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FSA sends out warning that third of firms failing on TCF

The FSA has fired a warning to advisers ahead of its March deadline for treating customers fairly, suggesting that a third of firms do not have the right systems to test TCF.

In its newsletter to advisers, the FSA says between September and December last year, it carried out visits to 50 adviser firms to review processes for giving advice, including management information. A further 50 firms were mystery-shopped.

Although the visits are still being analysed, the FSA says around a third of firms were not actively analysing and using management information they had gathered to review their processes and test whether they were treating their customers fairly.

Last year, the FSA set two new TCF deadlines – March for firms to show they have appropriate management information or measures to test TCF, and December to demonstrate they are consistently treating their customers fairly.

The newsletter says: “It was disappointing that, in spiteof producing some form of management information, including key performance indicators, so many firms failed to consider these on an ongoing basis as part of their monitoring of advising practices. In addition, many firms did not adequately consider findings from their review of customer files as part of their management information.”

The newsletter also highlights a recent review by the FSA into whether firms are doing enough to ensure appointed reps are treating customers fairly.

It found a number of issues with the 35 firms which took part, including firms’ own written procedures not being followed in practice, too much reliance placed on remote checking of client files and poor progress with treating customers fairly.

It says: “Firms need to ensure the ARs they recruit are fit and proper and that their customer facing staff have the necessary knowledge and competence to advise customers.”


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