In the Financial Services Authority’s (FSA) list of 11 principles for business, somewhat obscured at number six under the overall heading of ‘Principles-based Regulation’ comes its ‘Treating Customers Fairly’ (TCF) initiative. While seemingly mid-range on the principles ‘hit parade’, when it comes to current exposure and emphasis it is definitely number one. However as a result of a Department of Trade and Industry (DTI) survey, maybe there should be a shift in the industry concerns to ‘Treating Staff Fairly’.
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The DTI’s first Fair Treatment at Work Survey found that of all UK industries, the field of financial intermediation came out worst for treating staff unfairly with one-in-10 employees reporting that they had been treated unfairly in the workplace.
It found that 11 per cent of workers in brokerages had experienced bullying, discrimination or unfair demands with four out of five of these victims being women. Additionally more than one-in-five employees had either been treated unfairly themselves or knew someone who had been the victim of unfair treatment in the broker industry.
The report provides a summary of the findings from DTI’s first Fair Treatment at Work Survey, based on face-to-face interviews with almost 4,000 employees across Great Britain. It is the first large-scale official British survey of its kind, covering employee perceptions on all forms of unfair treatment at work. It provides an important baseline against which to gauge progress on equality and discrimination issues in the workplace. A second survey is planned in 2008.
The survey found that more than two million British employees had experienced discrimination, bullying, sexual harassment or other unfair treatment at work in the previous two years. Bullying alone affected almost one million employees.
Experiences also varied by industry. 21 per cent of employees in the financial intermediation and transport, storage and communication industries reported either personally experiencing unfair treatment, or said they were aware of others being treated unfairly. The lowest rate reported was in construction.
Specific problems
Unfair treatment at work appeared to be clustered in certain workplaces and among specific groups of employees. Three-fifths of employees who themselves had experienced unfair treatment, were aware of other people at their place of work who had also been treated unfairly. The survey reports that this clustering suggests that a targeted approach to government awareness, information and enforcement of equality and discrimination laws is likely to prove more effective than broad-based approaches.
However 85 per cent of all employees neither experienced unfair treatment themselves, nor were aware of any other person at their workplace being treated unfairly. 14 per cent of employees who worked with others said they were aware of another person at their place of work being treated unfairly in the last two years. Of those employees who worked with others, disabled employees – 21
per cent, gay, lesbian or bisexual employees –18 per cent, black employees – 17 per cent and public sector employees – 17 per cent, were more likely to report unfair treatment of others at work.
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By far the most common reason given for unfair treatment was long-term illness, cited by 3.80 per cent of employees who worked with others. This was followed by age and ‘the way they dress’– both 1.90 per cent – and race or ethnic group – 1.6 per cent. The incidence of unfair treatment of others due to gender – 1.2 per cent, religion – 1.0 per cent, and sexual orientation – 1.0 per cent, were lower.
Disappointing performance
The performance of the financial intermediation sector is a disappointing one. It is clearly unacceptable that anyone should have to suffer bullying, discrimination or unfair demands in the workplace and there is no place for work environments which are run on a mixture of fear or intimidation.
Rob Griffiths, associate director at the Association of Mortgage Intermediaries (AMI) agrees: “This is disturbing feedback. AMI has been vocal on the issue of looking after employees – they are, after all, a firm’s greatest resource. There is much talk about getting the ‘work/life balance’ in sync and this means that employers must engage with their employees to ensure their needs are central to the company ethos – intermediary firms are no different. Training & Competence (T&C) is obviously concerned with the professional needs of individual advisers – it is important that training opportunities are made available and the intermediary has an environment where they can develop over their career. But just as important is the personal needs of employees – a company in tune with these needs are likely to get more out of the staff in terms of productivity and loyalty.”
T&C
T&C is another area high on the list of FSA priorities and has recently announced plans to simplify the rules regarding its T&C sourcebook.
The FSA said the changes would help remove the more prescriptive rules on advisers and place more emphasis on senior management in ensuring good working practices.
Griffiths also suggests that the FSA has been keen to look at the ways intermediaries are remunerated and has expressed concern about firms where pay is only linked to hitting sales targets.
Catch up on the industry buzz
He explains: “This type of target-driven environment where employees feel pressure to turn every conversation into a sale is clearly not in the best interest of the customer or the individual adviser. It is exactly these measures which can result in atmospheres of bullying and unfair demands. The FSA is keen to see other measures included in any remuneration package including customer satisfaction levels and low complaint numbers, for instance.”
FSA review
While the FSA says it cannot report directly on the DTI findings it confirms that it requires staff to be fit and proper to do their job if they are carrying out a regulated activity and it falls on senior management to ensure that this is implemented and maintained.
When quizzed on remuneration and incentivised sales in the industry, a spokesperson at the FSA, said: “We are currently doing some work called the Retail Distribution Review, which looks at various aspects of retail distribution and one of the five working groups is considering the impact of incentives with remuneration being a commercial matter between the firm and the adviser. However, this work is yet to be completed and it will be fed into a discussion paper which is due to be published in June 2007.”
Taking a brief look at this review, the FSA reports that some common views are emerging about the future shape of the market and the changes needed. Overall, there seems to be some preference for a move away from the focus on products towards the range of services that reflect consumer needs. The outcomes which could be achieved by this shift in focus are consistent with the five themes of the review and, for example, might include:
- Services that are clearly defined and can be explained to consumers.
- Remuneration structures that reflect both the services provided and the responsibility of those providing the services.
- Standards of professionalism that are proportionate to the service offered and enhance the reputation of the industry.
- Products that are more transparent and, where appropriate, simpler and more accessible, reflecting consumer needs.
- Regulation that provides incentives for firms to treat their customers fairly and is proportionate to the risks presented.
- Capital, liability management and other prudential requirements that result in sustainable businesses.
Thomas Reeh, CEO at blackandwhite.co.uk, points to the sales and remuneration structures aspects. “Pressure sales techniques just don’t work. Our sales staff have a balanced scorecard which factors in sales results, compliance audit trail, accuracy of paperwork, suitability of advice, any complaints, etc. It’s all factored in. The other key factor is that our mortgage advisers are paid a flat fee per completion – they don’t get one penny of the procuration fee which of course varies from lender to lender and could cause a conflict of interest.”
Enhancing reputations
While it is easy to dwell on the negative figures displayed in the DTI research, firms must continue to ask themselves what needs to be done in order to eliminate these statistics and enhance the reputation of the industry.
In 2006, GMAC-RFC was included in the coveted Sunday Times Top 100 Best Companies To Work For, and in 2007 it leapt 36 places to number 32 in the list.
Julie Gaskin, corporate relations manager at GMAC-RFC, reflects on the importance of treating staff fairly: “It is important to emphasise how important our associates are to us. There is no ‘them and us’ as senior managers pride themselves on being visible and taking times to engage with associates at all levels and associates believed managers talk openly and honestly with them and trust their judgement.
“We believe in regular sports and social activities to bring the teams and associates together to help create an overall sense of well being, which means stress levels are low. Each year they also carry out an Associate Engagement Survey which is completely anonymous and allows associates to comment on how they feel they can improve their working environment. All of these are vital to create a happy work place, everyone and their opinion counts.”
Harking back to the alarming statistic that 11 per cent of workers in brokerages had experienced bullying, discrimination or unfair demands, with four out of five victims being women, Mortgage Introducer spoke to Rooftop Mortgages – where there is not only a female CEO but three out of six directors are female – regarding its perception of the role of women in the industry.
Alison Beech, director of business development at Rooftop
Mortgages, says that there is invariably a time lag between policy advances that have been made in terms of equal opportunities and the results of these changes. In addition to these policy changes the shift in attitudes, as accelerated by the women’s movement in the 1960s and 1970s, has opened up opportunities and an acceptance of women pursuing an occupation.
“We have yet to see the full effect of these cultural and policy changes but increasing numbers of women have successfully passed through further education and onto the career path; however the pools of senior male and female employees are still not balanced but they will become more so over the next decade,” Beech says.
Initial results
“The initial results are most definitely there to be seen though. Senior positions in terms of marketing, human resources, and compliance are regularly filled by women. What needs to happen now is for the senior roles within the sales, operations, finance, and IT departments to be welcoming to talented and driven females. If it’s not happening in a specific industry, questions need to be asked. Shareholders must take a look at the make up of the companies they invest in. If there is a gender imbalance, is the company really working hard enough to ensure that it is maximising the pool of talent – and therefore shareholder value – at its disposal?”
Ginny Darrow, chief executive officer at Rooftop Mortgages comments:
“There are undoubtedly still challenges for the financial services industry in terms of addressing the gender imbalance – you only have to look around at an industry gathering to see that is still the case. The situation, however, is changing for the better. Increasingly more women are breaking through to senior management positions, which in turn act as inspiration for others to follow. Individuals must be judged on performance alone; gender type doesn’t and will never dictate success or failure.”
Constant challenges
The industry faces constant challenges and in times where the phrase ‘recruitment crisis’ is increasingly being bandied about in the mortgage intermediary market the revelations by the survey are far from ideal.
The market needs to take decisive action. Several initiatives are underway to bring new blood into the sector but how they are treated once employed is a key issue as the future of the industry.
While the financial services regulator is looking at remuneration structures in its Retail Distribution Review, broker firms need to be looking at treating their staff fairly. It will, of course, be only a small number of businesses displaying bad practices, but there are enough to highlight the financial intermediation sector as the most unfair working sector out of all UK industries. Reports like the DTI’s undo all the good work that has, and is, being done to enhance the reputation of the industry so while TCF is important, ‘Treating Staff Fairly’ should also be high on your businesses agenda.
