We hear the term ‘treating customers fairly’ quite a bit here at StepChange Debt Charity. It’s something we pride ourselves on, but the term as it’s been set out by the Financial Conduct Authority (FCA) may not always be easy to understand.
That’s why our friend Rich Fenton from Doesn’t Grow On Trees is on hand to cut through the jargon and explain how ‘TCF’ really can be of benefit to you when dealing with creditors and other financial institutions. Take it away, Rich!
When we’re going about our daily business, I think it’s fair to say that as a customer we expect fair treatment to be a given, especially when it comes to banks or any company dealing with our precious money.
The Financial Conduct Authority (FCA) also believes that you should be treated fairly at all times, especially when dealing with any firm who is regulated and authorised by them. In fact any firm who is found not to be treating their customers fairly can find themselves in very hot water, and can be subject to eye-watering financial penalties.
That’s all well and good, but how does the FCA’s definition of ‘TCF’ actually benefit you? Is it just a nice ideal, or can it actually help you as a person when dealing with the banks and other financial organisations?
Treating Customers Fairly isn’t just a phrase any more
It’s a formal requirement laid down by the FCA to ensure that all financial services provided to consumers are done so in a way that isn’t detrimental to the customer. You could say that the FCA are a sort of ‘financial bodyguard and protector’. Kind of like Kevin Costner, but for banks (not really).
But what does being ‘Treated Fairly’ actually mean? And what can you expect when you are dealing with any financial firm who falls under the gaze of the FCA?
Well as with any regulator, the rules and definitions are never quite as obvious as they should be. There are six guiding principles which govern TCF. Below, I’ve outlined them and given you some expectations which should help you have confidence in your fair – or unfair – treatment with any company you’re dealing with, now or in the future.
What are the six TCF consumer principles?
- The FCA says: “Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture.”
What the FCA are saying is, they don’t want companies to do the right thing because they have been told they have to.
They want companies to do the right thing because it’s in their corporate blood to do so. It’s all about integrity and honesty right from the outset, and making sure that everyone knows where they stand.
- The FCA says: “Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly”.
The FCA are saying that it’s unfair to sell a product to a customer who has no need of it, or if it’s too expensive for their budget.
An example of this would be selling a 35 year mortgage term to a customer who’s five years away from retirement, or selling payday loans to a person who doesn’t have a job.
Affordability plays a very big part here. Lenders must ensure that if you wish to borrow any amount of money that you can actually afford the repayments.
- The FCA says: “Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.”
What that actually means: Most of us know about the small print and the ‘devil being in the detail’. This principle means that companies can’t hide important information in the small print any more. Hooray!
When a company tries selling you a financial product or service, you must be made aware of its key points. These include:
- the total cost of borrowing
- any penalty charges
- the term of the agreement,
- whether or not your home is being used as security
In fact, anything which is going to cost you more money now or down the line must be brought to your attention, before you sign on the dotted line.
- The FCA says: “Where customers receive advice, the advice is suitable and takes account of their circumstances.”
What that actually means: In the past, companies have found themselves in a spot of bother over the advice given to their customers.
This doesn’t just concern things such as loans; it can also relate to insurance and pension funds. It goes without saying that when taking advice on such important issues such as your pension that you must get the best possible advice relevant to your specific circumstances.
This simple principle from the FCA covers a whole world of hurt if it’s not adhered to by companies. So that’s good news!
- The FCA says: “Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect.”
What that actually means: Just like anything else which we buy on the high street, financial products and services must ‘do what it says on the tin’.
If you bought a car without an engine you would be quick to complain. With this in mind, it’s only fair that if you’re told that your savings account will deliver a certain amount of interest in a given period, it does just that.
This principle covers all types of financial products, from pensions and loans to insurance and bank accounts.
- The FCA says: “Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.”
A slow response to these things from financial companies isn’t fair to you, the consumer. The FCA doesn’t tolerate it. In fact, any time you interact with a company they must respond and or deliver in a reasonable time frame.
‘Put it in writing’ is no longer an acceptable response when a customer wishes to complain or make their concerns known. For example, 3 months to switch bank accounts is not a reasonable amount of time, 7 days is. Insurance claims must be dealt with in a timely manner to meet the needs of the claimant.
So now that’s all cleared up…
I hope that now we’ve boiled these points down to their bare, plain English essentials, you’re feeling at least a bit more confident with how TCF can actually make life easier for you.
For what it’s worth, many organisations are intent on treating you fairly whether the FCA intervenes or not, but peace of mind is always a good thing to have! And I know that StepChange Debt Charity adheres to these principles as well.