Treating Customers Fairly

Fact sheet 3: Product Design

The Financial Services Authority (FSA) have identified 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.

The way in which products are designed and their particular features can have a significant impact on the ability of the firm to meet the required standards. It is therefore suggested that TCF considerations should form a key element of all aspects of product design and development and that any project plan regarding a new product, or the development of an existing product, should have built into it an assessment that TCF issues have been fully considered.

A number of aspects of product design can readily be seen to potentially impact on TCF and the risks can be minimised by attention to particular areas:

• Product design process
• Product features
• Product description – clarity of information and timing thereof
• Channel selection and distribution
• Polarisation policy – product panel selection
• Customer research
  • of target group
  • of end consumers
• Suitability of product for defined target customer group
• A risk assessment in respect of :
• The firm
• The customer group
• Control needs
• Product life-cycle
• End user customer surveys
• Distributor surveys.