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TCF vs Consumer Duty – What’s the gap between the two? 20 APRIL 2023

TCF vs Consumer Duty – What’s the gap between the two?
4 minute read

Time is ticking for organisations to be compliant with the Financial Conduct Authority’s (FCA) new Consumer Duty so preparation should be well underway. The deadlines are as follows:


As organisations gear up for the April and July 2023 deadlines in particular, we’re hearing that there is some confusion in the market around just how the Consumer Duty is different to what they know as Treating Customers Fairly (TCF). Read on to find out how they differ.

Chalk and cheese?

There is no real comparison between the two principles; there is a 17-year gap between the two of them and the markets and regulation have changed significantly. TCF came about under the old Financial Services Authority (FSA) in 2006, and Consumer Duty will be launched by the Financial Conduct Authority this year.

At the outset of the Consumer Duty, there was a lot of discussion about how being compliant with TCF would be a good springboard to being compliant with the Consumer Duty, but there are many key differences between the two.

What differences do organisations need to be aware of?

Organisations’ plans for compliance should now be finalised, so we’ve noted down our thoughts on the differences that should be factored into these plans:

Fair treatment vs good outcomes

TCF is about having the right elements in place to enable the fair treatment of customers, including culture, frameworks, and infrastructure. These were intended to demonstrate that the fair treatment of customers is an integral part of an organisation’s business.

The Consumer Duty is not necessarily about demonstrating that processes and frameworks are in place, it is about an organisation being able to demonstrate that they are delivering good (not fair) outcomes for customers through data.

Regulatory oversight

Under TCF, the regulator would review an organisation’s available data and decide if they had not acted to deliver fair outcomes; there was then the possibility that comprehensive account reviews could be undertaken by the FCA. We will all be familiar with these types of reviews in the collections space, with hefty fines having been handed out to various organisations (from retail banks to pay day lenders) who did not comply.

Under the Consumer Duty, it is the responsibility of the organisation to ensure it is delivering good outcomes. Given the current economic and political backdrop, it is more important than ever before for organisations to step up and ensure (as well as demonstrate) that their customers receive good outcomes. This has never been truer for organisations’ collections processes and operations either, as after all, collections is where upstream problems tend to end up.

The customer journey

Redefining customer journeys to ensure good outcomes is a major undertaking for organisations, but a necessary requirement to drive out bias and ensure products and services are fit for purpose, suitable for the customer target base and provide customers with a good outcome.

For collections, journeys must ensure that “sludge practices” are removed and that it is as easy for customers to communicate with an organisation as it was when they first received a product or service. Journeys need to be digitally inclusive regardless of customers’ technological abilities and good outcomes should be defined for every aspect of customer interaction.

Many organisations are now appointing customer journey managers/teams, completely redefining their internal control processes, and ensuring a comprehensive approach to testing by various internal teams, all with senior management oversight and sign off.

This is a level of investment and commitment that was never required under TCF. It is also fair to say that many mature organisations are already up and running with the Consumer Duty principles, well ahead of the deadlines.

Use of data

Another key difference between TCF and the Consumer Duty is data. TCF mainly focused on senior management and culture (making sure the senior management did not deliver a culture that was not in the customers’ best interests, e.g., cash collection targets in collections), as well as processes and controls.

Under the Consumer Duty, organisations must collect data from all aspects of customer interactions and journeys in order to demonstrate that a customer has received a good outcome or not. A customer’s bad outcome could have started two years ago (e.g., being provided with the wrong product at point of sale), and organisations will need to demonstrate they have the capability to identify this type of scenario, and more.

Closing thoughts

The TCF practices will be an enabler for the Consumer Duty but, ultimately, the Consumer Duty is about showing that customers are receiving good outcomes, irrespective of what frameworks and checks and balance may be in place.

Arum has 25 years’ experience helping organisations within collections prevent and resolve their problem debt challenges, including improving customer treatments and digital capabilities, as well as ensuring compliance with all relevant regulations.

If you’d like to talk to me about anything raised in this blog or how Arum can help you, feel free to contact me directly.

Read our comprehensive guide to Consumer Duty

About the author

Nick Walsh
Principal Consultant

Nick is a collections and recoveries professional with over 30 years’ experience, domestically and internationally. He has enabled many organisations, large and small, across multiple sectors, to fast track to an optimal operating model designed specifically for each organisation, taking into account their constraints and with due regard to regulatory compliance and customer experience.


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