bonuses, incentives (like health, fitness well-being) etc. If all staff compensation is just based on sales alone for instance, there is a risk that a significant amount of unsuitable sales will be generated as a consequence
- Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted appropriately. Taking customers opinions into consideration during the design process and checking to see if sales, cancellations etc met expectations. Also reviewing different groups of customers to ensure communications are enabling them to buy products which suits their needs and not the other way round.
- Consumers are provided with clear information and are kept appropriately informed before, during and after a sale. For example, when a customers fixed rate period ends and their mortgage rate changes. Many customers feel aggrieved that they weren’t given due notice of this by their mortgage broker.
- Where customers receive advice; the advice must be suitable and take full account of their circumstances. For instance, It would be ideal to make product literature available in braille format for someone who has a visual impairment.
- 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 as they have been led to expect.. This simply means that firms can’t create false expectations or package things in a way that will lead to the consumer being misled.
- Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider submit a claim or make a complaint. For example, regarding switching provider a firm could easily impose long notice periods, onerous information demands, communication difficulties and even administrative delays in order to frustrate the customer
So we have looked at the 6 Consumer outcomes expected from TCF. This should help illuminate this important section found in CeMAP 1 Unit 2