“Treating Customers Fairly” Stuart Johnson Head of Distribution

1. “Treating Customers Fairly”Stuart JohnsonHead of Distribution

2. Background One of FSA’s principles for businesses “A firm must pay due regard to the interests of its customers and treat them fairly.” Treating Customers Fairly Principle – not Rules based Also other Principles too • Therefore it is for all firms to decide how to address and implement TCF INCLUDING YOU!

3. What TCF is NOT • Being “nice” to customers • Making less money and having lower profits • Doing the same as everyone else • Searching for bespoke products for each customer • Being responsible for customers

4. Structure of the TCF process • What does TCF mean? • Ensuring senior management understanding • Defining strategy and principles • Defining fairness • Lesson learned • Review actions • Communicate • Gap analysis • Assessment of risks to fair treatment of customers • Identification of areas not meeting TCF obligations • Action planning • Prioritising tasks • Securing resources and responsibilities • Defining measures • Management information • Implementation and monitoring • Tracking progress • Making changes • Monitoring outcomes and delivery • Identify remedial action

5. Progress so far • Be encouraged and pleased with progress • AMI survey • 95% of members either very aware or aware of TCF • 47% reported had built TCF into their operations • FSA research Mixed progress among firms, some good examples but: • 47% of self cert cases brokers had failed to assess affordability • 36% of cases where reasons for choice of self cert not given or unclear • 80% of ‘sub prime’ cases lack of evidence to show how the product met customer’s needs and circumstances

6. Product Life Cycle Address fair treatment of customers through the product life cycle: • Product design • Identifying target markets • Marketing and promoting • Sales and advice process • After sales information • Complaint handling

7. Pay attention to the following Take care with your communications • Clear, Fair and not Misleading With Advice Process ensure that you: • Meet the customers’ needs • Do not expose a customer to unnecessary risks or costs • Make costs transparent • Define standards of training for advisers and monitor sales quality Complaints • Establish a complaints policy that is proactive in communicating and obtaining feedback. • .

8. Some Examples Not taking advantage of the relative weakness of a customer Be clear about any fee charging policy and variations for different ‘types’ of client Consider how you use technology to support your day to day operations Select product providers who demonstrate support and commitment to your TCF strategy

9. Your Principles Keep these things in mind: • Have documented, written procedures for sales process, after sales service, complaints procedure • Be able to prove a monitoring system which you use to check these processes are being carried out • Show an analysis of that monitoring system and adjust if the original processes have failed in any way. • Make sure you record how you act on any gaps you find

10. Summary • Good Compliance = Good Sales? • Establish a Plan and evidence actions taken • Communication, Sales Process and Complaints • Document, Monitor, Adjust and Record • Use AMI and FSA resources for guidance • Good progress but more still to do

11. “Treating Customers Fairly” Stuart JohnsonHead of Distribution