Treating customers fairly: 4 rules all merchants must know

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As greater regulations are set to come into the lending space, it’s essential merchants are following the FCA’s Treating Customers Fairly (TCF) principles. In our blog we outline:


– Who needs an FCA license and how that’s likely to change soon

– What the FCA Treating Customers Fairly policy is and why you should follow it

– The six outcomes of Treating Customers Fairly

– Four golden rules to help merchants follow the policy


Treating Customers Fairly (TCF) regulations have been in place for almost 20 years now. They were first introduced back in 2006, when the Financial Conduct Authority (FCA) was known as the Financial Services Authority.


Essentially, they’re rules set in place for FCA-regulated businesses to ensure their customers are treated fairly throughout any lending agreements.


Do I need an FCA license?


Any business that intends to offer regulated activity is required by law to obtain an FCA licence. These regulated activities range from accepting financial deposits to managing investments. You can find a full list can be found on the FCA website here.


While interest free finance under 12 months is currently unregulated, we’ll see greater levels of regulation in place by 2024. The FCA is set to regulate the Buy Now Pay Later and point of sale finance space soon, so it makes sense to get ahead of the curve when it comes to regulation compliance. 


Regulatory obligations aside, the cost of living crisis continues to put financial pressure on consumers – so it’s more important than ever to look out for your customers and treat them fairly.


In this article, we outline exactly what the TCF policy is, its six desired outcomes, and four rules all merchants must follow to ensure they’re always compliant.


What is the Treating Customers Fairly FCA policy?


The FCA first introduced the Treating Customers Fairly policy in July 2006 and it outlines 11 principles that all FCA-regulated businesses must follow. These can also be found in their handbook in section PRIN 2.1 The Principles


The principles outline a range of regulations businesses should abide by, including rules surrounding conflicts of interest and market conduct. 


For the purpose of this blog, number six is the principle we’re most interested in, outlining rules surrounding customers’ interests. The principle states: “A firm must pay due regard to the interests of its customers and treat them fairly.” 


Any and all FCA-regulated businesses must have this principle at the core of their business, regardless of size, structure or sector.


The below FCA video explains the TCF policy in more detail, outlining why it should be at the heart of every business model.



6 outcomes of Treating Customers Fairly


To support any regulated businesses, the FCA has outlined 6 outcomes of Treating Customers Fairly that they should aim to achieve through their practices. The six outcomes are:


Outcome 1: Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture.


Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.


Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.


Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances.


Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.


Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.


How can merchants follow the Treating Customers Fairly policy?


As a merchant offering interest free credit, it’s essential these 6 outcomes of Treating Customers Fairly are at the heart of your business structure – whether you are regulated or not.


The principles will support your customers and their finances, ensuring you’re always doing right by them.


Here, we’ve outlined four rules all merchants must follow to ensure TCF is embedded in your business:


1. Understand your customers


Creating a business model that focuses on your target audience, including any vulnerabilities or particular needs, will help you treat customers fairly. Take on board their opinions, wants and complaints, making sure you respond in an empathetic manner.


2. Train your staff


It’s essential that your employees are sufficiently equipped to respond to the needs of your customers. This could include training workshops, online courses or external sessions. Whatever you choose to do, make sure your staff have the right capabilities and skills to recognise and respond to your customers’ needs.


3. Monitor and assess business systems 


Perform regular checks on your systems and procedure to ensure they are are always responding to your customers’ needs. Make improvements and modifications where necessary,  always ensuring your customers are at the heart of every decision you make and that you are treating them fairly.


4. Pay additional care to the most vulnerable


As the UK faces an ongoing cost of living crisis, more and more people will experience a change of circumstances that could plung them into hardship. But vulnerability doesn’t only apply to those experiencing financial difficulty. Make yourself aware of the different kinds of vulnerable customers you may encounter, and ensure they are cared for appropriately.


How DivideBuy treats its customers fairly


DivideBuy puts your customers at the heart of everything we do with our commitment to ethical lending.


Our Eligibility Checker means we only offer interest free credit to those who can genuinely afford it, helping to make sure those who most need it can access affordable payment plans, based on their current financial situation.


To find out more about our point of sale finance solution and how we embed TCF into every area of our business, get in touch with us now.

Book a Demo

Please note, a minimum turnover of £2.5M and minimum trading period of 24 months is required to offer DivideBuy finance solutions.

Please note, a minimum turnover of £2.5M and minimum trading of 24 months is required to work with DivideBuy.


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