Corporate culture within the financial services sector has been placed under the microscope by the public and regulators alike.
Whether it is a scandal in insurance or in another area of the industry, culture has to be front of mind for anyone in financial services and brokers are no different.
Peter Kell,
ASIC deputy chair, advised brokers that a focus on culture need not be complicated as it all boils down to “putting the customer first.”
“I want to underscore that at the centre of everything… is firm culture and industry culture,” Kell told the 2017
NIBA Convention. “A culture where it is acceptable to pass on a product, however it is designed to a third party, with no considerations to who the final consumer might be and whether the product adds any value, that sort of practice is no longer acceptable because it inevitably leads to poor consumer outcomes.”
With corporate culture firmly in the sights of the regulator, Kell revealed areas that brokers can focus on to avoid the watchful eye of the ASIC. Specifically, brokers should look to improve transparency around the outcomes delivered to customers.
Reforms are currently under way on the design and distribution of financial services products, and Kell said it has been made “abundantly clear” that brokers have a responsibility to clients regardless of product.
“You can no longer wash your hands of responsibility for the products you sell or outcomes you produce – if you ever did or didn’t – just because a third party is involved in product design or claims handling,” Kell continued.
Potential conflicts of interest should also be monitored.
“History tells us again and again that conflicts of interest create problems so as leaders what sort of line of sight do you have for how to manage those conflicts of interest?” Kell asked.
While the broking sector remains well regarded by the regulator within the financial services industry, Kell stressed that when difficulties with clients do arise, it is important to consider not just a legal obligation but also the more public side of a dispute.
“Think hard about how you manage the difficult cases,” Kell said, “the relatively small number of cases where there may technically be a reason why the customer can be pushed away or… where you may be technically correct from a legal perspective but would fail badly on any public assessment, on any public interest test, on any front-page test. This is what we have seen creating, in many cases, very bad reputational damage for insurance.”
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