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What’s the story?

Treating customers fairly is top of firms’ radars and we can all just about quote the six consumer outcomes but it appears that principle-led regulation will be no more.

The new framework will carry the snappy title “the intensive supervisory model”. If I ask Money Marketing readers what areas of current supervisory regulation they dislike, I imagine many will pinpoint the regulator’s supervision concentration on making sure appropriate systems and controls are in place and reliance on management to address the issues.

Applying regulation supervision in this way can cause frustration as some firms have great systems and controls but never use the output to help improve the customer experience in areas such as complaints, disclosure and report writing.

Some IFAs still work off paper and PC files and provide a fabulous personal service to the community with high levels of suitable advice but they may not score well on the FSA’s list of what makes a compliant intermediary due to the lack of rigorous technology. Current supervision is based on what the regulator can see there and then and does not widen the scope of activity to delve into business strategy.

One of the big FSA aims is to help retail consumers achieve a fair deal. In my mind, this means inherent product and provider default risk and the future performance must be built into supervisory activity. Trying to look wider at firms and also into the future might well help consumers get a fairer deal. The FSA has previously used the phrase “credible deterrence” and Sants emphasised that this involves the full use of criminal prosecution powers.

In the past, the focus was on ensuring there was adequate management information and controls in a firm. In the future, the FSA will concentrate on outcomes testing with more and better staff available. This will involve better use of mystery shopping and branch visits. This switch to outcomes testing is also central to the delivery of “credible deterrence”. All this sounds eminently sensible but feels like a heap of extra work for regulated companies.

May I ask if we are to get a cost benefit analysis soon or sight of any consumer research establishing what consumers think is a fair deal?

Kim North (Kim@techandtech.co.uk) is founder of Technology and Technical

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