How can businesses prepare for TCF?
FAnews chatted to Sanlam’s San-Marie Greeff, CEO of Sanlam Collective Investments (SCI), about what Treating Customers Fairly (TCF) will mean for companies when the legislation is implemented early next year. At this stage, most businesses ought to be ass
“The proposed legislation required financial services firms to consider the treatment of clients at all stages of the product life-cycle, including design, marketing, advice, point-of-sale and after-sales activities,”Greeff said. “While the TCF framework highlights principles, it is up to companies to decide how best to deliver the outcomes which the legislation seeks to achieve. While we like to believe the well-being of investors has always been central to our business, TCF provides additional impetus to ensure we deliver on that and also requires us to rethink the way we have done things in the past and if that is still going to be good enough in future.”
Greeff believes the ultimate outcome will be positive for investors because their confidence in dealing with financial services providers will increase.
How to prepare for TCF
We asked Greeff some leading questions about TCF, for those who are unclear about what it is and how it works.
1. Where do TCF and the Consumer Protection Act intersect and diverge?
The aim of both TCF and CPA is to protect consumers. However, the Consumer Protection Act is quite broad in its scope, and the belief was that the services provided by financial services providers, collective investment schemes and other financial institutions ought to be regulated by their own legislation as these services are both complex and specialised.In addition to the existing financial services legislation, TCF is therefore aimed at specifically enhancing the protection of consumers of financial products. The UK-example provided by the FSA will serve as a departure point for our regulators when drafting the TCF legislation.
2. How can businesses prepare for TCF?
The desired outcomes are clear – the challenge is determining how to deliver on these desired outcomes and ensuring that our assessment of delivering on the requirements and that of the public and government is aligned. Therefore we are following a back to basics approach rather than assuming we comply, asking some difficult questions and taking an in-depth look at our assumptions and processes through a number of clearly defined work streams. We are well aware that business processes take a long time to change, and we believe it is better to start this journey earlier and have a plan, even if the plan is not perfect, rather than scrambling to comply at the end.
3. What might the six TCF outcomes look like in practice?
We anticipate that clients will benefit through clearer communication, although there may be more pieces of disclosure required along the way. We may see an increase in the length of the product development cycle, as there are more considerations and governance around customer fairness that we need to address before a product can be taken to market. Hopefully, we will see better educated consumers who are better able to plan forand who are equipped to make informed decisions abouttheir financial futures. In addition, we hope to see more trust of the financial services sector in general as people have a better understanding of what they are buying.
4. What costs may be involved in implementing TCF?
Certainly there will a fair amount of employee time spent in preparation for implementation. There are also direct costs originating from changes to existing systems or correspondence, where we have to make changes to comply with TCF. We have learnt from the UK example that TCF is a journey, and that you need to be clear on the output you require from your IT systems before making the change in order to manage costs closely. Staff members also need to be trained to manage the challenges of TCF.
Editor’s thoughts:
We are just six months shy of 2014 and it is clear that companies will have to give their staff some direction with regard to how TCF outcomes are to be achieved in the future. If TCF is not already part of your broader business strategy, it should be. Do you think you will be ready for TCF when it is rolled out? Comment below or email fiona@fanews.co.za.
