2.2.1 Treating Customers Fairly (TCF)

Question 1

Treating Customers Fairly initiative (TCF)

Answer 1

Launched in 2000-01
Fait treatment is already embedded in principle 6, this just highlights to firms its importance. Six consumer outcomes were highlighted to firms

Question 2

Outcome 1) (Corporate Culture Hint)

Answer 2

Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture

Question 3

Outcome 2) (Hint retail market)

Answer 3

Products and services marketed and sold in the retail market are designed to meet the need of identified consumer groups and are targeted accordingly

Question 4

Outcome 3) (Sale information hint)

Answer 4

Consumers are provided information and kept informed before, during and after POS

Question 5

Outcome 4) (Advice)

Answer 5

The advice given to consumers is suitable and specific to their circumstances

Question 6

Outcome 5) (Expectations)

Answer 6

Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard

Question 7

Outcome 6) (post-sale barriers)

Answer 7

Consumers don’t face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint

Question 8

FCA risk assessment process step 1)

Answer 8

FSF - Presentative Work through structured conduct assessment of firms (considered here and later in this workbook)

Question 9

FCA risk assessment process step 2)

Answer 9

Event-driven work - dealing quickly and decisively with emerging or past problems and securing customer redress and other remedial work. This covers issues that occur outside the firm assessment cycle and uses better data monitoring and intelligence

Question 10

FCA risk assessment process step 3)

Answer 10

Issues and products - quick and intense. campaigns on sectors of the market or products that are, or may, put consumers at risk. this approach is driven by sector risk assessment and uses data analysis, market intelligence and input from the firm assessment process

Question 11

April 2015 - change to FCA’s authorisations and supervision departments to reflect the increasingly diverse sectors, where risks may be different across sectors but common across firms within. sector.

Answer 11

Split into

1) Retail and Authorisations
3) Investment, wholesale and specialists

Provides a greater emphasis on sector and market-wide analysis

Question 12

Sep 2015 - FCA announced changes to its supervisors model, including how it classified firms to support this sector-based approach. FCA will continue to look at the way individual firms and individuals play, but also at the market as a whole, with greater emphasis on the sector and market-wide analysis. FCA changed its model and moved away from C1-C4 conduct categories that were previously used. Firms now categorised as:

Answer 12

1) Fixed Portfolio
2) Flexible Portfolio

Within these 2 categories, the FCA utilises 3 approaches

Pillar 1 - proactive supervision for the biggest firms
Pillar 2 - event-driven, reactive supervision of actual or emerging risks according to their risk appetite
Pillar 3 - thematic work that focuses on risks and issues affecting multiple firms or a sector as a whole

Question 13

Flexible portfolio firms

Answer 13

FCA states:

1) they will be proactively supervised through a combination of market-based thematic work
2) as well as communication, engagement and education activist aligned to the key risks the FCA identifies for the sector

Firms moving into the flexible portfolio category will no longer have a named supervisor, 1st point of contact will be customer contact centre.

The gradual move away from designated supervisor best reflects the FCA’s increased remit over the last decade

Question 14

Fixed portfolio-impacted firms

Answer 14

Pillar 1 proactive supervision ordinarily compromises a 12 - 36 month cycle covering firm meetings, reviews of management info, an annual strategy meeting nad other proactive firm work.

Deep dive assessments look at how a firm’s business operates in practice and can be scheduled as part of the supervision strategy

in relation to the business model and strategy analysis (BMSA) the FCA will focus attention on where it sees common indicators of risk

Question 15

FSF - designed to assess a firm’s conduct risk, aims to answer the question: Are the interests of customers and market integrity at the heart of how a firm is run?

Does this by using a common framework across all sectors which is targeted to the type of firm. Common features involve:

Answer 15

1) BMSA - to give a view on how sustainable the business is in respect of conduct and where future risks may lie
2) Assessment of how the firm embeds fair treatment of customers and ensure market integrity in the way it conducts its business.

The assessment has 4 modules

1) Governance and culture - assess how effectively a firm identifies, manages and reduces conduct risks
2) Product design - determines whether a firm’s products or services meet customer needs and are targeted accordingly
3) Sales or transaction processes - assess a firms’ systems and controls
4) Post-sales/services and transaction handling - assesses how a firm ensures its customers are treated fairly after the POS, service or transaction, including complaint handling