Chapter 7 - Conduct and culture Flashcards
What is conduct?
The way brokers carry out their business, in every interaction they have with their clients and insurers
Open, honest, transparent
What FCA principles state good conduct?
Principle 5 - market conduct
Principle 6 - interact with and respect their customers’ interests
What is CII’s Code of Ethics?
Doing what is right, not just what is required
Applies to all its members - impose penalties for failure to comply
Supplemented by a Financially Inclusive Customer Outcomes companion guide
What is ‘trust capital’?
Commodity which must be earned
What are examples of ways in which brokers can demonstrate good conduct when dealing with clients?
Provision of service excellence;
High quality of advice and experience;
Transparency of earnings;
Good quality literature and documentation;
Efficient handling of complaints; and
Avoidance of errors and omissions (E&Os)
What is trust a result of?
Good conduct
Broker meets or exceeds client expectations
How can brokers achieve service excellence?
Always completing what has been agreed by the deadline;
Returning client calls and messages promptly;
Ensuring good communication at all times, in the manner that the client wishes to
communicate;
Knowing your client;
Ensuring procedures are in place to reduce mistakes (such as a ‘second pair of eyes’
check); and
Contributing to a client culture where the client’s needs come first
Why do brokers disclose their earnings?
Transparency
Generate client trust
Why is the quality of literature and documentation important?
Docs issued without errors - claim, quality of service if produced by broker or insurer
Why is efficient complaint handling important?
Increase the level of trust or decrease it depending on the client’s expectations of what they think the outcome of complaint should be
What will reduce the risk of E&Os?
Service excellence and good procedures and practices, including suitable experience and
training
When would a broker need to display good conduct to an insurer?
Management of an insurer’s money - within timescales
What is corporate culture?
Shared values, attitudes, standards and beliefs that characterise members of an organisation and define its nature
What are examples of different cultures?
Sales culture - growth
Client first culture - service
Innovation - think outside of standards e.g., IT org
Green culture - impact of environment ‘carbon footprint’
What are strategic objectives?
Set by the senior management team at board level and tend to be long-term goals
Known and understood by everyone in the company
Purpose for every activity at all levels
What are companies more likely to have with strong corporate culture?
Clear strategic goals - staff and resources to achieve
Effective comms to communicate strategy
Adapt processes and procedures, monitor activity
Set clear targets and goals related to strategic goal
Reward success relating to strategic goal
Why is culture important?
Influences the way that a firm deals with its clients and insurers and also the way it is perceived by the public
How does the FCA expect the fair treatment of customers to be part of a firm’s culture and
day-to-day operations?
Establishment of a ‘robust and auditable procedure for handling complaints’
What is the definition of a complaint?
any oral or written expression of dissatisfaction, whether justified or not, from, or on behalf of, a person about the provision of, or failure to provide, a financial service or a redress determination, which alleges that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience
What are all eligible complaints subject to?
FCA complaints-handling rules and eligible complainants have a right of access to the Financial Ombudsman Service (FOS)
What must firms have in place and operate for non-eligible complaints?
Appropriate procedures for registering and responding to the expression of dissatisfaction
What is redress determination?
A written communication from a respondent under a consumer redress scheme which
sets out the results of the respondent’s determination under the scheme;
encloses a copy of the Financial Ombudsman Service’s standard explanatory leaflet;
and
informs the complainant that if he is dissatisfied, he may now make a complaint to the
Financial Ombudsman Service and must do so within six months
What does the FCA require all brokers to do for complaints?
Have formal procedure for dealing with complaints
Inform clients of this procedure and how to complain to the FOS - TOBA
Manage complaints as per procedure and document in firm’s compliance manual
What does a complaint give a broker the opportunity to do?
Remedy complaint to retain business
Identify problems within organisation to improve
