While it would be tempting to say: “Of course” and pass on, I think it is important that we stop and consider carefully what the Treating Customers Fairly initiative means.I think there is always a temptation to set value-driven issues on one side in favour of what many people regard as a realistic commercial view. We saw this when the FSA started to put forward an ethical agenda as part of its training and competency review. It is very clear from the FSA’s latest paper (Treating Customers Fairly – Building on Progress) that the move to principles-based regulation is very much under way. A general review is being undertaken of the FSA handbook to identify requirements no longer necessary to achieve the FSA’s objectives. When the FSA asked consumers what fairness meant in financial services, they came up with six points:
- Give the customer what they pay for.
- Do not take advantage of the customer.
- Offer the customer the best product you can.
- Do your best to resolve mistakes as quickly as possible.
- Show flexibility, empathy and consideration towards customers.
- Exhibit clarity in all customer dealings. The impression I have from the FSA paper is that the process of implementing Treating Customers Fairly is moving ahead more in bigger firms. This is probably to be expected in view of the large number of people which such firms can deploy. But I would venture to suggest that a small firm with a strong tradition of good customer service might be in a very good position to demonstrate quickly that they deal with the six points above. With a smaller number of people, the management issues are much simpler. As the FSA points out, a longstanding client base and high level of knowledge about individual clients should help greater understanding of the impact of the firm’s activities on its customers. It is important to emphasise that Treating Customers Fairly is about firms acting to observe the spirit of what the FSA rules aim to achieve. A greater level of understanding within the firm of what people are there for and their objectives is necessary. I think it helps to see regulatory rules as a codification of good practice and to try to understand the reasons and the basic principles behind them. We need to address Treating Customers Fairly as a vital part of our professional development. There will be opportunities to attend FSA roadshows and surgeries at which questions can be raised and we hope to stage some sessions within the PFS for that purpose.