Enforcement action taken over breaches of Treating Customers Fairly principle
When is a principle a rule? Many brokers are uncertain whether the FSA principle, treating customers fairly (TCF), is a rule and are unaware that they could be disiplined if found to be in breach of it.
In a speech given last week, FSA chief executive John Tiner said: "We do not consider there is anything unfair about taking enforcement action for the breach of principles.
"In other words, where requirement of predictability is met, it is legitimate for consequences to follow even though the priniciple is expressed in general terms."
But a straw poll conducted by Insurance Times found many brokers were confused by the regulator's communication tactics. Several were unaware that FSA prinicples are set rules.
One broker said: "Why can't they be straight? Why hasn't it been stated before? For it to be buried in a speech somewhere is ridiculous."
Another added: "I honestly think the FSA is using its influence to hit out at the wrong people, they are picking on the small guys. They are going to carry on until we are all out of business."
One compliance expert said: "The FSA has been talking about prinicples for some time. These are rule-based principles. The problem is that this is a good way to approach regulation, if you do something wrong it is much harder to defend yourself.
"Principles cover absolutely anything and no one understands where the line is drawn."
An FSA spokesman explained: "Principles have always been rules. In many cases where we have brought charges it is because of a breach of principle. TCF is a rule, it has always been."
Another broker responded: "There are one thousand and one views on TCF, smaller brokers would like more prescription from the FSA.
"Where the FSA falls down is that interpretation of the rules keep changing. There is very little tested practically."
