Treating Customers Fairly

Fact Sheet 1: Relevance for senior management

The Financial Services Authority (FSA) have emphasised the importance of their principle that a firm must pay due regard to the interests of its customers and treat them fairly. This requirement has been underlined by reference to other FSA Principles, the FSA Business Plans, speeches and other output.

FSA Supervision is also focusing on Treating Customers Fairly (TCF) when examining the way in which firms conduct their business.

In terms of the impact on the senior management of a firm, steps should be taken to ensure that:

• The FSA require that TCF be a fundamental part of the culture of the firm. Senior management can assist in assuring its importance is recognised within the firm by ensuring proper consideration of the issues. Mechanisms such as requiring it to be a separately identified separate agenda item when considering policy, product development, customer servicing, and as an objective for senior personnel.
• The chief executive should expect all business areas to report their progress on a regular basis in achieving the required standards, providing details of activity undertaken to measure performance, and
• action either undertaken or under progress to address any deficiencies.
• Progress on TCF should also be reported to the Board or Audit Committee on a regular basis by the individual in the firm tasked with prime responsibility, in many cases the chief executive.
• Its achievement should be openly defined as a key objective both for the firm and for all individuals within the firm. This may be through inclusion in a mission statement, staff handbooks, and reinforced by regular messages to all staff.
• A clear strategy should be established to ensure that TCF standards in the firm meet minimum FSA standards and that strategy should drive even higher standards going forward. Practical ways of achieving these objectives might be through the establishment of a TCF consultative group tasked with benchmarking relevant activities and identifying shortcomings.
• Activity to address TCF shortcomings should be handled through proper project management to ensure that objectives are set and can be subsequently measured.