In what is arguably the FSA’s flagship policy for the retail market, its own assessment is that only 13 per cent of firms met the TCF requirements of the March deadline. This deadline was relatively gentle in that each firm had to show they had adequate MI or management information on TCF. The FSA is more upbeat about the prospects for the December deadline, which involves full implementation, suggesting that some 80 per cent can do so.
Looking at the examples of good practice in this report, Money Marketing suggests that the level of information required and the scale of suggested changes in practice proposed can be rather breathtaking. We can understand how a small or medium-sized firm already navigating a downturn, is wondering why and how they should devote not just management but also staff time to this sort of regulatory vision.
Several of the best practice examples also suggest the FSA wants aspects of the RDR put into practice now, notably customer agreed remuneration. Of course, if firms bring in what the FSA wants, it is clear that management and staff will have a much better idea of how their businesses are working. It will arguably be easier to steer a ship in these circumstances. Yet some firms will argue that this will only apply if they have time to do some business among all that regulation.
MM’s misgivings concern first, the fact that for smaller firms, the sheer quantity of information required seems quite onerous. We are also slightly wary of the FSA assertion of a significant difference between customer satisfaction and fairness. Indeed we also wonder where potentially vexatious customers fit into this fairness concept. There may also be a risk that a greater burden will be placed on advice-based firms. The FSA must be careful that the price of advice is not inflated even more.
But we still think TCF is a blueprint for improvement if costs are controlled and if it is introduced with a degree of sensitivity to these difficult markets. But it must not become an excuse for even more arbitrary regulation that treats firms unfairly. Money Marketing is still quite far from having confidence in that outcome.