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Introduction
The FSA has initiated, facilitated and continues to develop the concept of "treating customers fairly" (TCF). It does so in pursuance of one of its four statutory objectives set out in S2 of the Financial Services and Markets Act 2000, namely, protection of the consumer. Yet there are inherent links to the other statutory objectives of "public awareness" and general "market confidence". The [11] FSA (2000) has made it clear from the outset that its overall regulatory aim is to maintain efficient, orderly and clean markets and to help retail customers achieve a fair deal. This manifests itself in a number of high level "Principles of Business" that include the requirements that:
... firms pay due regard to the interests of customers and treat them fairly, communicate information in a way that is clear, fair and not misleading, and manage conflicts of interest fairly ([13] FSA, 2002a, p. 3).
TCF is a key element in the FSA's retail agenda. Clive Briault, Managing Director, of the FSA's retail markets explains that the retail agenda is built upon four pillars:
capable and confident consumers;
simple and understandable information for, and used by, consumers;
well managed and adequately capitalised firms who treat their customers fairly; and
risk-based and proportionate regulation ([3] Briault, 2005).
Exactly what regulatory approach should the FSA therefore use to achieve its objective of fair treatment for customers? The FSA's "Treating customers fairly: progress report" ([13] FSA, 2002a), which contains practitioner views on the earlier FSA discussion paper, "Treating customers fairly after the point of sale" ([12] FSA, 2001), clearly indicated that it is impossible to generalise or use a blanket approach because the financial services sector is such a huge and diverse market. The respondents see the term fairness as a flexible and relative concept and therefore are of the view that to adopt a procedural checklist approach to TCF would not be useful. They favour the FSA's high principle-based approach, based upon:
... widely recognised concepts and "tests" for fairness, than rigid definitions that would be unable to keep pace with rapidly changing environments ([13] FSA, 2002a, p. 4).
The FSA favours this approach, as it prefers senior management to work out for themselves what "treating customers fairly" means:
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