Treating Customers Fairly: The Legal Framework and Its Application

In the early 2010s, financial regulation in South Africa took a fundamental change of direction. Inspired by an initiative being implemented in the UK, local policymakers sought to put the consumer of financial services and products at the centre of regulation by building a legal framework founded on principles of fairness.

The Financial Services Board, now called the Financial Sector Conduct Authority (FSCA), released its Treating Customers Fairly (TCF) Roadmap in March 2011, with formal implementation in 2014. It’s important to understand that TCF is not regulation in of itself; it is the underlying philosophy on which the current framework rests – all legislation and regulation that has followed has been designed with the TCF principles in mind. This includes regulation around how financial products are designed and marketed, how the financial services industry deals with the consumer, and means of recourse open to the consumer.

The six TCF outcomes

According to the FSCA, regulated financial services providers (from product providers to intermediaries) are expected to demonstrate that they deliver the following six TCF outcomes to their customers throughout the product life cycle, from product design and promotion, through advice and servicing, to complaints and claims handling:

1. Customers can be confident they are dealing with firms where TCF is central to the corporate culture.

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

3. Customers are provided with clear information and kept appropriately informed before, during and after point of sale

4. Where advice is given, it is suitable and takes account of a customer’s circumstances.

5. Products perform as firms have led customers to expect, and service is of an acceptable standard and as they have been led to expect.

6. Customers do not face unreasonable post-sale barriers imposed by firms to change products, switch providers, submit a claim or make a complaint.

FAIS Ombud case study

While the Financial Advisory and Intermediary Services (FAIS) Act and its code of conduct for financial services providers predates the introduction of TCF by about a decade, it aligns with the TCF outcomes. The Ombud for Financial Services Providers, widely known as the FAIS Ombud, takes both the code and the TCF outcomes into consideration when dealing with complaints, as shown in the following case from the ombud’s annual report for 2024/25.

Ms A submitted an instruction to her insurance company to increase her monthly funeral cover premium and cover amount. The insurer confirmed that the amounts had been changed to R135 and R9 500 respectively. Soon thereafter, the insurer changed its business operating name, informing its policyholders accordingly. When Ms A submitted a claim, she was paid only R3 937 instead of R9 500.

The insurer argued that Ms A was not paying the correct premiums, despite her membership certificate showing otherwise. It could provide no proof of communication with her supporting its argument that she was paying the incorrect premiums.

In dealing with the case, the ombud referred to TCF Outcomes 3 and 6. 

TCF Outcome 3 says that customers should be provided with clear information and kept appropriately informed before, during, and after the point of sale. “This means that businesses should ensure customers have a good understanding of the products or services being offered and are kept informed about any changes or important information related to their purchase,” the report notes.

TCF Outcome 6 states that customers do not face unreasonable post-sale barriers when they want to change a product, switch providers, submit a claim or make a complaint.

The ombud found that the insurer had failed to prove it had complied with parts of the code of conduct and the abovementioned TCF outcomes. The insurer accepted the finding and paid the outstanding claim amount of R5 563.