Fair treatment of customers underpins the General Code of Conduct for financial services providers (FSPs) and Representatives. While the principles embodied within the outcomes may already form part of the culture of an FSP’s business, the demonstration of the outcomes may not yet be in place and changes to some business processes may be required, and in some cases new processes may need to be implemented. We provide support by helping FSPs understand the requirements and run workshops to help businesses align their processes with both the Financial Advisory and Intermediary Services Act (FAIS) and Treating Customers Fairly (TCF) framework. Identifying TCF gaps and providing solutions that best suit the FSP also forms part of the compliance visits.
What is Treating Customers Fairly?
TCF is a regulatory framework set by the Financial Services Board (FSB). This framework governs the way an FSP business conducts daily dealings with its clients ensuring that all clients are treated fairly, during all stages of the product life-cycle and advice process.
The TCF framework is built on principles that help drive an FSPs business conduct towards a set of six outcomes aptly termed TCF outcomes. An FSP therefore needs to move toward a place where their business practices achieve these outcomes and eventually become an inherent part of all areas within the business. At the same time, all FSPs need to demonstrate to regulators that they adhere to the TCF principles and treat their customers fairly. Documenting the implementation of new business processes or the change to existing practices therefore becomes a fundamental part of a businesses’ TCF journey.
What is the FSB looking to achieve through the TCF outcomes?
Placing clients at the center of your business and aiming to achieve the six TCF outcomes in the fullest sense ensures a win-win situation for everybody. The TCF outcomes, which should already be entrenched within an FSP, are defined by the FSB as follows:
- Outcome 1 – Customers must feel confident that they are dealing with an institution where TCF is at the core of their culture.
- Outcome 2 – Products and services in the retail market which are sold and marketed are designed according to the needs of the customers identified and targeted accordingly.
- Outcome 3 – Customers are provided with clear information and kept appropriately informed before, during and after point of sale.
- Outcome 4 – Advice is suitable and according to the customer’s circumstances.
- Outcome 5 – Service is of an acceptable standard and products perform as customers have been led to expect.
- Outcome 6 – Customers do not face unreasonable post-sale barriers when they want to change a product, switch providers, submit a claim or make a complaint.
TCF Principles
The TCF principles are encompassed in the TCF outcomes and in many ways are also embodied in the General Code of Conduct. Although these principles may already form part of your business strategy, they are linked to outcomes that focus specifically on the fair treatment of the customer. The principles can be defined as follows:
- Outcome 1 – Principle of Culture & Governance
- Outcome 2 – Principle of Product Suitability
- Outcome 3 – Principle of Disclosure
- Outcome 4 – Principle of Suitable Advice
- Outcome 5 – Principle of Performance and Service in line with expectations
- Outcome 6 – Principle of Claims, Complaints & Changes
The TCF principles are being incorporated by the FSB into its regulatory and supervisory frameworks on an incremental basis. This approach will form a fundamental part of the new Financial Sector Conduct Authority (FSCA).
The FSB provides guidance regarding its Treating Customers Fairly expectations. However, businesses are expected to identify ways in which they can integrate these principles in all areas of the business to ensure that the desired outcomes are achieved. Incorporating TCF in your business ensures that you comply with regulation and in turn results in fewer complaints from clients. Clients who are treated fairly are more likely to remain loyal clients and in turn reward your business.
For further reading on how to integrate TCF in your business, click the links below:
For regulatory discussion papers, notices and announcements about TCF, click here.
