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FSA urge companies to do more to treat customers fairly

The Financial Services Authority (FSA) is asking for firm to treat customers fairly when selling general insurance, mortgages and investment products.

The call comes in the wake of a review of a number of smaller companies by the FSA into Systems and controls, Recruitment, Training and Competence and Treating Customers Fairly.

Four of the firms surveyed are "being considered for referral to enforcement" while 11 additional companies have been marked for follow up visits in the new year because they were found to require “significant remedial action” to address identified failings.

The review follows a similar initiative undertaken in 2006.

The current survey of 35 Principal firms and 67 of their ARs. revealed general insurance was the worst performing area.

Some of the key concerns identified were:

• Firms’ written procedures not followed through in practice;
• Too great a reliance on remote checking of client files as the primary method of monitoring Appointed Representatives;
• Poor progress in implementing Treating Customers Fairly;
• Few measures in place to monitor Appointed Representatives’ progress towards delivering TCF’s consumer outcomes and working towards the end of December 2008 deadline.

The FSA is calling for small firms to do more to ensure their Appointed Representatives "are fit and proper and that their customer-facing staff have the necessary knowledge and competence to sell and advise."

Stephen Bland, Director Small Firms Division, FSA was "disappointed" by the findings of the latest survey, saying that firms are expected to "demonstrate that they are achieving the six TCF outcomes" by the end of 2008.

"Principal firms therefore need to act now to ensure that they have appropriate controls in place and management information that enables them to be confident ahead of the deadline that their ARs are treating their customers fairly," he added.