News & Articles

TCF In No Time At All

29th May 2009
Lee Werrell

TCF Doesn't Need To Be Unfriendly

A recent report has claimed that independent financial advisers are under such a heavy burden with Treating Customers Fairly (TCF) that they have been forced to scale back the number of meetings they hold with clients.

Since the end of last year (2008), all adviser firms have been expected to demonstrate that they are treating their customers fairly, with TCF visits to firms currently taking place by the regulator.

But now advisers have said the increasing regulatory burden means that many have to work long hours, some six days a week to keep up with the "regulatory burden". Some have said that client face-to-face meetings have had to be reduced by up to 20%!

Whilst the actual regulatory burden has undoubtedly increased, fundamentally most IFAs still appear not to have their heads around what is required. Quite simply an annual review covering TCF elements should take no more than 2 days. An initial, one off review and appraisal will take longer depending on the size of the organisation and the business areas involved.

Too many IFAs are struggling to come to terms with what is required by the regulator regarding the identification of TCF issues and what actions to take. Many look at taking on additional staff when the existing framework starts to creak and groan. This can be costly and also involve enormous amounts of time in training, coaching and developing a new member of staff, whereas the answer could be simply to engage a Compliance Consultancy, locally or regionally and the costs could be less than the cost of a reasonable PA/paraplanner. Retain an outsourced function with prescribed limits to the service, and then pay the full costs when you need the services.

Financial promotions are a big headache for most IFAs but with broadband coverage across the UK these can so easily be effectively outsourced. Complaints can be outsourced for a fraction of the costs using a simple method of scanning and protecting any transmitted data or even using a courier/postal service to deliver/collect relevant items. All findings and recommendation can then be detailed and explained for you to negotiate or discuss with your PI insurers.

As far as TCF is concerned, "snow-blindness" is a common occurrence whenever you review your own work, systems or documentation, as you cannot be truly objective. Ideally you need to have a system in place which firstly identifies your weak areas, shortfalls or gaps. This then highlights the TCF outcomes where you are required to take some action. From this you can then set up periodic reviews for policies, sales practices, financial promotions (expiry dates and review), ensure relevant staff training and other cultural issues are on-track, as well as customer satisfaction questionnaires are correctly used to provide feedback.

Once in place, your TCF requirements and responsibilities can be monitored by you and scheduled by your retained consultant, handled on a frequent or infrequent arrangement, or in any other combination you need, ensuring that you are kept fully informed of all the issues.

Do not forget that Compliance consultants can provide a whole range of services. Some of the more common services include:

• Initial risk assessment or audit — an initial analysis to identify higher risk areas of the business and weaknesses in procedures.
• Business development — business analysis advice or advice on particular issues � for example, how your firm is Treating Customers Fairly and an action plan for implementing TCF across your business.
• Help with setting up procedures — for example procedural manuals for recruitment, training and competence, complaints handling and anti-money laundering. May also include templates for disclosure documents, fact-finds and registers.
• File audits — checks to ensure that procedures are being followed and identify good practices and weaknesses.
• Technical support — may include advice on particular products or regulatory reporting. May be available in various formats, including website, helpdesk and individual technical advice.
• Training — for example competency assessments, training opportunities or product risk guidance. May be online support, regulatory updates or seminar based.
• Support on individual issues — for example in dealing with a complaint, a financial promotion or a particular suitability letter.
• Remedial work — helping to action remedial work required by the FSA after an ARROW or Themed visit.

If you compare the costs to employing an admin assistant who understands the FSA rules and TCF methodology, with all the e'er NI contributions, Pension, DIS and/or other benefits, you could be talking in excess of £20,000 and then there are equipment costs and all the other "hidden" extras a new member of staff involves. Do your business a favour and call a Compliance Consultant and discuss your needs, you could be pleasantly surprised.

Call CEI Compliance on 07092 289901 or send a fax to the same number.

Bibliography

Lee Werrell FInstSMM MSI is the Owner and Principal Consultant of CEI Compliance Limited, a Compliance Consultancy. CEI provide a broad range of expertise having worked with governance, risk and compliance functions for a number of years.