The remaining deadline is December this year. By then, all firms should be able to show they are consistently treating their customers fairly – a more demanding requirement than for the March 2008 deadline.
To quote the FSA report, this is only likely to happen if there “is very substantial and continuing effort” and, even then, 20 per cent of firms are still expected to fall short.
There may be a number of reasons for this but I am going to work on the assumption the FSA research is representative of small firms and firms do want to dem-onstrate TCF, it is just a ques-tion of how best to do so.
TCF is, as we know, about focusing our business and processes on the client and I have yet to come across a business owner who did not consider this important. The challenge is more about how we should do this (and sensibly measure it), rather than why we should bother.
Plenty of support is now available, ranging from the FSA website to the exper-ience of individual small firms and external consul- tants. The steps that most firms need to make should be both positive for business and eminently sensible.
It is important not to get one or two aspects in place and then sit back and rest on your laurels. No one indicator, in isolation, will help you demonstrate TCF. I have seen firms that have defined what TCF means but do not adequately evidence or measure the steps they have taken.
Here is a no-nonsense guide to 10 steps that should make your businesses more profitable and help you meet the final TCF deadline by the end of this year:
Undertake a gap analysis
Look at what you already have and cross-reference it to the TCF six outcomes. Put an action plan together to address areas that need attention. I have yet to come across a firm which did not have at least some systems or measures, so this mapping exercise is essential if you want to avoid omissions or unnecessary duplication.
Conduct a staff survey
Establish the understanding of your staff about what TCF means to them and how processes can be more client focused. Ensure there is also clear and ongoing communication with staff.
Find out what your clients think
This is not about finding out how happy they are, but about obtaining qualitative information about the service you provide. Use a client satisfaction survey with clients or conduct client focus groups.
Review the KPIs you useThe KPIs used need to be relevant to each business. The key question is: what do these KPIs tell us about how we treat our clients? You get what you measure, so use the minimum number of relevant indicators possible, monitor trends and act upon these. Make sure these focus on outcomes rather than processes.
Ensure there is clear management oversight and responsibility
Is it clear who has responsibility for TCF? Are measures monitored and acted upon? Is TCF part of ongoing board or partnership meetings?
Having great KPI information is one thing, spotting and acting on the trends and differences is another. The FSA has also identified some of the leadership behaviours it would expect to see from senior management. Can senior management demonstrate these?
Measure the knowledge of staff
This should apply to new staff, existing advisers, supervisors and staff who review advice. Exams are pretty topical at the moment but they are only part of the story. What about online testing, study groups and periodic knowledge health checks based on interviews or discussions of client cases?
Measure adviser interaction with clients
Observe client meetings using criteria that look at soft skills and have clear TCF indicators – not just the minimum “compliance” requirements. Are your forms about monitoring, or development? Give constructive and documented feedback to the adviser.
Review files of the advice given
Given that this has been standard practice for many years now, it is amazing how often there are still recurring issues with completeness of the fact-find, such as demonstrating how the advice meets the client’s needs.
This issue was again highlighted in the FSA’s report on investment advice in August. Files should consistently show the full story and in a way a client can understand.
Ensure sampling takes place, bring in a compliance firm to do so independently, identify high-risk cases and monitor these more closely. Peer review of files is a great way of driving up standards and the consistency of approach.
Ensure there is clear communication with the client
This ranges from how we explain remuneration, status and our services, to letters and the advice we provide. This is about the client’s understanding, not their satisfaction. How clear is this? How do you know?
Reward what is important to you
adviser and staff bonus policy is based on the quality of advice given or service provided to the client. If you believe in the adage, you get what you reward, then make sure there is a culture where quality (as well as income) gets rewarded.