Financial firms which fail to improve the way they treat customers could face tough action, the City regulator warned today.
The Financial Services Authority (FSA) says there has been an increase in senior management commitment to its Treating Customers Fairly (TCF) regime.
But it admits that more work needs to be done, especially by smaller companies.
It has now set a deadline of December 2008 for financial services firms to prove that they are consistently meeting its standards – and is warning that those who fall short could face action.
Treating Customers Fairly
The FSA said that by March 93 per cent of major retail firms and 87 per cent of medium-sized retail companies had met its Treating Customers Fairly (TCF) commitments.
However, the performance of small firms was far worse, with just 41 per cent implementing necessary changes in a substantial part of their business.
Sarah Wilson, Director with responsibility for the TCF programme at the FSA, said: ‘We are encouraged that senior management in very many firms are showing strong commitment to TCF and are rising to the challenge of a more principles-based approach to regulation.
‘The big prize is achieving improved outcomes for consumers and this is why we have set a further deadline today. Meeting that deadline will require sustained focus from senior management.’
‘Cause for concern’
But Which? personal finance campaigner Dominic Lindley said: ‘The fact that a sizeable number of companies have still not put processes in place to ensure that they are treating customers fairly is a real cause for concern.
‘People will still be buying financial products over the coming months and these results show there is a real chance that they could unwittingly visit a company which isn’t up to scratch.
‘The FSA must take stronger action to ensure that the plans and processes companies employ translate into real improvements for their customers.’