Carry Out a TCF Self-Assessment

Why would you need to carry out a TCF self-assessment? If you are regulated by the Financial Conduct Authority (FCA) you will have obligations under the ‘Responsibilities to Customers‘ rules. Dependant on your business and permission type, you may also have similar obligations under the Consumer Duty rules.

Treating Customers Fairly (TCF) remains one of the central expectations of firms authorised by the FCA. Businesses are required to put customers at the forefront of their products, services and activities. To ensure TCF is embedded from the ground up in your company, you must approach its implementation on multiple levels. Effective policies, controls and procedures are required to compy with the standards and outcomes.

The 6 TCF Outcomes

The 6 TCF outcomes detail what the FCA are trying to achieve for consumers. They are used for guiding regulatory decisions and actions and remain at the core the FCA’s expectation of firms.

• Outcome 1: Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture.
• Outcome 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.
• 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 firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.
• Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.

Implementing the TCF Outcomes and Standards

It’s possible that even without focusing on the TCF principles some of your existing business processes will already meet the standards. This is because most businesses are aware that good customer service and a clear and open approach to their products and services results in: –

• a better reputation
• repeat business
• less complaints
• reducing post-sale issues
• happier customers
• reduced costs.

Whether you are new to TCF controls or already have a compliant program, it is important to run a TCF self-assessment audit to see how compliant you really are. The questions in an audit should be designed to see if you meet the current standards and expectations as set by your industry and the FCA. You will also be able to use the self-assessment as an ongoing audit function to monitor TCF compliance and evidence this to your regulators.

Used as a gap analysis tool, a TCF self-assessment can help you identify gaps within your business. It also provides valuable management information (MI).

The FCA’s TCF Expectations

Within the objective of protecting consumers also comes one of the FCA’s core objectives – Treating Customer Fairly (TCF). Protecting consumers means the regulator: –

• Ensuring customers are treated in a way that is appropriate for their level of financial knowledge and understanding.
• Being more outward looking, by engaging more with consumers and understanding more about their concerns and behaviour.
• Setting clear expectations for firms and being clear about what firms can expect from the FCA.
• Intervening early to tackle potential risks to consumers before they take shape.
• Being tougher and bolder, following a strategy of credible deterrence, using new powers of intervention and enforcement.

“[The FCA] expect customers’ interests to be at the heart of how firms do business. Customers can expect to get financial services and products that meet their needs from firms that they can trust. Meeting customers’ fair and reasonable expectations should be the responsibility of firms, not that of the regulator.”

As part of the FCA’s TCF initiative, they expect firms to demonstrate that: –

• They are integrating TCF into their business culture.
• They have the appropriate MI or measures in place to test whether they are treating their customers fairly including by delivering the six TCF consumer outcomes.
• The MI demonstrates to them and to the FCA that they are consistently treating customers fairly and delivering the consumer outcomes.
• There are processes in place that monitor the MI to enable the right people to act.

TCF Resources and Products

How do you know that your TCF measures are effective and cover all the required standards? A TCF Self Assessment Checklist! Take a look at our Excel based checklist using the video provided.