Treating Customers Fairly

Fact sheet 4: Relevance for HR – including remuneration

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.

Particular aspects of HR policy have been identified by the FSA as potentially having a significant impact on the performance of a firm in meeting the highest TCF standards.

These comments have largely been based on issues that have arisen in the area of investment business and as a result of the way in which some staff have been remunerated. Elements of a remuneration policy can encourage product bias, evidence of pressure selling including misrepresentation, failure to address customer need, failure to recommend the most suitable product, overselling, poor customer service.

The firm’s HR policy, the staff handbook and all other relevant documentation should clearly identify that any action which fails to meet TCF requirements is contra to policy and may result in disciplinary action.

At the level of remuneration policy TCF issues must be considered when determining any incentivisation policy for all staff, commissions paid, bonus arrangements and any other incentives offered.