Centre stage for client care
The FSA is putting the onus on
firms to determine for themselves
how to treat their customers fairly,
an approach that is influencing
other jurisidictions keen to
improve services on their patch
BY NEAL UNDERWOOD
Treating customers fairly
(TCF) is at the forefront of
the UK Financial Services
Authority’s (FSA) move to
what it calls a principlesbased
approach to regulation.
It is placing the onus
on firms to determine for
themselves how to deliver
fair treatment to their customers
in a way that suits
their business.
Besides the UK, where
from December 2008 all
firms are expected to be
able to demonstrate to
themselves and to the FSA
that they are consistently
treating their customers
fairly, other jurisdictions are
looking at adopting similar
principles. These are being
driven in some cases by
the regulator and in others
by individual firms.
l Shaping guidelines
Singapore’s regulator – the
Monetary Authority of
Singapore (MAS) – is introducing
guidelines in this
area and the FSA’s TCF initiative
has influenced the
direction it has taken in
developing them.
Shane Tregillis, deputy
managing director (Market
Conduct) at MAS, says:
“One of MAS’s key objectives
in financial supervi-
sion is to promote transparent
and fair dealing
by financial institutions.
Increasingly, it will be looking
to the board and senior
management of financial
institutions to embed fair
dealing outcomes in all
their business practices.”
Chris Gill, regional
sales director, South East
Asia, at Friends Provident
International in Singapore,
points out that that the
Singapore market is still
dominated by tied agencies:
about 70% of life
business is done through
this channel.
He says: “The regulator
has had an easy job to
date; all it has had to do is
control the life companies.
FSA DEFINITION OF TCF
The FSA says through TCF, it is trying to bring about a real change
in firms’ behaviour towards their customers. It has defined six
outcomes for consumers which sum up what it wants TCF to achieve:
■ Consumers can be confident they are dealing with firms where the
fair treatment of customers is central to their corporate culture.
■ Products and services marketed and sold in the retail market are
designed to meet the needs of identified consumer groups and are
targeted accordingly.
■ Consumers are provided with clear information and are kept
appropriately informed before, during and after the point of sale.
■ Where consumers receive advice, the advice is suitable and takes
account of their circumstances.
■ Consumers are provided with products that perform as firms
have led them to expect, and the associated service is both of an
acceptable standard and as they have been led to expect.
■ Consumers do not face unreasonable barriers imposed by firms
after a sale to change product, switch provider, submit a claim or
make a complaint.
Even on the IFA side, both
expatriate and local, a lot
of advisers have come from
a tied agency background.
But it is slowly changing.
“Singapore is becoming
increasingly affluent. We
are seeing an increase in
high net worth individuals.
There are now in excess of
40 private banks, and that is
spilling over into advisers.
With that in mind the regulator
is being forward thinking.
The introduction of this
puts the ball back in IFAs’
court. Tied agencies are
used to being more compli-
AUGUST 2008 [www.international-adviser.com] INTERNATIONAL ADVISER
BUSINESS STRATEGIES EXPORTING TCF
ant, but some expat IFAs
may be used to regulations
which are a little lighter.
This feels about right.”
l A positive initiative
Gill says that adopting a
principles-based approach
to implementing TCF is
the right way to go. “Being
very prescriptive makes life
more difficult. It does not
always mean the best solution
for customers, advisers
and companies. Companies
want happy clients and
advisers. Leaving it up to
the companies to decide
how to do it has got to be
the way forward.”
It is understandable that
regulators such as the FSA
and the MAS feel they must
be seen to be overseeing
advisers and protecting the
welfare of consumers. It
could be argued, though,
that any adviser firm that
values its clients should
already be operating
according to the principles
of TCF without any intervention
from the regulator.
Dubai-based adviser
firm Globaleye deals with
both corporate and private
clients. Its chief execu-
“
We have
corporate values and
a culture that prevails
and TCF is a big part
of that culture
”
Chris Gill, regional sales
director, South East Asia,
Friends Provident International,
Singapore
23
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