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A bit of a Tif

Now that treating customers fairly is embedded in most firms’ compliance regime, the FSA is already progressing its principle-based regulations agenda, with yet another EU directive, Mifid, helping to drive this agenda.

A new initiative, as outlined in an FSA press release last weekend, Tif, treating intermediaries fairly, made pleasant reading.

The FSA has recognised that if lenders do not treat intermediaries fairly, the consequence will often be that the client is not treated fairly, unless from past experience the intermediary expected not to be treated fairly and was therefore able to manage their customer’s expectations accordingly.

The regulator points out that the move to principle-based regulation means that the minimum requirements it has set for Tif will not be the limit of lenders’ obligations to intermediaries and lenders will be required to document their Tif policy by December 31, 2008 and make it available in a service standard disclosure document to any intermediary.

The FSA recognises that intermediaries are much better placed than it is to monitor lenders’ service standards and with the expected redundancies at Canary Wharf, it does not anticipate that situation changing. In order to encourage lenders to meet their service standards, they will be required to waive the product arrangement fee on any case where they have fallen below the service standards they have set themselves.

In the event of a dispute as to whether a lender has failed to meet their specified service standards, the lender will be allowed to add the arrangement fee to the mortgage but the case will then be referred to the FOS and, if found against the lender, the fee will have to be refunded to the borrower.

The FSA wants to encourage lenders to compete on service as well as product and criteria and it hopes lenders will feel the need to set themselves and, of course, meet, high standards in the SSDD in order to not be selected against by intermediaries.

In view of the shortly to be introduced 03 number, one mandatory requirement to comply with Tif is that lenders will be banned from using the premium rate 0870 numbers for intermediaries to call and on this basis it seems reasonable to assume that the FSA will also consider that using 0870 numbers for customer helplines will contravene TCF.

What a pity I did not notice until I had finished reading the FSA press release that it was dated April 1.

Ray Boulger is senior technical manager at John Charcol.

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