Treating Customers Fairly Policy
Treating customers fairly (TCF) is about a business being able to demonstrate that is can deliver the 6 outcomes of the TCF chapter, and has firmly embedded them into its business.
Principle 6 of the FCA Handbook states, “that a business must pay due regard to the interests of its customers and treat them fairly”. There are 4 other Principles which apply to how you deal with customers:
Principle 1: A business must conduct its business with integrity.
Principle 7: A business must pay due regard to the information needs of its clients and communicate information to them in a way that it is clear, fair and not misleading.
Principle 8: A business must manage conflicts of interests fairly, both between itself and its customers and between a customer and another client.
Principle 9: A business must take reasonable care to ensure that the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgement.
Each Partner is responsible for ensuring and overseeing their business to ensure that they are adhering to this Principle. Even if you decide to outsource your compliance function to an external consultancy, the business and its owners will also remain responsible with the FCA for being able to evidence adherence to TCF.
TCF is not just about being “nice” to customers, but is about putting yourself in the place of your customers and considering if you have treated them fairly in all aspects of dealing with them.
This includes a host of areas but some examples would be;
- Customers can be confident that they are dealing with businesses where the fair treatment of customers is central to the culture.
- Customers are given clear information about the product or service and provided with everything they would need to enable them to make their own, informed decision.
- The customer is given appropriate advice given their circumstances.
- Giving the customer the service they have paid for and what they expect to receive.
- Not taking advantage of them or putting the benefits of your business before the benefits of the customer.
- Not having sales tactics or promotions that aren’t transparent or do anything that would unduly influence a sale when the customer may not have otherwise gone ahead.
- Not allowing the customer to complain if they are dissatisfied.
- Having unreasonable sales targets for staff that encourages them to mis-sell.
- providing training for your staff that ensures quality of advice;
- providing information for customers that is clear and easy to understand; ensuring the customer gets the right advice/product;
- meeting customers’ expectations;
- putting things right if they go wrong and understanding why something went wrong to stop it happening to other customers; and
- not taking advantage of your customer.
The FCA has identified six outcomes for consumers that they would like businesses to deliver. These outcomes are detailed below:
Outcome 1: Consumers can be confident that they are dealing with businesses where the fair treatment of customers is central to the corporate culture.
Outcome 2: Products and services marketed and sold in the consumer market are designed to meet the needs of identified consumer groups and are targeted accordingly.
Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.
Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances.
Outcome 5: Consumers are provided with products that perform as businesses have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect.
Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by businesses to change product, switch provider, submit a claim or make a complaint.
TCF is a continuous process – it is not something that can be put in place and then forgotten about. It needs to be included in all business decisions going forward and be regularly reviewed.
1.1 Conduct for Treating Customers Fairly
When a business is considering how it can evidence its conduct of TCF, it should ensure the procedures include:
- Acting with integrity and in good faith.
- Being open and honest with customers.
- Being transparent.
- Not using jargon customers won’t understand.
- Providing customers with clear and accurate information.
- Providing help and assistance to understand relevant products and services.
- Be competent and diligent.
What you need to do to implement TCF
The FCA requires you to take an objective look at the way you do business. There are no hard or fast rules on how businesses do this, but it should be reflective and adequate for the size of the business.
The minimum expectation would be that you have:
- Satisfied yourself that the business’s systems and controls can evidence TCF.
- Robust Management Information in place so you can demonstrate how you are analysing, identifying and mitigating any risk that you are not treating customers fairly.
- Trained staff to fully understand the expectations of the FCA and to work within the requirements.
- Once a gap analysis has been undertaken, the plan to resolve to outcomes is completed and monitored and reviewed on a regular (at least annual) basis.
Areas to review
Gap Analysis - Although not an exhaustive list the following are areas that you should consider when undertaking a gap analysis:
Financial promotions/general advertising – ensure these are clear, fair and not misleading.
Advice and sales process – ensure the process is appropriate for your business, and takes the customers knowledge and experience into account.
Training – staff must be adequately trained. The ability of your staff to offer customers the appropriate standard of service depends on the training they have received and you need to be satisfied that all staff have the necessary skills and competence.
Accurate and timely record keeping
It is important that you maintain accurate and adequate records of customer profiles and instructions on each stage of the sales process. This is essential for the management to be able to respond quickly to disputes and also will help if there is a need to provide evidence to the FOS.
Disputes and complaint handling
You need to ensure that you have a complaints procedure in place, regardless of whether you have had any complaints or not. You should monitor and manage the progress of a complaint within a business and ensures that action is then taken to prevent re-occurrences. Trends and issues should be analysed.
1.3 Next steps
Complete the attached gap analysis and implement an action plan to address any areas that are highlighted as weak.