Senior management must establish the right culture to convert good intentions into fair outcomes for consumers. We do not consider it reasonable for firms to compromise on fair treatment of customers in the name of financial success.
Critical areas influencing firm culture
We believe there are six areas of management behaviour that can influence a firm’s culture of customer treatment:
- Leadership: all managers should make clear in their practices and communication that the fair treatment of customers is fundamental to the firm’s operation. Controls and monitoring should be applied to other staff.
- Strategy: the firm can articulate a clear vision featuring fair treatment of customers. Strategic decisions – such as change management and outsourcing – reflect the centrality of customers to the firm’s future. Risk levels should reflect customer concerns and feedback.
- Decision-making: at all levels, decisions should reflect on the fair treatment of customers. Feedback from staff, customers and other external sources should be used, where appropriate. This management information should feed into properly balancing customers’ interests against shareholders.
- Recruitment, training and competence: Staff selection should reflect the importance of customer treatment to the firm. Management should then train and maintain staff knowledge, behaviour and values to accord with fair customer treatment. Managers should also reward good staff performance in this regard and act on poor performance.
- Reward: The firm’s reward framework (such as incentives and bonuses) should be transparent, recognise good quality and support the fair treatment of customers. In other words, firms should not concentrate on sales, volumes and profit without considering quality and controls to mitigate this risky framework.
- Controls: The firm should have controls that reflect the fair treatment of customers. These should be integral to the firm’s risk framework.