The Market Conduct Policy Framework and the new Regulators aim to incorporate the TCF principles into its regulatory and supervisory frameworks – the aim being giving effect to a new market conduct regulator (the Financial Sector Conduct Authority (FSCA)). From a practical perspective this requires FSPs to implement TCF principles within their businesses to such an extent that fair treatment of customers is embedded in every interaction with customers.
In this article we’d like to share an example of how the Masthead integrated risk management approach assisted an FSP to implement TCF principles in a way that supports both treating customers fairly and long-term business sustainability by building business value.
Although this particular member business had historically built long-term relationships with its customers and built a solid business over the years, demonstrating the six TCF principles had not yet been put in place. The essence of looking after customers and providing good service was present, the implementation of all the required TCF outcomes was not yet embedded into day to day business practices.
The following strategies and plans were implemented:
- Strategic Objectives and annual business plan (Business planning)
- Operations plan
- Marketing and Communication plan
- Financial planning process
In this article we deal with how Business planning and Operations plan support TCF outcomes.
Strategic objectives and annual business plan
These plans provided the business with direction for the future which support business sustainability, profitability and plans to incorporate business practices which build, rather than destroy business and capital value. Business owners’ awareness of the key indicators central to remaining on track to achieving business goals, directed them to share plans with all their staff which achieved two outcomes:
- Everyone in the business understood the long-term goals and each individuals’ contribution towards achieving these goals;
- Everyone was aware that embedding TCF principles in the day-to-day running of the business was one of the key strategies.
The leadership team created direction with quantifiable indicators that had to be met in the short and medium term. Implementing this plan demonstrates compliance with TCF Outcome 1.
Embedding a TCF culture in the business requires guidance for everyone in the business on exactly HOW this is to be achieved. There are two ways to do this:
- Creating an awareness of treating customers fairly and for leaders to reinforce this culture by ‘walking the talk’ as well as actively discussing this topic at monthly meetings.
- Creating an Operations plan. An Operations plan includes an operations manual, with an organogram, employment contracts, job descriptions, code of ethics, client segmentation policy (criteria and differentiated services), policies, processes which ensures that there is a systemised approach in doing daily tasks and general business activities. The financial planning process is the core focus and all the steps and relevant processes were documented in order to assist both advisors and support staff to follow depending on what their specific position focus is.
Implementing an Operations plan demonstrates compliance by embedding TCF Outcome 1, 4 and 6.
This exercise guides consistency and focuses the responsibility of each staff member in their role. From a practical perspective there is a cohesive focus on business goals which contributes to effective risk management and now everyone in the business contributes to building a solid business brand, client trust and as a result a good reputation.
We continue the rest of this success story in the next Mastering Compliance newsletter when we talk about how implementing a Marketing and Communication plan and the Financial Planning process embeds TCF Outcome 2 and 5.
Should you require input from us to assist you with embedding the TCF principles in your business, please make contact with your regional office and enquire about the regional seminar dates. Our seminars are practical and provide you with the opportunity to take ‘time out’ and work ON your business as opposed to IN your business. This will become more and more important as you prepare for RDR.