Senior Management Buy-in

Compliance officers should be empowered by senior management in order to perform their duties effectively. But it doesn't mean the role of senior management is simply to delegate. They have been expected to roll up their sleeves, especially under the principles-based regulatory framework.

In the recent FSA conference titled "Treating Customers Fairly, Towards Fair Outcomes for consumers", 33% of delegates responded that the biggest barrier to implementing Treating Customers Fairly within their firms was lack of buy-in from senior management. Other major barriers are quality of staff (23%), regulation (11%) and cost (10%).

The above findings, together with recent FSA enforcement cases, reinforce the point that senior management aspirations had not yet fully permeated through businesses to result in improved outcomes for customers.

The Treating Customers Fairly (TCF) initiative is a pioneering example of the FSA's move towards more principles-based regulation, which focuses on the outcomes to be achieved as well as the responsibility of senior management to achieve them.

The six outcomes for consumers set out by FSA include:

• Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture;
• Products and services marketed and sold in the retail market are designed to meet the needs of identified groups of consumers and are targeted accordingly;
• Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale;
• Where consumers receive advice, the advice is suitable and takes account of their circumstances;
• Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and also as they have been led to expect; and
• Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.

Real changes of compliance culture are required to achieve the above outcomes, which are emerging from senior management commitment. Increasingly FSA is seeing senior management engaging directly with the experience of their customers, e.g. listening to calls from call centres, sampling complaints, looking at reports from mystery shoppers, participating in customer panels, etc.

Such efforts can ensure that senior management can obtain more information to measure the compliance performance, without being biased by the word-of-month reports from either the business unit or the compliance department.