What is TCF?
Our regulator, the Financial Services Authority (FSA) have been working on their Treating Customers Fairly (TCF) initiative for some time. The aim of the initiative is for firms such as Money Wise, to:
- put customers at the heart of their business
- help build consumer confidence in the financial services industry
- ensure that firms meet the requirement to 'pay due regard to the interests of its customers and treat them fairly'.
Action Plan
This TCF plan will be constantly reviewed and updated by management when specific milestones have been achieved. We have appointed the Compliance Director as the TCF champion. He does not have responsibility for sales. He will review practices and align with the six TCF consumer outcomes, shown below.
Training and Competence (T&C) Plan
As well as this TCF web page, TCF is covered in our T&C web pages.
Principles Based Regulation
TCF is under principle 6 of the 11 FSA principles to which we adhere. The 11 principles are that we must:
1. Conduct business with integrity.
2. Conduct business with due skill, care and diligence.
3. Take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
4. Maintain adequate financial resources.
5. Observe proper standards of market conduct.
6. Pay due regard to the interests of customers and treat them fairly.
7. Pay due regard to the information needs of clients, and communicate information to them in a way which is clear, fair and not misleading.
8. Manage conflicts of interest fairly, both between ourselves and our customers and between a customer and another client.
9. Take reasonable care to ensure the suitability of advice and discretionary decisions for any customer who is entitled to rely upon its judgement.
10. Arrange adequate protection for clients’ assets when it is responsible for them.
11. Deal with its regulators in an open co-operative way, and must disclose to the FSA appropriately anything relating to the firm of which the FSA would reasonably expect notice.
Six TCF consumer outcomes
Money Wise is focused on delivering the six TCF consumer outcomes:
Outcome 1 – Culture/Management Behaviours
Clients can be confident that they are dealing a firm where the fair treatment of customers is central to the corporate culture
Outcome 2 - Products and services
Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly
Outcome 3 – Clear Information
Clients are provided with clear information and are kept appropriately informed before, during and after the point of sale
Outcome 4 – Suitable Advice
Where clients receive advice, the advice is suitable and takes account of their circumstances
Outcome 5 – Consumer Expectations
Clients 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
Outcome 6 - Post sale barriers
Clients do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint
Gap analysis
Management will conduct a gap analysis of all of the Minimum Standards, benchmarking the company against the six consumer outcomes above.
Who does TCF apply to?
The FSA expects financial services firms to consider the implications of TCF for their businesses and to take steps to tackle any shortfalls which are identified as a result. The principle of TCF applies to all financial services firms, no matter how large or small they are. It also applies to all firms regardless whether they produce, distribute or advise on retail products.
What does TCF mean for Money Wise IFA Limited?
We are clear about what TCF means for us. We are generally supportive of TCF and consider it part of good business practice. This page demonstrates what TCF means for us, what procedures are in place, and what we do to deliver it. We endeavour to treat our customers fairly. We pay due regard to the interests of our customers and treat them fairly. TCF is a fundamental part of the culture of Money Wise IFA Limited and the minimum standards we expect from our advisers is shown withing the 14 sections below:
14 minimum standards for TCF
1. Relevance for senior management
2. Renumeration structure
3. Financial promotions / Advertising
4. Scope of Service
5. Advice
6. Sales Process
7. Customer Service
8. Training
9. Product Providers and the information they issue
10. Accurate & Timely Record Keeping
11. Disputes and Complaint Handling
12. Risk Assessment and Mitigation
13. Flow of information
14. Management Information (MI), Responsibilities, Strategy & Reporting
Deadlines
By the end of March 2008 we were expected to have appropriate Management Information (MI) or measures in place to test whether we are ‘Treating Customers Fairly’. Please see 'Minimum Standard 14'.
By December 2008 we are expected to be able to demonstrate that we are consistently ‘Treating Customers Fairly’.
Customer surveys
We conduct random surveys of clients to check their experiences of dealing with us. We welcome customer feedback and would be grateful if you would take the time to complete an online customer survey and add any comments you feel necessary. These surveys are a way of differentiating between a satisfied customer and one that has been treated fairly.
Minimum standard 1. Relevance for senior management
TCF is a separately identified agenda item when considering policy, customer servicing, and as an objective for senior personnel. All business areas report their progress on a regular basis (e.g.new business submission forms or Quarterly Meetings) providing details of activity undertaken to measure performance, and action either undertaken or under progress to address any deficiencies. Progress on TCF is reported to the Directors on a regular basis by the Compliance Director via quarterly meetings. TCF is a key objective both for us and for all individuals within our firm, and forms part of our mission statement, manual, and regular emails to all staff, to include any shortcomings identified. Activity to address TCF shortcomings are handled through proper project management to ensure that objectives are set and can be subsequently measured. Management discusses on an ongoing basis TCF fits into the business and what behaviour they expected from staff.
Organisation structure
We consider and review, on an ongoing basis, all aspects of our business and organisational structure to identify risks or areas for improvement that might have an impact on adviser’s ability to give good quality advice. Where any such risks are identified we will address them and implement a program of change.
Gap Analysis for Minimum standard 1
Specific milestones to be achieved
By December 2008 we will be able to demonstrate that we are consistently ‘Treating Customers Fairly’.
How the findings are used
To amend our procedures so that we can test whether we are ‘Treating Customers Fairly’.
Date reviewed and updated
Ongoing
How we benchmark against the six consumer outcomes
By following our procedures we satisfy the consumer outcomes required.
Minimum standard 2. Renumeration structure
We provide clients with accurate information about our remuneration.
Does the salary or bonus package reflect the client’s interests are being put first?
Yes. We pay due regard to the interests of our customers and treat them fairly. We have a fair remuneration policy as shown on our Initial Disclosure Document, which discourages product bias, pressure selling, misrepresentation and overselling. It encourages good customer service, addressing customer needs and recommending the most suitable product. Any action which fails to meet TCF requirements is contra to our company policy and may result in disciplinary action / suspension of commission. We consider TCF issues when determining any incentivisation policy for all staff, commissions paid, bonus arrangements and any other incentives offered.
We will give accurate information to customers about the firm's remuneration. We bring to the customers' attention the importance of our Initial Disclosure Document .
Are we satisfied that the charges for our services are fair and not excessive?
Yes. Our Initial Disclosure Document states that we are renumerated by a combination of fees from the client, and commission from the product providers.We show the client how the amount of commission we receive compares against the market average. We do not exceed the commission levels stated on our Initial Disclosure Document. Any action which fails to meet this TCF requirement is contra to policy and may result in disciplinary action.
Elements of a remuneration policy can encourage product bias, evidence of pressure selling including misrepresentation, failure to address customer need, failure to recommend the most suitable product, overselling, poor customer service.
Gap Analysis for Minimum standard 2
Specific milestones to be achieved
By December 2008 we will be able to demonstrate that we are consistently ‘Treating Customers Fairly’.
How the findings are used
To amend our procedures so that we can test whether we are ‘Treating Customers Fairly’.
Date reviewed and updated
Ongoing
How we benchmark against the six consumer outcomes
By following our procedures we satisfy the consumer outcomes required.
Minimum standard 3. Financial promotions / Advertising
What constitutes a financial promotion?
It is an invitation or inducement to engage in investment activity.
Are financial promotions clear, fair and not misleading?
Yes, we endeavour to ensure that our financial promotions including bespoke material such as suitability letters are clear, fair and not misleading.
Financial promotions
Do we have controls and processes in place to approve and confirm compliance with the financial promotion rules (in COBS, ICOBS, and MCOB)?
Yes, before we approve financial promotion we confirm that the financial promotion complies with the rules in the various COBS, ICOBS, and MCOB chapters in the FSA handbook. The Compliance Director carries out this confirmation exercise.
Do our financial promotion controls extent to the activities undertaken by our Appointed Representatives?
Yes, the same rules apply to our Appointed Representatives.
We do not use ‘small print’ to place caveats on claims made in an advert as this is now seen as inappropriate. Every element of an advert should be capable of being taken ‘out of context’, and still be a true and fair statement. Risk warnings should retain adequate prominence. The content of the advertisement will be sufficient to enable the client to achieve a proper understanding of the offer.
We are aware that, aswell as the FSA rules we must consider the Companies Act, Code of advertising and sales promotion, Code of banking practice, Consumer credit act, Data protection act, OFTEL, Lotteries and amusements Act and the CII Code of Ethics and Conduct. To ensure that all of these elements are properly complied with we ensure that all promotional material is subject to a comprehensive sign-off process. We keep records to evidence the sign-off process and to identify the use and distribution of all items.
Some testing (using customer surveys) is undertaken to look into the reaction of consumers to the material particularly having regard to the levels of comprehension, interpretation and understanding that are achieved. Evidence that all elements of the promotion are understood will not only ensure that the maximum business effect is achieved, but will also evidence that the we are taking all reasonable steps to ensure that our promotions take into account the requirements of TCF.
How are our promotions targeted to make sure they are aimed at the right customers?
By using our 'Know your client' information, although we rarely conduct promotions.
How are client queries and complaints used to improve or stop financial promotions?
We rarely conduct promotions and we rarely receive complaints.
Gap Analysis for Minimum standard 3
Specific milestones to be achieved
By December 2008 we will be able to demonstrate that we are consistently ‘Treating Customers Fairly’.
How the findings are used
To amend our procedures so that we can test whether we are ‘Treating Customers Fairly’.
Date reviewed and updated
Ongoing
How we benchmark against the six consumer outcomes
By following our procedures we satisfy the consumer outcomes required.
Minimum standard 4. Scope of Service
When dealing with clients do we accurately describe the ‘Scope of Service’ we offer? e.g. if we promote ourselves as providing an ‘Independent’ service, are products truly selected on a ‘whole of market’ basis?
Yes, this is accurately described on our Initial Disclosure Document, which we provide for clients. This states our terms and conditions. It is constantly kept up to date. We recommend products from ‘the whole market’, rather than ‘from a limited number of companies’ or ‘from a single group of companies’. We are remunerated by a combination of commission from providers and fees from clients. Our recommendations would form part of a detailed ‘Suitability Letter’.We aim to ensure clients receive all necessary information about the service we offer and on any products we recommend, and that this is explained in a way that is understandable to clients.
Gap Analysis for Minimum standard 4
Specific milestones to be achieved
By December 2008 we will be able to demonstrate that we are consistently ‘Treating Customers Fairly’.
How the findings are used
To amend our procedures so that we can test whether we are ‘Treating Customers Fairly’.
Date reviewed and updated
Ongoing
How we benchmark against the six consumer outcomes
By following our procedures we satisfy the consumer outcomes required.
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