For most of us, TCF is something hovering vaguely somewhere in the ether. With a bit of luck, and if we ignore it long enough, it will go away.
Sorry to burst your bubble – it is starting to rear its head in a tangible way.
Very few of us disagree with the underlying sentiments of fairness towards clients. Very often, we are people in the trenches fighting for exactly that when we feel that a client received a raw deal, had a claim rejected, or could have been treated better.
What does concern most, if not all of us, is what impact it will have on our ability to run our businesses. I had limited insight into the results of a survey on the cost of compliance over the weekend. The combined effect of real and hidden costs is quite staggering. Unfortunately, there is still an embargo on this information.
Adding more requirements to an already huge administrative burden is the last thing we want, or need. From information on the Regulator’s website, it appears that the UK model was used to design our version. One trusts that the necessary modifications are made to take into account the vast difference between the UK and SA financial markets, particularly the vast discrepancy between the haves and the have-nots.
When TCF was first announced, we gained the impression that the biggest focus would be on product providers. This may still be the case, but there is a definite impact on the financial advisor too.
The rationale for TCF is explained as follows:
South African financial sector regulation includes various measures aimed at protecting consumers of financial products and services. Although these have proven useful in mitigating various specific risks to consumers, a holistic and co-ordinated consumer protection regulatory framework that applies consistently across the financial services sector – and is tailored to address the specific conduct risks peculiar to the sector – has been lacking.
Earlier this month, the FSB published a “Self-Assessment Tool” on its website. The media release states that this tool “… allows regulated financial firms (including financial advisers) to gauge their progress in delivering the six TCF customer outcomes. Please click here to access the relevant section on the FSB website.
The six outcomes, forming the basis of TCF, are:
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Outcome 1: |
Customers are confident that they are dealing with firms where the fair treatment of customers is central to the firm culture. |
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Outcome 2: |
Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly. |
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Outcome 3: |
Customers are given clear information and are kept appropriately informed before, during and after the time of contracting. |
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Outcome 4: |
Where customers receive advice, the advice is suitable and takes account of their circumstances. |
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Outcome 5: |
Customers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and what they have been led to expect. |
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Outcome 6: |
Customers do not face unreasonable post-sale barriers to change a product, switch provider, submit a claim or make a complaint. |
It is clear that TCF will impact very directly on how we do business. Moonstone MD, Hjalmar Bekker, recently said at a conference attended by our compliance officers: “Do not think that TCF is part of compliance. The very opposite applies – compliance is part of TCF.”
We urge readers to visit the link supplied above to familiarise themselves with this new concept. It will not go away.
It is here – to stay.
