FSA Annual Report 2006/07 - Better Regulation Ltd
FSA Annual Report 2006/07 - Better Regulation Ltd
FSA Annual Report 2006/07 - Better Regulation Ltd
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108<br />
Section six – Appendices<br />
Appendix 2<br />
Retail strategy<br />
Our overall retail strategy is to help consumers achieve a fair deal. To fulfil<br />
this aim, we operate a risk-based approach and focus on achieving capable<br />
and confident consumers; clear, simple and understandable information for,<br />
and used by consumers; soundly-managed and well-capitalised firms who<br />
treat their customers fairly; and risk-based and principles-based regulation,<br />
through firm-specific and thematic supervision and policy.<br />
The retail market is characterised by many problems that make it difficult for<br />
us to meet our consumer protection, market confidence and consumer<br />
understanding objectives. Some of these relate to poor practices by firms<br />
across a wide range of sectors and types of business. These we aim to<br />
identify and address through our policy, firm-specific supervision and<br />
thematic reviews. Others relate to low levels of financial capability on the<br />
part of consumers. These factors underpin our particular focus on treating<br />
customers fairly and on financial capability.<br />
We recognise that there is more we need to do to improve our<br />
communication of what we are doing and why. We have been working with<br />
our stakeholders and building on the feedback we have received to make<br />
further progress in this area.<br />
Treating customers fairly (TCF)<br />
As the Panel acknowledges, we have published a range of materials,<br />
including case studies and examples of good and poor practice, to help firms<br />
understand what TCF means in practice. We also provide training for firms<br />
on TCF, and for small firms we have produced a simple self-assessment tool<br />
and published new TCF web pages. Firms’ progress on TCF has been mixed;<br />
over 90% of major retail firms, 87% of medium sized retail firms, 74% of<br />
wholesale firms (where TCF is relevant) and just over 40% of small firms<br />
sampled were implementing necessary changes in a substantial part of their<br />
business by 31 March 20<strong>07</strong>. To encourage small firms to engage with this<br />
initiative we are increasing the help available to them, including expanding<br />
the range of TCF online tools and beginning the roll out of regional<br />
workshops.<br />
We recognise that some in the industry are concerned about the costs<br />
associated with the need for firms to prove that they treat their customers<br />
fairly. However, we do not believe that evidencing TCF need be as onerous as<br />
some have suggested. In accordance with existing regulatory arrangements<br />
firms already collect large amounts of management information (MI) that<br />
can be used to measure performance against TCF outcomes. To further<br />
support firms in meeting the March 2008 deadline for MI, we will continue<br />
to work with the industry to help develop and share good practice.<br />
We have already promised the industry that where a firm can demonstrate<br />
good performance against the TCF outcomes through its MI it will be subject<br />
to less regulatory scrutiny. This will mean that such firms should incur lower<br />
costs in managing their dealings with us, benefiting from a ‘regulatory<br />
dividend’.<br />
To help us measure and report on our effectiveness in delivering regulatory<br />
outcomes we have developed an outcomes performance report (OPR), which<br />
we published in outline in April 20<strong>07</strong>. As part of this we will measure the<br />
extent to which financial services firms treat their customers fairly.