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Big rise in FSA fines show that TCF is starting to bite

Breaches of the treating customers fairly principles now feature in 40 per cent of all fines imposed by the FSA compared with 11 per cent in March 2006.

Research from law firm Reynolds Porter Chamberlain uncovered the big rise, for the year ending March 2007, and solicitor Robbie Constance says it shows that the FSA’s TCF initiative is beginning to bite.

RPC also says the number of financial penalty notices handed out by the regulator has risen 58 per cent – from 19 cases to 30, which the law firm says is evidence of the direction the FSA is heading.

Constance says: “The big difficulty with the TCF principle is that it is too vague. By refusing to define or provide guidelines on how to implement TCF, the FSA is causing a headache for firms.

“This regulatory uncertainty makes it very costly for firms to attempt to comply.”

He says to meet TCF guidelines, firms should fully explain terms and conditions, make customers aware of hidden costs, test promotional material with a non-expert and ensure there are not unreasonable barriers to clients switching service provider.

He also warned of potential problems with the Financial Ombudsman Service when dealing with TCF.

He says: “The FOS will decide whether companies have breached the TCF principle. But the FOS does not work as clearly as a court of law. There is still substantial uncertainty as to how they will deal with TCF.”

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Guide: how to… communicate with your pension members

Effective communication of your pension scheme is a large part of getting auto-enrolment right. Delivering the same message to all employees is not necessarily the way to go. To assist you with the communication of your pension scheme, we have provided some key areas to think about, such as:

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