TCF

1. TCF

2. The Outcomes • 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.

3. What TCF isn’t • Creating satisfied customers; a satisfied customer could still be treated unfairly and not know it • That every firm must offer an identical level of service – the FSA recognises that businesses have different resources and ways of doing things • That the FSA has the final say on which products consumers should want or be sold • That customers are no longer expected to make decisions or take responsibility for them • TCF is about a culture - doing business in a way that will help ensure customers get fair treatment

4. TCF & Your Business • The FSA ‘Conduct of Business Rules’ supports the principle of TCF • If you are following the rules relevant to the mortgage industry, you are probably already implementing TCF in much of what you do • In order to satisfy FSA requirements, you need to take extra steps to show how you’re implementing TCF throughout your business

5. The Ombudsman • The ombudsman service decides, in the circumstances of a particular complaint, whether an individual consumer has been treated fairly – taking into account the law, relevant rules and good industry practice • The FSA's "treating customers fairly" programme encourages the senior management of an FSA-regulated firm to create systems that support fair treatment of all customers, but it does not impose any new rules • “Treating Customers Fairly" should therefore improve the way businesses treat their customers, but it does not affect how we decide individual complaints

6. What it Means For You • You must be able to demonstrate that you: • understand what the fair treatment of customers means • understand where/how they expect staff to achieve this at all times • ensures that errors (of which there should be relatively few) are promptly corrected and learnt from • Accurately measure performance against all customer fairness issues that are materially relevant to your business and be acting on the results • Demonstrate through those measures that you are delivering fair outcomes • Have no serious failings – whether seen through management information (MI) or other failings (including regulatory) already known to and publicised by the FSA

7. FSA Objectives There are three broad headings for its immediate business objectives: • Promoting efficient orderly and fair markets; • Helping retail consumers achieve a fair deal; and • Improving our business capability and effectiveness Treating customers fairly (TCF) relates to Principles 1, 6, 7, 8 and 9 of the FSA’s Principles for Businesses • A mismatch between the current levels of consumer understanding and the complexity of financial products still in the FSA’s view leads to customers sometimes being treated unfairly • Treating customers fairly applies particularly to Principle 6:

8. The 11 Principles of Business 1 Integrity - A firm must conduct its business with integrity 2 Skill, care and diligence 3 Management and control 4 Financial prudence 5 Market conduct 6 Customers' interests - A firm must pay due regard to the interests of its customers and treat them fairly

9. The 11 Principles of Business ... 7 Communications with clients - A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading 8 Conflicts of interest - A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client 9 Customers: relationships of trust - A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment 10 Clients' assets 11 Relations with regulators

10. A Principle Based System • Although the FSA’s main initial scrutiny will be of those firms producing, distributing or advising on retail products, the principle applies to ALL firms • The more closely that TCF can be aligned with strategic change, the more successful its incorporation within all business activities will be • There are no definitive rules and no specific guidance on how to implement TCF, but nevertheless the FSA will be paying close attention to how firms do implement it

11. Is It Nice or Fair • Treating customers fairly is NOT the same as treating customers nicely. Even where a customer is delighted with the service they have received, they may not have been treated fairly • Customer satisfaction is no indication of fair treatment • What fairness means, according to the FSA, varies according to the business that the firm is in, and to its customers • The FSA does not define what fairness is, and acknowledges that this is subjective

12. Evidence of Fairness • A business must have effective systems and controls in place to ensure that it acts in a way that is likely to be fair for the consumer groups who are its target customers • Fairness must be evident throughout every level of a firm’s operations, it must be built into the operating model and culture of every aspect of the business, and embedded into its strategy and culture • The FSA will assess the extent to which firms are treating their customers fairly as part of its system of Arrow risk assessments, to identify any problems • Customers are still expected to make decisions and be responsible for them • Firms are still expected to decide what products should be recommended or sold to customers

13. Management Information (MI) • Accurate – The correct numbers with any commentary contributed by the right people • Timely – Available sufficiently quickly after the relevant business activity to enable managers to act • Relevant – Displaying what a manager can directly influence or something that they may need to escalate to someone who can take the necessary action • Consistent – Allows managers to spot trends and make sound decisions

14. The Phases • Phase 1 – Introduction of TCF Feedback Form and getting information from clients. This is from January 2008 or Date of Start • Phase 2 – Introduction of the Excel Spreadsheet • Phase 3 – Returning the Data

15. Phase 1 • The Current Form • Now part of the MORTGAGE & PROTECTION SUITABILITY LETTERS • Needs to be signed by the customer • Then input data onto the spreadsheet. The form stays on the client file

16. The Questions Asked 5 4 3 2 1 1 My adviser took the time to understand my circumstances and my financial needs 2 The advice was clear and easy to understand 3 The product recommended met my needs 4 The information provided was clear 5 The costs were explained to me 6 I was treated with courtesy and in a friendly manner 7 I would recommend my advisor to a friend 8 Your overall experience of the service

17. Phase 2 • The TCF Survey Spreadsheet Go to www.newleafdistribution.co.uk Click on Compliance Manual / View Documents • Needs to be regularly updated and is on a quarterly basis TCF SURVEY SPREADSHEET

19. Phase 3 • The TCF Return • Go to www.newleafdistribution.co.uk • Log in and go to the TCF Icon on the left • The Return