The FSA's TCF initiative is beginning to bite says law firm
Treating Customers Fairly (TCF) breaches now feature in 40% of all fines imposed by the FSA, up from just 11% of fines in the previous year, reveals research by City law firm Reynolds Porter Chamberlain LLP (RPC).
Overall the number of financial penalty notices handed out by the FSA has risen by 58% to 30 during the last year from 19 cases in the previous year, which RPC says shows the way the FSA has been heading.
Under the FSA’s core principals, all insurance companies must “treat customers fairly”. Over the last 18 months the FSA has put TCF at the centre of its disciplinary drive, making it clear that companies that breach this principle will be fined.
Robbie Constance, a solicitor, with RPC said: “The enforcement of the FSA’s TCF initiative is now really beginning to bite. The big difficulty with the TCF principle is that it is too vague. By refusing to define or provide guidelines on how to implement TCF, the FSA is causing a headache for firms. This state of regulatory uncertainty makes it very costly for firms to attempt to comply.”
RPC says that to meet TCF firms should fully explain terms and conditions, make customers aware of any hidden costs, test any promotional material with a non-expert; and customers must be able to switch service providers without facing unreasonable barriers.
However, Robbie Constance says that there are other problems associated with TCF. “The Financial Ombudsman Service (FOS) will decide whether companies have breached the TCF principle. But the FOS does not work as clearly as a court of law. There is still substantial uncertainty as to how they will deal with TCF.
“TCF is also causing more problems for small businesses: red tape always seems to fall most heavily on firms that can least afford it.”
