Fundamentals of "Treating Customers Fairly" principle still lacking in many financial services firms

19 July

The FSA's publication of a deadline for firms to demonstrate that they are incorporating the principle of treating customers fairly into their business has been welcomed by the Financial Services Consumer Panel.

The Panel believes that in too many financial services firms, the benefits of the principle are not yet reaching the consumer. The culture change required by 'Treating Customers Fairly' is not filtering down to the staff who really control the relationship with customers on a day to day basis. There has been recent evidence of this:

• In June 2006, the FSA published research showing that in many cases, mortgage documents from firms are not up to scratch¹;
  
  

• Today the FSA is also publishing information about firms failing to give advice properly on mainstream products²;
  
  

• Last week the Consumer Panel published research showing a disturbing level of non compliance in financial advertising.³

The FSA says that senior managers have signed up to the principle of TCF. But firms' advertising, documents, and advice giving is at the heart of the consumer interface with financial services firms, and all these must be improved.

The Chairman of the Financial Services Consumer Panel, John Howard said:

"For consumers to have confidence in the financial services industry, they need to be able to trust that the adverts that they see, the documents they read, and the advice they are given are all clear, fair and not misleading. That is what 'treating customers fairly' should be about. It is not good enough just to 'talk the talk' in head office. Financial services firms must 'walk the walk' in the high street as well."

¹ Review of Mortgage Disclosure Documents – published by the FSA 29 th June 2006

²  FSA press briefing note – process of giving financial advice: FSA says firms need to improve 19 th July 2006

³  FSA must take firmer action on financial advertising

 

Notes to editors

1. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.
   

2. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. More information about the Panel's work is available on this website.

3. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.

4. There are currently eleven members of the Panel as listed below (for further information on individual members, see the Panel's website).

John Howard (Chairman)
Adam Phillips (Vice Chairman)
Caroline Gardner
Harriet Hall
Tony Hetherington
Stephen Locke

Nick Lord
David Metz
Paul Salvidge
Robert Skinner
Carol Stewart