Finance

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Chapter 4

Internal and Organizational Frameworks and Customer-

Related Policies

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Internal Organizational Structure and Procedures

 In each organization, internal policies, procedures and frameworks will (or should) exist and set out the steps to be taken in various situations or processes such as: – best practice guidelines – organization and customer charters – complaint and grievance procedures – induction programs – operating manuals

 These exist to ensure a uniform and acceptable system is followed by those engaged in an organization.

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Maintaining Currency of Information

 As laws, regulations and codes of practice change over time, it is necessary to maintain a professional approach by keeping up-to-date.

 There are relevant statutory records which must be maintained by a financial services organization including written ‘financial records’ that: – correctly record and explain its transactions and

financial position and performance, and – would enable true and fair financial statements to

be prepared and audited.

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Maintaining Currency of Information…

 ‘Financial records’ are defined in section 9 of the Corporations Act 2001 as including: – invoices, receipts orders for the payment of money, bills

of exchange, cheques, promissory notes and vouchers; – documents of prime entry; – working papers and other documents needed to

explain: • the methods by which financial statements are

made up, and • adjustments to be made in preparing financial

statements

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Maintaining Currency of Information…

 Tax and training records and copies of agreements are also to be kept on file.

 It is necessary to promptly identify whenever legislation or policies change, and for these changes to then be communicated in an acceptable and effective way where needed.

 Legislation, regulations and policies must be sourced and accessed so that their: – implications can be interpreted and analysed – effect on workplace practices identified and implemented.

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Maintaining Currency of Information…

 Internal monitoring/audit programs for staff and authority holders can help to keep organizational frameworks in line with wider policy requirements may include: – audits of disclosure documentation – audits of Financial Services Reform (FSR) documents – loan document audits – monthly journal audits – qualification checks.

 Update services are often also available to help keep on top of legislative changes.

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Customer Complaint Processes

 Most organizations have in place standard formats and guidelines for processing and dealing with information such as a customer complaint.

 Such procedures might typically involve keeping a documented record system whenever feedback or a complaint is received from a customer: – taking certain steps as authorised – escalating the matter to a higher or other level

 A client relations officer might be the first step of an organization’s in-house procedures.

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Customer Complaint Processes…

 Complaint handling procedures arise when customer needs and expectations are not met such as: – administrative errors – product or service not being delivered at all, or in the time

required – poor or unsatisfactory quality of service or advice – a breach of statutory or other requirements

 If a customer complaint can be resolved at an internal level, it circumvents the need for steps to be taken by a consumer to address the matter more formally.

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Customer Complaint Processes…

 It is always important that customer complaints are: – handled with sensitivity and courtesy; – in accordance with the requirements set out in the

in-house policies and procedures, and – within WHS frameworks

 The services and products provided to customers can be enhanced by ensuring internal systems are in place to continually monitor and improve service delivery. – Especially in areas where the customer feedback

points to a need for such improvements.

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Customer Complaint Processes…

 Customer feedback processes could be to survey the customer at various stages, or at least upon completion of the provision of goods and/or services for them.

 As part of any business’s development and expansion, it is essential to: – identify opportunities to promote and enhance the

services and products – look for opportunities to improve the service

standards – follow best practice models where available

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Customer Complaint Processes…

 A regular review of levels of customer satisfaction might have regard to various types of verifiable data or evidence, including feedback from sources such as: – questionnaires – audits and reports – quality assurance data – returned goods information – gleaned or implied information from lapsed

customers – information related to service calls – complaints

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Customer Complaint Processes…

 Customer satisfaction levels range from dissatisfaction through to increasing degrees of contentment at the manner and/or quality of goods and/or service delivery. – organization members/members of the public – corporate customers/other agencies – internal or external departments

 With each increasing level, there is an increase in the likelihood that the customer will return or recommend the provider to others, generating increased business and customer loyalty.

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Customer Complaint Processes…

 Studies have shown that a customer does not necessarily develop loyalty to an organization just because their expectations have been met.

 Generally, it takes higher levels of experience for customers to form a sense of loyalty.

 There is sometimes more loyalty to an organization or service provider which arises after a customer has complained. – Such satisfaction arises when a customer feels like

they have been heard and taken seriously, or treated with respect.

Principal and Agent  An agent is one who, while not directly employed by

them, is authorized to work under the control of and on behalf of another, who is known as the principal.

 There is an obvious distinction to be made between a broker who acts exclusively as agent for one particular lender, and a broker who is free to pick and choose options for their client, from a range of different lenders and products.

 It is appropriate to make clear to the client what the business relationship is between the broker and lender, and the extent of the broker’s authority.

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Principal and Agent…

 Where there is NOT an agency in existence, it is still prudent for the broker to clearly explain that they act independently.

 A code of practice recognizes that the primary responsibility of a broker is to the client.

 In regard to some types of credit facilities, the finance broker may also act as a limited agent of the credit provider.

 If they do in fact act for both parties they are likely to also have a responsibility and duty of care to both parties.

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Principal and Agent…

 The extent of an agent’s authority varies depending on their relationship with the principal. – In some cases agents might be authorized to bind the

principal in a contract with a third-party.

 A mortgage broker, much like a real estate agent, serves merely as an ‘agent of introduction’. – The parties (borrower/lender, buyer/seller) then

go on to enter into a contract directly with each other, once the introduction has been made.

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Sustainability and Triple Bottom Line

 Environmental sustainability has become a new catchphrase in the workplace and is now identified as an integral part of business planning and promoted as a business opportunity.

 We are encouraged to become more and more cognizant in our business systems and policies, of the effect we are having on our ecology and health with our workplace practices and choices.

 This extends to planning and implementing environmental and energy efficient policies/procedures.

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Sustainability and Triple Bottom Line…

 Sustainability initiatives are becoming more prevalent in internal standards, guidelines and approaches and awareness of a range of environmental issues such as: – carbon trading – green office programs – green purchasing – life cycle analyses – sustainability covenants and compacts – triple bottom line reporting, (encompasses goals

of sustainability for People, Planet and Profit) in social, economic and environmental arenas

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Sustainability and Triple Bottom Line…

 Work planning in organizational frameworks is now to incorporate and support triple bottom line principles.

 Information on environmental or sustainability policies, strategies and impacts on industry is obtained and analysed from a range of sources including legislation, regulations and codes of practice that apply to the industry and its organizations.

 Any integrated approach to sustainability should address environmental, economic and social concerns either holistically or each individually.

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Sustainability and Triple Bottom Line…

 Regardless of the process an organization adopts, meeting relevant laws, by-laws and regulations or best practice to support compliance in environmental performance and sustainability is required at each level: – International – Commonwealth – State or Territory – industry and its organizations

 All information is to be presented in a format appropriate for the audience.

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Prospecting Methods and Management Strategies  An essential part of the internal framework in business

activities is having a system to generate new business.

 Organizations will usually have policies and procedures in place for prospecting of potential buyers who are likely to be interested in purchasing the salesperson’s product. Some of the methods may include: – advertisements – direct mail – networking groups and events – telemarketing, etc.

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Prospecting Methods and Management Strategies…

 A broker’s communication skills come to the fore when dealing with potential new clients (sometimes called ‘prospects’).

 Appropriate questioning and listening skills should be applied to determine a prospective client’s understanding of financial processes.

 It is helpful to create a rapport with prospective clients because this encourages them to express their financial needs openly.

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Prospecting Methods and Management Strategies…

 When building rapport and exploring the prospective client’s needs, the broker should: – ask about which aspects of their finances they most need

to focus on now – determine whether any aspects give them particular

concern – assess any risk or apprehension in the potential

client determine the nature of the person’s relationship to a referee

– use silence appropriately – listen actively to the answers and their sub-text.

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Prospecting Methods and Management Strategies…

 The broker should use a range of communication and interpersonal skills to gather personal, financial and business details (in accordance with relevant legislation).

 There may be any number of reasons that a prospective client might resist taking up the broker’s services. These may include: – no perceived need – poor rapport with salesperson – price resistance – timing issues – uncertainty about product or service

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Prospecting Methods and Management Strategies…

 Within reason, the broker should explore the client’s attitude in order to identify and address the nature of their resistance in an appropriate manner.

 One or more strategies might be employed to manage this kind of situation, such as: – giving the contact details of satisfied clients and

other referrals – giving trial offers or offers of incentive – listing and describing superior benefits of

products and services – providing additional information, education, and support

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Prospecting Methods and Management Strategies…

 It is desirable for a broker to develop the ability and know-how to promote their service to more and more new clients.

 Techniques involve: – looking at things from the point of view of the

prospective client – understanding buyer motives – tactfully utilizing existing clientele as a

recommendation base – ensuring that all marketing information has a

‘call to action’ with clearly provided contact details.

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Prospecting Methods and Management Strategies…

 The way a broker presents – both themselves and their information – has a bearing on how a client will respond. – Acting respectfully towards the prospective client

and their time is a basic step.

 A broker’s confidence in the product and the subject matter being dealt with will tend to assist in making the client feel more at ease

 Using communication techniques that engender trust and rapport.

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Maintaining Product Knowledge

 A professional mortgage broker needs to be aware of the relevant products in the marketplace: – as used by their own organization, – similar products and services offered by competitors

 Keep up-to-date with emerging trends affecting the financial services industry.

 Review the products and services and identify any changes (such as changes to terms and conditions). – Information presented to clients is correct and current.

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Maintaining Product Knowledge…

 A broker can obtain information on products and services (including those of the competition) through tools and systems such as: – internet research – consumer reports – financial reviews and conferences – events promoting financial products and services – database systems – induction programs – seminars – training programs

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Promotional Strategies and Skills

 The organization's promotional for products and services should be accessed and applied in the dealings of the business so that they are used effectively. – Marketing – Promotional – Advertising – Strategic plans

 To determine effectiveness, approaches to selling the products and services in a competitive marketplace should be evaluated on an on-going basis.

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Promotional Strategies and Skills…

 The Australian Securities and Investments Commission now oversees any deceptive advertising. – Potential investors are not lured into risky financial

products that aren’t suited to their circumstances. – Ensures both the rewards and the risks of financial

products are mentioned.

 The broker uses and applies their general marketing skills by: – identifying and seeking different types of

potential customers

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Promotional Strategies and Skills…

*Please note; you must externally research products in this chapter, ie Google, internet, Financial publications

– informing the market by communicating the benefits of their products and services,

– reading about the market and consumer trends and then finding the right products to meet and match their clients’ needs.

 Each promotional or marketing situation turns on its own merits.

 Knowing how to identify the strengths and weaknesses of comparable products can also be of help to clients as a useful marketing technique.