Treating Customers Fairly TCF

1
Treating Customers Fairly (TCF)

• TCF is a principles based initiative to focus
  on outcome rather than processes and detailed
  rules.
• There are 6 outcomes.
• Outcome 5 meeting customers expectations.
• Outcome 6 post sale barriers

2
TCF - Fairness in Terms

• FSA Project reviewing Fairness of terms in
  consumer contract a visible factor in firms
  treating their customers fairly
• By the end of 2008 firms are expected to
  demonstrate to the FSA and themselves they are
  consistently treating customers fairly.

3
Key Methods

• Unfair contract terms may be evidence of not TCF.
• FSA expect proactiveness
• Want to encourage firms to use information
  provided by the FSA

4
To encourage

• Awareness of the Regulations
• Systems and controls in place, for example
• a) Firms to comply with their own undertakings
• b) to apply undertakings to their other
  regulated contracts.
• c) to use undertakings given by other firms to
  ensure terms are properly drafted.
• d) to use other FSA material, eg.
  publications, schematic projects

5
Good and Bad Practice Examples

• Good Practice
• Frequent reviews
• Assessment of contracts as part of regular
  reviews or products documentation.
• Review when complaints are received,
  cancellations or evidence that a term may be
  unfair.
• Monitor and review updates of the FSA, OFT and
  legislation

6
Bad Practice

• Being internally focused
• Being passive and relying on others to bring
  information to your firms attention.
• Irregular reviews meaning the contracts are out
  of date.
• Reliance upon external providers without checking
  or questioning work conducted.

7
Findings
8
Questions to Consider

• Do you have robust systems and controls in place
  to ensure your consumer contracts are fair? For
  example
• - Do you have adequately skilled people drafting
  your consumer contracts?
• - Do you ensure someone with appropriate
  expertise signs them off.
• - Do you have adequate systems for checking the
  contracts comply with any developments in Law and
  regulations?

9
Questions to Consider (contd)

• - Do you have adequate systems and controls
  ensuring terms are supplied fairly in practice.
• Does your Senior Management
• - receive and use appropriate Management
  Information to measure the effectiveness of
  systems and controls around unfair terms and
• - use such information to identify emerging risk
  to the firms ability to treat its customers
  fairly and to take remedial action?

10
Risks

• Legal Risks Regulation 8(1) UTCCR
• Potential risk unenforceable terms, means
  potential exposure to unexpected costs.
• Operational risks spending management time in
  re-drafting reputational risk consumer does
  not trust your firm/market.

11
Sanctions by the FSA

• Seek an undertaking from the firm to delete the
  unfair term, or to change the term under the
  Regulations.
• NOTE
• Undertakings are published on the FSA website.
• The FSA could proactively launch a review of
  contracts within a particular sector.
• Breach of undertaking could lead to an injunction
  
• Failure to adhere to other firms undertakers
  could also lead to a legal, regulatory and
  reputational risk.