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TCF Guide for small FSPs and IFAs

Treating Customers Fairly will impact on the whole industry. To date, most of the communication was aimed at corporates and industry bodies, with little information flowing through to smaller FSPs and independent financial advisors.

The publication of this guide, as well as one for Asset Managers, is therefore a welcome addition to the FSB’s communication to the industry.

It formed the basis of the FSB telematics broadcast yesterday, 20 November, and attendees were actually mailed the guides prior to the broadcast. The single most important action you can take at this stage is to start thinking about TCF, and talking to your staff. We strongly recommend that those unable to attend the broadcast obtain a copy of the DVD of the presentation and discuss it in a meeting with your staff (or yourself, if you are a sole proprietor!). Please click here if you wish to order a DVD of the presentation.

We were concerned that the original implementation date of 1 January 2014, announced in the TCF Roadmap document, would catch many smaller players unawares. This will no longer be the case, mainly as a result of problems in aligning developments with the proposed Twin Peaks framework.

…there is not going to be a once-off “big bang” TCF implementation date. Instead, the FSB is in the process of introducing TCF into both its regulatory and supervisory frameworks on a gradual, incremental basis. Although there will be explicit inclusion of TCF principles in future new, over-arching legislation to be introduced in time under Twin Peaks, it is clear that existing legislative and regulatory frameworks already allow the FSB to introduce most elements of TCF.

The TCF guide addresses the legal standing of TCF, given that there is no official legislation on it:

So for financial advisers, for example, s2 of the FAIS General Code of Conduct already obliges FSP’s to “at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of clients and the integrity of the financial services industry.” In practice, a material failure to deliver one or more of the TCF Outcomes will already constitute a breach of this obligation, and would therefore be actionable by the regulator. A number of the more specific obligations in the General Code, for example those relating to disclosure, suitability of advice, etc. are equally consistent with the TCF principles. Similar examples exist in other pieces of FSB-supervised legislation.

The guide provides practical advice on making TCF part of your practice. In addition to suggestions on implementation, it provides a series of questions which will help you understand how the six expected outcomes relate to your business. These are discussed at length in the telematics broadcast, with practical examples.

The FSB guide also contains a detailed discussion on complaints handling, with practical advice to help you draw up a compliant complaints resolution document.

We believe that the TCF self-test, which is currently available on the Regulator’s website, is undergoing changes, but the FSB recommended that you consider doing the test as a means of familiarising yourself with the six TCF outcomes.

While most advisors are serious about client care, you will now be required to provide proof that it forms an integral part of your business.

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