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Annual Review 2017/2018

CONSUMER OUTCOMES

Developing a framework

The BSB Assessment focuses on the characteristics of a firm that we would expect to be associated with any good culture in banking (with ‘good’ defined in terms of the outcomes for customers, clients and society as a whole). While the Assessment draws primarily on what employees see, assume or believe, we have also  been considering in parallel how to identify more directly the links between firms’ cultures and customer and client outcomes. As part of this, we are continuing to explore whether and how to take into account — as part of the Assessment itself, or alongside it — other types of data and information. This data may be produced and held internally by firms themselves, provided by external sources or gathered by the BSB.

We have also, during 2017 and as flagged in our last Annual Review, been exploring how the customer perspective can help inform, improve and challenge our work. A sector as diverse as banking has, of course, a very wide customer base. The majority of people in the UK are banking sector customers, and many will bank with more than one firm or type of firm, or in more than one capacity (not just as individuals, but as businesses, organisations or societies). UK banking also, of course, has a very wide client base. We have begun this work by focusing on one part of this customer base; that of consumers. Over time, and as the work and the BSB itself develops, we plan to extend this engagement also to other types of customers and clients to help ensure that what we are doing is as relevant as possible to all our member firms and those they serve.

Learning from consumer and civil society organisations

To develop this first phase of our work on customer outcomes, we have been engaging extensively with a range of consumer and civil society organisations (as well as our retail banking member firms) to help us understand the needs, wants and experiences of consumers. In doing this we have also tailored our approach to take into account the many different demands placed on such organisations, and the time and capacity they are able to spare for us.

We have, to date, presented and/or run workshops in partnership with the Essential Services Access Network, Money Advice Liaison Group Northern Ireland Discussion Forum, Consumer Council of Northern Ireland, and Money Advice Scotland.

We have also spoken directly with many organisations and are grateful for the support and advice of all. They include (but are not limited to) Advice NI, Age UK, Bristol University Personal Finance Research Centre, Carnegie UK Trust, Christians Against Poverty,  Citizens Advice, Citizens Advice Scotland,  Consumer Council NI, Fair Banking Foundation, Fairer Finance, Financial Services Consumer Panel, Friends Provident Foundation, International Longevity Centre, Macmillan Cancer Support, Money Advice Scotland, Money Advice Trust, Money and Mental Health Policy Institute, Money Saving Expert, National Consumer Federation, Queen Margaret University Consumer Dispute Resolution Centre, Scope, Scot Cash, StepChange, Toynbee Hall, Unite the Union, Unlock, Which? and Young Scot.

Developing a BSB Consumer Framework

Informed by our discussions with consumer and civil society organisations, we developed and, in late 2017, consulted on what we have called our Consumer Framework.1 This framework is designed to:

  • facilitate our understanding of consumer issues and concerns as they relate to the BSB’s work;
  • provide a basis for the creation of good practice guidelines for firms that serve consumers, along with a common language for both firms and consumer organisations; and
  • enable consumer and civil society organisations to engage more readily with relevant aspects of our work.

As with the BSB’s work more generally, the UK regulatory framework and the stated position of the regulators on the issues concerned provide an important starting point. The Consumer Framework is intended to help and encourage firms to build on regulatory minimum requirements rather than be satisfied solely with meeting them.

The Framework has been written from a consumer perspective. We have taken into account the core principles that many consumer organisations and regulatory panels already use for understanding consumers’ needs or analysing how a market is meeting those needs. The Framework is accordingly based around access, choice, clarity and transparency, safety and security, redress and being listened to, value for money and fairness. It focuses on outcomes, and includes illustrative ‘real-life’ examples suggested from our informal engagement with consumer organisations and our review of existing research.

Our consultation on the draft Consumer Framework closed on 26 January 2018. We received over 80 responses, including four workshop-facilitated responses. Informed by both these and our ongoing engagement work, we will over the coming months publish a further version of our Consumer Framework, as well as a non-attributable summary of all the responses we received.

Following this, we will talk with member firms and others about how the outcomes identified and the Framework can help in the development of standards of good practice. Such standards should both benefit consumers and be relevant and applicable to retail firms of all business models, sizes and structures. They should also, as far as possible, take into account not only the current context, but ongoing changes in technology, the sector and society more broadly.

Learning directly from consumers

As noted, our Consumer Framework consultation was aimed primarily at consumer and civil society organisations. While we also of course welcomed (and received) responses from individuals themselves, we were conscious of the need to do more to encourage direct engagement at the consumer level. We therefore designed, in parallel, a separate questionnaire tailored to individual respondents. This was distributed by a number of organisations including Money Saving Expert, Money Advice Scotland and Young Scot.

The questionnaire ran over a period of three months in late 2017 and early 2018, and received 2600 responses. We will publish the (non-attributable) results later this year, as part of our overall response to the Consumer Framework consultation.

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Senior Managers and Certification Regime

Exploring how the SMCR - and especially Certification - can be implemented in the most effective way across the sector.

The Senior Managers and Certification Regime is a major regulatory change that will affect all banks and building societies. Responding to recommendations by the Parliamentary Commission on Banking Standards, the government and regulators have together developed a comprehensive framework to ensure better accountability and responsibility for behaviour, competence and culture in banks and building societies. The new framework provides an opportunity for the industry to focus on and demonstrate a culture of professionalism. We are working with firms and regulators to facilitate this, including areas where a common approach across firms could support both the objectives of the regime and the skills and development of the people covered by it.

Professionalism

Evaluating whether a more 'professional' approach to banking would improve behaviour and competence across the industry.

The Parliamentary Commission on Banking Standards found that 'banking culture has all too often been characterised by an absence of any sense of collective responsibility to uphold the reputation of the industry', and argued that a greater focus on professionalism could be an answer to this. Working with a leading team at the University of Leeds, we are researching the issues around professionalism in banking. In particular, we are reviewing how professional qualifications are currently used across the sector, and at whether a stronger role for professional bodies, along the lines seen in some other sectors, like medicine or law, would help raise standards. To inform this work and develop a rounded picture of 'professionalism' and what it means in banking, we are surveying banks and building societies, professional bodies and a wide range of other interested groups, including consumer bodies and investors.

Assessments

Providing an honest and impartial assessment to Boards of progress against objectives on behaviour, competence and culture.

The BSB assessment exercise presents Boards with an objective and impartial view of their firm's culture, identifying where things are working well and recommending areas for improvement. It draws on information not only from Boards and senior teams, but also from employees, investors (or members), trade unions, customer groups and other relevant bodies. In doing so, it will provide constructive challenge to each firm individually, while building a collective understanding of common issues across the industry, or sectors within it. We undertook our first annual assessment exercise in 2015 with ten firms (Barclays, Citi, HSBC Bank, Lloyds Banking Group, Metro Bank, Morgan Stanley International, Nationwide, RBS, Santander UK and Standard Chartered). The BSB itself will not publish individual assessment reports - each firm owns its own report - but key themes and messages will be set out in the BSB's annual report, the first of which will be published in Spring 2016. Given that Board engagement is central to the assessment work, only firms that have their headquarters in the UK are eligible for the full assessment exercise. All firms, including branches of firms headquartered overseas, will however be included in a focused membership-wide survey, which will allow each participating firm to benchmark itself against its peer group.

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