Customers can be confident that they are dealing with businesses where the fair treatment of customers is central to the corporate culture

Principle 1: Culture & Governance


What that means:

Companies should do the right thing because it is in their corporate blood to do so. It is all about integrity and honesty right from the very start and making sure that everyone knows where they stand.


A culture of treating customers fairly.

A culture of treating customers fairly, implemented in every part of the business, is outcome number one. The Board of directors, senior and middle management must provide leadership, direction and monitor the delivery of TCF behaviour and outcomes.

The recruitment of appropriate people, who are trained to deliver appropriate TCF outcomes is necessary. Moreover, people must be evaluated in terms of performance in TCF competence and expectations and where necessary, performance management applied.

Targets related to the growth must take note of fair outcomes.

Monitoring the success of TCF requires that the right information (MI) must be identified, collected, and evaluated so that we can see what works and what needs improvement.

This is probably one of the most critical elements of TCF, and the result is that with the right culture and the right implementation, comes well deserved customer trust.

Creating confidence and trust are key to a sustainable and successful financial services industry. You will not buy a product from a supermarket if you are not confident that the product is what it said it is. The same is with financial products.

If customers lose confidence in one part of the sector it will affect the whole industry as the customers will no longer be eager to buy financial products.

Therefore, it is just as important to FSP’s and the industry that customers are confident that they will buy a financial product that delivers as expected.


The term ”Customer”

For purposes of TCF, the term customer always refers to the actual end user of the financial product or service concerned, which may or may not be a natural person.

Where institutional investors such as pension funds or insurers invest in a product for purposes of backing liabilities to provide products to their own members or policyholders, then the customers will be those members or policyholders.

Where there are various intermediate entities in the value chain, the term customer does not refer to those intermediate entities, regardless of whether the financial services provider may regard those entities as their customers for business purposes.

For example, if the financial services provider is a reinsurer, the customer for TCF purposes is not the primary insurer whose policies the financial services provider reinsures, but the end policyholders of the primary insurer.

Representatives or other intermediaries who market or distribute financial products or services to end customers, are not customers for TCF purposes.

Where relevant, the term customer also includes beneficiaries or dependents.


The term ”Fair”

The dictionary describes fair as being without cheating or trying to achieve an unjust advantage. Customers will not feel confident to buy a product if they feel that they are being cheated or at a disadvantage especially where information is concerned.

Customers buy financial products to protect themselves from risk or to increase their wealth. The wrong product can lead to very negative effects. Therefore, it is very important that the customers in the financial services industry receive fair treatment.

Fair treatment in the financial services industry can be described as treatment that adheres to the stipulations of the FAIS Act and the Code of Conducts as well as ensures the TCF outcomes are reached.

The last part of the outcome reads “where fair treatment of customers is central to corporate culture”.


The term “Corporate Culture”

Culture refers to a firm’s values, beliefs, and behaviors. In general, it is concerned with beliefs and values on the basis of which people interpret experiences and behave, individually and in groups. Cultural statements become operative when senior management express and publish the values of their firm which provide patterns for how employees should behave. Firms with strong cultures achieve greater results because employees focus on what to do and how to do it.

Imagine your company is a tree. The roots signify the active network of leadership, individual employees, systems, and processes that shape how people interact and how the work gets done. As the tree grows, its limbs and branches represent your company’s customer, partner and stakeholders, your products or services, sales, marketing, and other divisions.

The organisational culture is the trunk that connects the roots with the branches. The culture is essential to the structural stability of the tree’s ability to withstand any challenges.

Corporate culture (Outcome 1) should be rooted in goals, strategies, structures, and approaches to customers.

The successful implementation of TCF requires a change of mindset amongst leadership and management. All employees of an FSP must have the fair treatment of customers at heart.

Corporate culture is unique for every business and one of the hardest things to change. No two businesses are the same. The differences between companies can be as obvious as size, location, and industry, and as subtle as the unspoken assumptions that govern how employees treat each other and their customers. Therefore, it is very important that the corporate culture need to be instilled under outcome 1 and should be driven from the top of the financial services hierarchy and filtered down into the following organisational structures and processes:

• Management.
• Strategy.
• Decision making.
• Governance and controls.
• Performance management.
• Reward.


TCF must be “owned” by the most senior management structures within the business, which will be held to account to ensure the delivery of TCF outcomes at all levels. The importance of TCF must not only be understood, but it must also be implemented in all business areas.

Management within a company includes senior management and any person with responsibility for managing staff. Managers have a very significant influence over the TCF culture of a firm, through their values and behaviour.



The TCF outcomes should not merely be part of a FSP’s stated vision and values. The outcomes need to be carried through to implementation as part of the financial services provider’s broader business strategy.

Strategy includes any future developed by senior managers and leaders. This includes the development of new products or target markets, or any outsourcing arrangements.

The TCF approach should be built into any strategic and business plans (or changes in plans) developed by senior management and should form an essential component of any strategic planning processes.


Decision making

Decision making at all levels gives an indication of the TCF culture within a firm. It refers to any situation where an individual is expected to make a decision that could have an impact, directly or indirectly, on delivery of fair consumer outcomes.

All decisions that impact on customers should be subject to challenge by staff members.

For staff to feel that they can evaluate and challenge decisions from the TCF perspective without repercussion, FSP’s must set processes in place to create a conducive environment.


Governance and controls

Controls, including MI, enable a company to manage customer risks and to identify poor performance. Appropriate MI needs to be available to all levels of management to proof that the customer risks they are responsible for are being managed appropriately and that they are delivering fair consumer outcomes.

Governance and control mechanisms must be in place to ensure the financial service provider’s compliance with the explicit rules-based components of the TCF regulatory framework and to deliver the reports that is required by the FSCA.

The governance structures and control mechanisms within financial service providers should be designed to create disciplines around TCF. For example, governance processes around product approval, claims reviews and complaint escalations would all need to cater for TCF considerations.


Performance management

The delivery of fair consumer outcomes can be influence by recruiting staff with appropriate values and skills. A robust performance management framework with clear and appropriate objectives linked to the fair treatment of customers, which are regularly reviewed and acted on, will support the delivery of fair customer outcomes.

TCF deliverables should form part of staff performance contracts where appropriate, and performance should be evaluated in terms of TCF competence and expectations.

This should not apply only at the level of customer-facing staff, but also at middle and senior management levels to ensure that both staff and management are appropriately held to account for TCF successes and failures.



Remuneration, incentive, and reward policies need to take notice of fair customer outcomes and entail consequences for TCF successes and failures.

A reward strategy includes several aspects, such as salary, bonus, and commission, as well as profit sharing, and staff incentive and recognition schemes.

Reward practices may therefore need to be reviewed to ensure that conflicts of interest are avoided and unreasonable risk-taking at the expense of customer protection is not encouraged.


What does ‘fair’ mean to a firm?

• All clients understand the services we offer and the price / cost / how we get paid.
• All clients receive the same initial documents.
• Advisers apply certain minimum standards to all advised sales (fact-finds / timely reports).
• Staff are trained regularly, properly and know their own limitations.
• The firm adopt certain levels of service standards.
• Clients understand risks / charges / penalties and limitations of their contracts.
• Any advertisements / promotions are fair.
• Any potential conflicts of interest are regularly monitored.
• All staff are trained on understanding complaints and the procedures to follow.
• All complainants are dealt with in a positive and fair manner.
• Wherever possible, clients are educated.
• When any mistakes are made (on both sides), regular communication continues until the
matter is fully resolved.
• We understand that some clients require additional assistance and have limitations.
• New staff are properly trained on the firm standards and operational systems in use.


Evidence of Outcome 1 being implemented:

  • The TCF message is coming through from the top and is constantly reinforced.
  • Training has been provided on TCF outcomes
  • TCF “hotspots” in the business unit have been identified and what is required here to ensure that things do not fall through the cracks.
  • People understand their work, the expectation and why they do what they do, and perform as required. This means that business units should have clear procedures to follow, and people need to be properly trained on these.
  • Processes are in place to identify when things go wrong, or breaches occur.
  • Where there is a breach, this is investigated, and the proper action taken to ensure there is no repeat problem. Performance management is applied where necessary.
  • Service standards encourage TCF and are recorded and measured.
  • Good TCF outcomes are rewarded. Include rewards for good suggestions, competitions, nominations.