TREATING CUSTOMERS FAIRLY :

What does “Treating Customers Fairly” means?

The Treating Customers Fairly (TCF) principle aims to raise standards in the way financial institutions carry on their business by introducing changes that will benefit consumers and increase their confidence in the financial services industry. This is a customer centric initiative aimed at improving the image and reputation of financial institutions by recognising the Customers as one of the key stakeholders carefully and giving them the deserved treatment. This assumes most importance in the financial services industry keeping in mind that the customers park their hard earned money with them and depend on them based on the expected level of servicing. Moreover, a small dissatisfaction could lead to an irreparable damage to the institutions as well.

Financial Services Authority (‘FSA’), UK, has introduced this as a Code for compliance by the Financial institutions. Specifically, TCF aims to:

• help Customers fully understand the features, benefits, risks and costs of the financial products they buy.

• minimise the sale of unsuitable products by encouraging best practice before, during and after a sale.

In fact, Treating Customers Fairly is an integral part of Principle 6 of “Principles of Business” published by FSA, which states that a firm must pay due regard to the interests of the customers and treat them fairly. The retail regulatory agenda of FSA aims to achieve an effective and efficient market by treating the customers fairly. This is aimed to achieved through a focus on:

• capable and confident consumers

• providing simple and understandable information to consumers

• well managed and adequately capitalised firms which treat the customers fairly

• risk based and proportionate regulation

FSA has identified the following as the outcomes from customer perspective as a result of adopting the principle of TCR – financial institutions should be focused on trying to achieve these outcomes