Four in ten fines meted out by the FSA now concern TCF breaches, according to research from Reynolds Porter Chamberlain.
The city law firm says the statistic, taken from details of FSA fines during the year to the end of March, is almost quadruple that of the previous 12 months.
The number of FSA financial penalty notices has also risen - by 58% to 30 - during the same period and is up from 19 cases in the previous year.
Financial services companies must treat customers fairly according to the FSA’s core principles.
Robbie Constance, a solicitor at RPC, says one of the reasons there are more TCF related fines is because its principles lack clarity.
"The big difficulty with the TCF principle is that it is too vague," he says. "By refusing to define or provide guidelines on how to implement TCF, the FSA is causing a headache for firms.”
Constance says regulatory uncertainty makes it costly for firms to comply.
He says: “TCF is also causing more problems for small financial services businesses; red tape always seems to fall most heavily on firms that can least afford it.”
RPC says to meet TCF, firms should fully explain terms and conditions, make customers aware of any hidden costs, and test any promotional material with a non-expert.
It also suggests customers must be able to switch service providers without facing unreasonable barriers.
However, Constance says there are other problems associated with TCF.
“The Financial Ombudsman Service (FOS) will decide whether companies have breached the TCF principle," he says. "But the FOS does not work as clearly as a court of law. There is still substantial uncertainty as to how they will deal with TCF.”
Only 41% of small firms were able to meet the FSA’s March deadline to implement TCF into a “substantial part of their business”, compared with a 93% compliance rate for major retails firms.
In its March report, the regulator also set new deadlines for firms to implement TCF into their businesses - December next year.
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Have your say:
"It is only to be expected that the FSA is now fining firms for non-compliance with TCF rules. The rules are all vague and ethereal and leaves the FSA (and FOS) to decide whether a firm is meeting their ridiculous, non-specific, irrelevant ideas on whether a customer is being treated fairly.
Best advice, disclosure of fees and commissions, satisfied customers - all this means nothing if the FSA find you don't have laid down, written up procedures on how you intend to make sure a customer will be treated fairly. Soon they'll be trawling for complainants who think that they may have not been treated fairly and awarding damages.
Where will it all end ?
It never will since this mindless bunch of civil servant types are only really interested in their own comfy, well-paid jobs.
From start to finish, the regulations (including data protection, money laundering etc etc) are nothing but bullshit. The paying public are no better protected against the sharks than ever they were - except now, the cost of regulation (and all the bureaucracy from government) is being loaded on top of every financial product they buy.
Still, its the same with every other aspect of life in Britain today.
Can't wait for the revolution." Bill WellsIFAonline
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