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Treating customers fairly | 23
TCF initiative. These are: The FSA concluded that Heaney lacked
l Outcome 1 - Consumers can be confident that integrity and was not competent to run an
they are dealing with firms where the fair authorised firm. Heaney entrusted the running of
treatment of customers is central to the his business to an inexperienced employee and
corporate culture did not ensure that his advisers received adequate
l Outcome 2 - Products and services marketed training and support. Having delegated so much
and sold in the retail market are designed to responsibility to another person however, he
meet the needs of identified consumer groups failed to put in place management
and are targeted accordingly information that could have helped him
l Outcome 3 - Consumers are provided with be informed about the business being
clear information and kept appropriately conducted in his name. Another
informed before, during and after the point of consequence of the weak controls
sale was that he exposed his business
lOutcome 4 - Where consumers receive advice, to the risk of being used by third
the advice is suitable and takes account of their parties to commit mortgage
circumstances fraud. Heaney also failed to take
l Outcome 5 - Consumers are provided with remedial action identified by
products that perform as firms have led them two compliance consultants
to expect, and the associated service is of an and the FSA, and he did not
acceptable standard and as they have been led have in place a complaint
to expect handling procedure.
lOutcome 6 - Consumers do not face
unreasonable post-sale barriers imposed by Assessment
firms to change product, switch provider, programme
submit a claim or make a complaint. This case in question
highlights the
Enforcement effectiveness of the
To illustrate the current FSA demeanor towards FSA’s small firms’
firms and individuals not towing the TCF line we assessment
have recently see two specific examples of programme.
enforcement action that demonstrate the breadth In the year
of the guidelines. On a more high profile vein the ahead we
FSA fined GMAC‑RFC Limited (GMAC-RFC) can
£2.8million for failing to treat customers fairly
and secured redress of up to £7.7million (plus
interest) for over 46,000 mortgage customers. expect
Between 31 October 2004 and 30 November more of the same in
2008, a number of serious failings by GMAC- terms of a sustained period
RFC were identified in relation to its dealings of enforcement action as the FSA
with customers experiencing arrears and has pledged to ‘continue to deal robustly
repossessions. These include: with the firms and individuals who do
1.excessive and unfair charges for customers that not engage with us to ensure the fair
did not reflect administration costs; treatment of their customers.’
2. proposing repayment plans that did not always This underlines just how seriously the
consider a customer’s individual intermediary community has to take the
circumstances; FSA in terms of ensuring that robust
3. inadequate training of mortgage servicing staff processes are firmly in place in order to
in handling of arrears and repossessions; and satisfy the regulator’s demands as well as
4. issuing repossession proceedings before fully the needs of clients.
considering all the alternatives. The headlines generated by the news
The case set a precedent, with the FSA of such a large fine being addressed to a
concluding this investigation in a matter of prominent lender will ensure that a
weeks, and the firm working with the FSA to larger number of intermediary clients
agree a process to enable customers to receive will be aware of the TCF bandwagon
redress as quickly as possible. As a result of early and posing questions as to what this
settlement, the firm qualified for a 30 per cent actually means for them. Now more
discount under the FSA’s settlement discount than ever firms need to place TCF at
scheme. Without the discount the fine would the bedrock of their business. It has
have been £4million. been over a year since the December
On the other end of the scale but with no less 2008 deadline for the implementation
of a consequence the watchdog banned mortgage of this initiative. With this in mind the
broker Noel Heaney, trading as Heaney Finance, beginning of 2010 is an appropriate
after identifying wide-ranging management and time for firms of all sizes to partake
control problems across his business and for in a comprehensive review of their
failing to treat his customers fairly. TCF culture. January 2010 Mortgage Introducer
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