Treating Customers Fairly
Treating Customers Fairly, usually shortened to TCF, is a long-standing FCA principle.
The basic idea is simple:
Customers should be treated fairly throughout their relationship with a financial firm.
This applies before, during and after a financial product is sold.
Therefore, fair treatment should not depend on one good conversation with an adviser.
Instead, it should be built into:
- the firm’s culture
- its products
- its communications
- its advice
- its complaints process
- its customer support
For mortgage advisers, TCF is extremely important.
After all, a mortgage can affect a customer for many years.
What Does Treating Customers Fairly Mean?
TCF does not mean giving every customer the same answer.
Instead, it means giving customers fair treatment based on their circumstances.
For example, one customer may need:
- more explanation
- more time
- a different communication method
- additional support
Another customer may need none of these.
Therefore:
Fair does not always mean identical.
It means appropriate treatment.
TCF Is About the Whole Customer Journey
A customer should be treated fairly at every stage.
For example:
Before the sale
↓
Information should be clear.
During advice
↓
The customer’s needs should be considered.
After the sale
↓
Support should remain available.
If something goes wrong
↓
Complaints should be handled properly.
Therefore, TCF is not limited to the moment the mortgage is recommended.
Why Is TCF Important?
Financial firms often know much more about their products than customers do.
For example, an adviser may understand:
- interest rates
- early repayment charges
- affordability
- lender criteria
- mortgage fees
- repayment methods
Meanwhile, a first-time buyer may understand very little.
Therefore, there is a clear difference in knowledge.
TCF helps reduce the risk of customers being disadvantaged because of that gap.
A Simple Mortgage Example
Imagine a customer wants the lowest possible interest rate.
The lowest rate has:
Large product fee
and:
High early repayment charge
Another mortgage has a slightly higher rate but lower overall costs for that customer’s situation.
If the adviser focuses only on the headline rate, the customer may receive poor advice.
Therefore, fair treatment means looking at the wider picture.
TCF Starts With the Customer
Good mortgage advice starts by understanding the customer.
For example, the adviser may need to know:
- income
- spending
- debts
- deposit
- future plans
- mortgage term
- preferences
- likely changes in circumstances
Therefore, the adviser should not start with:
Which mortgage do I want to sell?
Instead, they should start with:
What does this customer need?
That is one of the clearest ways to understand TCF.
The Six TCF Outcomes
The FCA developed six outcomes linked to Treating Customers Fairly.
These are useful because they show what fair treatment should look like in practice.
The six outcomes are:
- Consumers can be confident they are dealing with firms where fair treatment is central to the culture.
- Products and services are designed to meet the needs of identified consumer groups.
- Consumers receive clear information and are kept appropriately informed.
- Where advice is given, it is suitable.
- Products perform as firms have led consumers to expect, and service is of an acceptable standard.
- Consumers do not face unreasonable barriers when changing product, switching provider, making a claim or complaining.
Let’s look at each outcome in simple terms.
Outcome 1: Fair Treatment Is Part of the Culture
Fair treatment should be built into the firm.
Therefore, it should not depend on whether one adviser happens to be particularly helpful.
Instead, the business should support fairness through:
- policies
- training
- supervision
- management
- incentives
- customer support
As a result, fair treatment becomes part of everyday business.
A Culture Example
Imagine a mortgage firm rewards advisers only for the number of sales they complete.
That could create pressure to recommend products quickly.
However, if the firm also measures:
- advice quality
- customer outcomes
- complaint levels
- compliance
then behaviour may be better balanced.
Therefore, incentives can affect culture.
Outcome 2: Products Should Meet Customer Needs
Financial products should be designed with real customers in mind.
For example, a mortgage product may be aimed at:
- first-time buyers
- home movers
- remortgage customers
- buy-to-let landlords
Therefore, firms should understand who the product is suitable for.
They should also avoid selling products to people for whom they are clearly inappropriate.
Outcome 3: Customers Should Receive Clear Information
Customers need information they can understand.
Therefore, communication should be:
- clear
- timely
- relevant
- not misleading
For example, a customer should understand:
- monthly payments
- fees
- interest-rate changes
- early repayment charges
- risks
As a result, better information can support better decisions.
A Clear Information Example
Imagine a mortgage has a low introductory rate.
However, the rate changes significantly after two years.
If that is important, the customer should understand it.
Therefore, the adviser should not focus only on:
Low rate today
and ignore:
Higher possible cost later
Fair information gives the fuller picture.
Outcome 4: Advice Should Be Suitable
Where advice is given, it should match the customer’s needs and circumstances.
Therefore, an adviser should consider more than one fact.
For example:
Customer wants payment certainty
Customer may move soon
Customer has limited spare income
These factors may point in different directions.
Therefore, the adviser needs to balance them carefully.
Suitability Is Individual
Two customers may want to borrow the same amount.
However, they may need different mortgages.
For example:
Customer A
Wants stable payments for several years.
Customer B
May move home soon.
Therefore, the same mortgage may not suit both customers.
This is why suitability is based on the individual.
Outcome 5: Products Should Perform as Expected
Customers should receive what they were led to expect.
For example, if a mortgage is described as having a particular feature, that feature should operate as explained.
Likewise, service should meet an acceptable standard.
Therefore, firms should avoid creating unrealistic expectations.
A Service Example
Imagine a firm promises:
Easy support if you fall into payment difficulty.
However, when a customer asks for help, they cannot contact anyone for weeks.
That would not match the service the customer was led to expect.
Therefore, fair treatment continues after the sale.
Outcome 6: No Unreasonable Barriers
Customers should not face unreasonable barriers when they want to:
- switch
- change product
- make a claim
- complain
- cancel where allowed
For example, it should not be extremely easy to take out a product but almost impossible to leave it.
Therefore:
The customer journey should remain fair from start to finish.
Fair Does Not Mean Free
TCF does not mean firms cannot charge fees.
For example, a mortgage broker may charge a legitimate advice fee.
That can still be fair if:
- the fee is disclosed clearly
- the customer understands it
- the service justifies it
- the charge is applied properly
Therefore:
Fair treatment does not mean no cost.
It means fair and transparent treatment.
Fair Does Not Mean Automatic Approval
Likewise, a lender can fairly decline a mortgage.
For example, the customer may:
- fail affordability
- have unacceptable credit history
- exceed LTV limits
- want an unacceptable property type
Therefore:
Fair treatment does not mean the customer always gets the outcome they want.
Instead, the decision should be made properly.
Fair Does Not Mean Ignoring Risk
Mortgage lenders need to manage risk.
Therefore, they can set lending criteria.
For example, a lender may choose not to accept:
- certain property types
- very high LTVs
- certain income sources
- particular credit histories
That does not automatically mean the customer has been treated unfairly.
Instead, the key question is whether the criteria and process are applied properly.
Communication Is a Major Part of TCF
A customer cannot make a fair decision if important information is hidden.
Therefore, advisers should explain key features clearly.
For example:
Interest rate
↓
Monthly payment
↓
Fees
↓
Mortgage term
↓
Early repayment charges
↓
Main risks
This helps the customer understand what they are agreeing to.
Avoiding Jargon
Mortgage language can be technical.
For example:
- LTV
- SVR
- ERC
- APRC
- capital repayment
However, customers may not understand these terms.
Therefore, advisers should explain them in simple language.
For example:
ERC means an early repayment charge. It is a fee that may apply if you repay the mortgage early.
That is more useful than simply using the abbreviation.
TCF and Vulnerable Customers
Some customers may need extra support.
For example, a customer may be dealing with:
- poor health
- bereavement
- job loss
- low financial confidence
- communication difficulty
Therefore, fair treatment may require the adviser to adjust how they work.
This does not mean treating the customer as incapable.
Instead, it means removing unnecessary barriers.
We will look at vulnerable customers properly on Page 22.
TCF and Complaints
Complaints are another important part of fair treatment.
If a customer raises a complaint, the firm should:
- listen
- investigate
- respond properly
- explain the outcome
- provide escalation information where required
Therefore, complaint handling should also be fair.
We will cover complaints and compensation on Page 23.
TCF and Sales Targets
Sales targets can create problems if they push advisers towards poor behaviour.
For example, an adviser may feel pressure to complete as many mortgages as possible.
However, this must not override:
- suitability
- customer needs
- proper advice
- fair treatment
Therefore, firms need to think carefully about incentives.
A Sales Pressure Example
Imagine an adviser receives a large bonus for selling one particular mortgage product.
However, another mortgage is clearly more suitable for the customer.
If the bonus drives the recommendation, the customer may be treated unfairly.
Therefore:
Customer needs should come before sales pressure.
TCF and Commission
Mortgage advisers may receive payment from lenders.
That does not automatically make the advice unfair.
However, commission should not improperly influence the recommendation.
Therefore, firms need to manage conflicts of interest.
This connects with the FCA Principles we studied on Page 17.
TCF and Record Keeping
Good records help show whether the customer was treated fairly.
For example, a mortgage file may show:
- customer needs
- financial circumstances
- options considered
- recommendation
- reasons for the advice
- important risks explained
Therefore:
Good records help show how fair treatment was put into practice.
A Simple Advice Trail
Imagine the customer says:
I may move in two years.
The adviser considers a five-year fixed mortgage.
However, the mortgage has a large early repayment charge.
Therefore:
Customer plans recorded
↓
ERC considered
↓
Potential cost explained
↓
Different options compared
↓
Recommendation made
This creates a clear advice trail.
TCF and Product Design
Fair treatment starts before the adviser meets the customer.
For example, firms should think about:
- who a product is designed for
- how it will be sold
- what risks exist
- whether customers can understand it
Therefore, TCF is also relevant at product-design level.
As a result, fair treatment is a firm-wide responsibility.
TCF and After-Sales Service
A customer may need help long after the mortgage completes.
For example, they may ask about:
- overpayments
- moving home
- product transfers
- payment difficulty
- early repayment charges
Therefore, fair treatment should continue after completion.
The sale is not the end of the customer relationship.
TCF and Mortgage Arrears
Fair treatment becomes especially important when customers are struggling financially.
For example, a customer may fall behind because of:
- job loss
- illness
- relationship breakdown
- rising household costs
Therefore, lenders need to follow relevant rules when dealing with mortgage arrears.
We will explore this in more detail later in CeMAP.
For now, remember:
Financial difficulty does not remove the customer’s right to fair treatment.
TCF Is Not the Same as Consumer Duty
TCF and Consumer Duty are closely linked.
However, they are not exactly the same.
TCF has long focused on fair customer treatment.
Meanwhile, Consumer Duty places a stronger focus on firms delivering good outcomes for retail customers.
Therefore:
TCF → Fair treatment
while:
Consumer Duty → Good customer outcomes
The two ideas overlap.
However, Consumer Duty goes further in several areas.
We will study it fully on the next page.
TCF and the FCA Principles
Treating Customers Fairly connects strongly with Principle 6:
A firm must pay due regard to the interests of its customers and treat them fairly.
Therefore, TCF is not a separate idea floating outside the FCA framework.
Instead, it sits within the wider conduct system.
As a result, fair treatment should be part of:
- advice
- communications
- complaints
- customer support
- firm culture
A Full Mortgage Example
Imagine Mark wants a mortgage.
He says:
- he wants low monthly payments
- he may move in three years
- his budget is tight
- he has little savings left after the deposit
The adviser finds a mortgage with:
Low interest rate
However, it also has:
Large product fee
and:
Five-year early repayment charge
Therefore, the adviser should not recommend it simply because the rate is low.
Instead, they should consider:
- total cost
- likely moving plans
- available savings
- early repayment risk
As a result, fair treatment means looking at the customer’s whole situation.
What Does TCF Look Like in Practice?
A fair mortgage adviser should:
Listen to the customer
↓
Understand their needs
↓
Explain options clearly
↓
Consider costs and risks
↓
Recommend appropriately
↓
Keep good records
↓
Provide fair support later
Therefore, TCF should be visible throughout the whole process.
What TCF Does Not Mean
It is useful to remember what TCF does not require.
It does not mean:
- every customer gets the same product
- every application is accepted
- every service is free
- lenders cannot manage risk
- customers never suffer losses
Instead, it means customers should receive appropriate and fair treatment.
A Simple Memory Aid
Remember TCF as:
Right customer
↓
Right information
↓
Suitable advice
↓
Expected service
↓
Fair treatment throughout
This captures the main idea.
Key Terms to Remember
TCF
Treating Customers Fairly.
Fair Treatment
Providing appropriate and fair treatment based on the customer’s circumstances.
Suitability
Making sure advice fits the customer’s needs and circumstances.
Clear Information
Information that helps customers understand important features, costs and risks.
Customer Journey
The customer’s experience before, during and after taking out a financial product.
Unreasonable Barrier
An unnecessary difficulty that prevents a customer from changing, cancelling, claiming or complaining where they are entitled to do so.
Firm Culture
The values, behaviour and working practices within a financial business.
Quick Knowledge Check
1. What does TCF stand for?
Treating Customers Fairly.
2. Does fair treatment mean every customer receives the same treatment?
No. Fair treatment may need to reflect individual circumstances.
3. Is TCF only relevant when the mortgage is sold?
No. It applies throughout the customer journey.
4. How many TCF outcomes are there?
Six.
5. What does TCF say about advice?
Where advice is given, it should be suitable.
6. What does TCF say about customer information?
Customers should receive clear information and be kept appropriately informed.
7. Does TCF mean a lender must approve every application?
No. A fair decision can still be a decline.
8. Can sales targets override suitability?
No. Customer needs and appropriate advice must come first.
9. Why are good records important?
They help show how the customer’s needs were considered and why the recommendation was made.
10. Is TCF exactly the same as Consumer Duty?
No. They are closely linked, but Consumer Duty places a stronger focus on delivering good customer outcomes.
Quick Summary
Treating Customers Fairly means customers should receive fair treatment throughout their relationship with a financial firm.
Therefore:
Before sale
↓
Clear information.
During advice
↓
Suitable recommendations.
After sale
↓
Appropriate service.
If problems arise
↓
Fair support and complaint handling.
The six TCF outcomes focus on:
- fair culture
- appropriate products
- clear information
- suitable advice
- expected product and service performance
- no unreasonable barriers
Most importantly:
Fair does not mean identical.
Instead, treatment should fit the customer’s circumstances.
Likewise:
Fair does not mean automatic approval.
A lender can still make reasonable lending decisions.
For mortgage advisers, the key lesson is simple:
Understand the customer first.
Then:
Explain clearly, advise appropriately and treat them fairly throughout the journey.
This leads naturally to the next development in FCA consumer protection.
Next Page
Consumer Duty Explained