FSA determines TCF problem areas

TCF update highlights information distribution and sales monitoring as main problems

Providing information to distributors and monitoring sales channels are key problem areas for providers on TCF, according to FSA feedback.

In a recent progress update, the regulator said providers from several areas of the market have better measures in place to ensure fair information for consumers than for distributors.

"We would caution all firms that provide information to distributors to think carefully about what they should do to ensure it is sufficient, appropriate and comprehensible," it added.

On this front, the regulator suggested testing the effectiveness of communications with intermediaries through feedback and focus groups.

Elsewhere, the update said many groups are taking insufficient action to monitor sales via various distribution channels.

"Too often, they take the view that the existence of a distributor relieves them of any responsibility to the customer," it added.

Good practice in this area is defined as analysing actual versus forecast volumes of sales to identify unusual spikes and investigating these where they occur.

This comes as the FSA revealed only 13% of firms met the interim March cut-off for having appropriate TCF measuring systems in place.

The regulator believes 80% of firms can meet the December 2008 TCF deadline "with a very substantial continuing effort", which means one in five is still expected to fail.

Where firms were unable to meet the March deadline and are unlikely to achieve the December target, the FSA will intervene.

Examples of intervention include meetings with firms to discuss issues, requiring them to appoint external staff skilled in this field, and in cases of significant actual or potential consumer detriment, referral to enforcement.

The FSA now expects all firms to undertake "a significant amount of further work with a great deal of energy" to ensure they meet the December deadline.

Sarah Wilson, FSA director for TCF, said: "These results show that adequate MI is not yet fully in place in the firms assessed - it does not mean that they are treating their customers unfairly."