The Association of IFAs has leapt to the defence of smaller firms after an FSA report found a large portion of them to be failing to implement TCF.
In its ‘Treating Customers Fairly initiative: progress report’ published this morning, the regulator says only 41% of small firms met its March implementation deadline.
Chris Cummings, director general of Aifa, says it is no surprise smaller firms have been found wanting so far.
He also the regulator’s data is partially misleading at first glance because the FSA’s assessment of small firms was carried out in December 2006 and January this year, two months before the deadline.
“It may be disappointing, but I think it is not surprising, that the report demonstrated that in the main it was small advisory firms, which are not members of networks, who were found to be behind with meeting the deadline,” he says.
“It is significant the FSA is now trying to measure the outputs of regulation as well as just process. As the National Audit Office found, larger firms are more likely to take to principles-based regulation faster, given the depth of the relationship they enjoy with FSA.
“The close and continuous supervision of these firms means they can pose questions and seek clarification in a way that is simply not possible for a small firm whose only contact is the FSA's Contact Centre.
“Smaller firms need more help to implement TCF in a manner the FSA understands. This means the FSA must work harder to better understand the needs of smaller firms and offer more practical assistance to them and we are pleased that they have stated publicly that they are committed to do this.”
Cummings also says just because firms are meeting certain targets and deadline does not mean they are treating customers fairly in practice.
“It must be noted that this survey has focused on process, rather than outcomes and that compliance with this deadline does not mean a firm is actually ‘treating its customers fairly’.
“What it means is that a firm has a plan of how to move into that position. It is also worth pointing out the FSA may have given a large firm many action points that could take months, or years, to correct whilst an intermediary firm may only have a small number to address.
“I am pleased the FSA has made it clear to us that failure to meet the deadline does not automatically mean that those firms are not treating customers fairly now or that those who have met the deadline have no further work to do on implementing TCF.”
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Roger Holloway says: "I am a smaller firm, and I work with about 45 clients in one year, on an annual review basis I think, that if I was not treating my clients fairly I would not have a business."IFAonline
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