financial Services

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Section 3 Managing information

We all need information to facilitate managing the various roles we

undertake in financial services organisations. Whether it is people,

finance or operations, managing information is vital.

One aspect of running an effective organisation is ensuring that you

understand the documents you deal with on a day-to-day basis.

Understanding relevant documents

Understanding different types of documents may mean undertaking

research and regular training of the products your organisation provides

for its customers, and making sure you know how to handle various

forms correctly, clearly and concisely.

You will need to regularly sort through documents to decide on their

relevance to your organisation.

Key documents such as originals (e.g. a verified copy of a birth

certificate) or contracts, or application forms should be read and stored

in a secure filing system for future reference. If there needs to be any

action taken with such documents, make sure you do so in the way your

organisation’s policies and procedures require.

Analysing, checking and organising documents

As a finance or mortgage broker part of your role is to ensure your

client’s documents and other paperwork are thoroughly checked and

organised in an acceptable manner.

The information will not be useful if it is not accurate or complete.

Analysing, checking and organising your documents regularly

throughout any work progress will save time in the long run and

demonstrate professionalism to your customers.

You may already have checklists that are invaluable to your area of

operation. If this is done correctly it will assist you to ensure that each

process is consistently carried out in the correct manner.

Managing any information and/or documents must be done strictly in

accordance with the policies and procedures of your organisation, and/or

those of your licensee.

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Presenting information

As a professional in the financial services industry, you present information

to your clients, lenders and other relative stakeholders. It is important for

you to present this information in a manner that is appropriate to the user.

There are a number of questions you will need to ask yourself, if you

wish to present your information suitably.

 Who will be your audience?

 Will the presentation be written, oral or both?

 How many people will you be presenting to?

 What do they already know about the information?

 What is their level of interest?

Documentation used in the finance industry

We have previously explored the documents that are required in

accordance with the NCCP’s responsible lending obligations, as listed

below:

 Credit guide

 Written quote

 Preliminary assessment

 Credit proposal disclosure

The following documents listed are discussed further in Module 2 of the

learner guide as they relate the loan/lease application process. However,

it is important to understand the importance of managing the

information within your CRM system. Client records must be securely

stored for seven years and only made available those who have

authority to access the information such as the licensee or ASIC.

Activity 8 – Understanding documents

1. What are the benefits of reading and understanding

documentation?

2. What are the likely repercussions if documents are not

carefully checked, analysed and understood?

Check the model answers section

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Credit Guide & Privacy and consent form

Along with the ACR’s profile this guide is handed to the clients at initial interview and it sets out the services that are offered along with the Privacy Policy of that organisation and the complaints procedure.

Needs Review/fact

Find

By using a Client Needs Review/Fact Find you will have all the information

required to form an opinion as to what type of loan best suits the clients’ requirements and their affordability for the finance. At the same time you are acting with best practice to ensure that any further needs such as insurances and ancillary services.

Costing sheet for fees

and charges Estimate of total fees and charges payable to the financier in relation to

applying for the finance. This information is completed early to determine the required loan amount. It will form part of the credit proposal.

Interview notes/file notes

Your interview notes will go a long way to avoid any adverse opinions from any audit that may be undertaken by any aggregator company or ASIC official. Whilst

documents required under NCC such as a fact find/client needs review, preliminary assessment and credit proposal will highlight requirements and recommendations they may cover all conversations/ time lines between the broker and client.

Preliminary Assessment

Based upon your enquiries as to the financial situation, requirements and objectives of your client you are required to conduct a preliminary assessment

to determine whether the proposed credit contract/lease is ‘not unsuitable’ for the client. This must be done prior to suggesting the client applies for, or providing assistance applying for a particular credit contract.

Credit Quote and

Credit Proposal

Documents

These forms may be incorporate into the one document.

The Credit Quote outlines the maximum fees and charges payable to the credit

representative and licensee for credit assistance. Must be provided before credit assistance is provided. The Credit Proposal document outlines the fees, charges and

commissions relating to the particular credit contract or consumer lease and to whom/by whom they are payable.

Serviceability When submitting an application you are to include a Serviceability Assessment sheet/calculator which shows the lender you have ensured the clients can

afford the loan. You will find these assessment tools form part of the lenders’ online broker toolkit.

First Home Owners Grant application

The FHOG is federal government funding towards the purchase of a client’s first home. Whilst the Federal Government provides the funding for these concessions each State and Territory Government administers the schemes.

Information is available by visiting the Office of Revenue in the jurisdiction in which the client resides. Exemptions and limits for this funding apply. There may also be first home buyers stamp duty concessions available.

Fully completed lender

loan/lease application

A loan/lease application form of the lender needs to be fully completed. Most

are completed and submitted through to the lender online. If the loan is for business purposes, the business purpose declaration needs to be completed and signed by the borrowers.

Notes to Lender Finance brokers must provide as much information as possible when submitting

a loan/lease application, of any nature, to ensure a fair and reasonable decision can be made by the lender.

Lenders/Broker document checklist

Lenders have a checklist to ensure you have submitted the application correctly with all the supporting documentary evidence. Please ensure this is completed.

Anti-Money Laundering/ Counter

Terrorism Financing

Due to criminal activities and money laundering you have to provide the necessary identifying documents to support the application.

Some lenders carry out their own verification through their branch network.

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Other supporting documents

Other documents to support the loan or lease application should form

part of the client file may include those that form part of the loan/lease

application to the lender and/or assessment and settlement of the

facility. These documents could include, invoices, proof of income,

registrations, contracts of sale, loan contracts, statements, financial

records, trust deeds.

Maintaining statutory records

Regulators such as ASIC and APRA require financial services

organisations to maintain records of transactions and correspondence

that relate to the provision of financial services.

In many cases, records must be kept for a minimum of seven (7) years.

This requires efficient systems to store an extensive amount of

documentation. Mortgage contracts, which are held by the lender, must

be stored for the entire period of the loan.

Maintaining an up-to-date understanding of

compliance requirements

As previously mentioned, finance brokers are required to remain up to date

with compliance requirements as they change over time. They must ensure

they have systems in place to regularly review compliance information.

Sources might include:

 ASIC publishes its compliance requirements free of charge on its

website at www.asic.gov.au. In addition, as the licensing body, ASIC

contacts licensees with news of changes to compliance requirements.

The licensee must then ensure that this information is passed on to all

representatives. The regular receipt and review of ASIC literature is

essential for meeting the ongoing compliance standards.

 Financial Press: Changes in compliance requirements for financial

advisers are usually detailed in the various financial media available in

Australia. The most thorough examination of changes is usually

available through the print media. Many print media outlets are

available online, and many of these offer a free newsletter service,

Activity 9 – Disclosure documents

List the responsibilities associated with credit guides, quotes and

lease proposal documents.

Check the model answers section

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which informs subscribers of the various headlines available each day.

Subscribing to, and reading these newsletters is often a good way of

ensuring that you are notified when significant changes occur.

 Aggregator/Association/Licensee – these parties also have a direct

interest in ensuring credit advisers are keep abreast of current industry

changes to regulation. They also effectively lobby against any changes

they don’t believe are valuable for clients and members.

Statutory records under the NCCP

The NCCP places obligations to maintain certain statutory records on

licensed credit providers. Such financial records must correctly record

and explain the credit activities the licensee engages in. There are also

obligations regarding trust accounts where funds are received and held

on behalf of another person.

Licensees are required to retain financial records for a period of seven

years after the transactions covered by the record have been completed.

National Consumer Credit Protection (NCCP) Act and the

National Credit Code (NCC)

Credit providers are obliged to provide copies of customer records, e.g.

Loan Contracts, Guarantees, Mortgages, Insurance Contracts and

Notices during the life of the contract.

Credit licensees are only obliged to retain financial records for seven (7)

years after the transactions covered by the record have been completed.

A licensee must keep a copy of all quotes, preliminary assessments, and

full suitability assessments for funded loans.

A licensee must also keep a record of all material that forms the basis of

an assessment of whether a credit contract or consumer lease will be

unsuitable for a consumer in a form that will enable the licensee to give

the consumer a written copy of the assessment, if a request is made

under section 120, 132, 143 or 155 of the National Credit Act.

Information received in support of loan applications can also be required

for review by third parties such as APRS, ASIC, mortgages insurers and

internal and external auditors.

 Keep records to demonstrate that you are meeting your responsible

lending obligations

 Keep records to demonstrate compliance of your representatives

 Keep records to demonstrate compliance with your Australian Credit

Licence conditions e.g. complaints, disputes, breach registers, training

register.

Bright Law: Record Retention Aug 2014

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The definition of financial records includes the following types of records:

 Invoices, receipts, orders for the payment of money, bills of exchange,

cheques, promissory notes and vouchers

 Documents of prime entry, ('Documents of prime entry' refer to a

chronological record of business transactions arranged according to

type, for example, Cash or Sales) and

 Where the licensee provides credit services, any trust account

statements or reports that the licensee is required to keep

 Other records that need to be maintained include Professional

Registrations, Memberships, Licensing and Insurance certificates of

currency.

 OHS training, risk assessment, conflicts of interest and incident

registers

Records must be in English (or readily convertible to

English)

Records must include, among other things:

 For each credit contract the amount and day of all payments made, and

all amounts (including principal, interest, fees and charges) owed by

the debtor

 All income received by the licensee from commissions, interest, and

other sources, and all expenses, commissions, and interest paid by the

licensee

 Copies of all relevant agreements and authorities, and

 All the assets and liabilities (including contingent liabilities) of the

licensee.

Paper files

Traditional filing cabinets are generally used to keep all “hard copy”

files. These papers, as required by the Privacy Act and ASIC, are to be

kept in a lockable filing unit, or in a lockable filing room which is

preferably fireproofed.

In many cases, these documents are held within these lockable cabinets

for the entire financial year where they are then transferred to an

archive system, again, locked and secured.

Computer files

It is essential that computer files are held securely and backed-up each

day. These back up devices should also be kept secured. It is also

recommended that files that can be accessed from a computer

connected to the internet be transferred to a server that can be

partitioned off from the main system’s accessible files.

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Computer hackers now have the technology to gain access and

download files from most computers that are connected to the internet.

As this is becoming more and more an issue with privacy, businesses

are employing IT professionals to create firewalls and security sites that

can only be accessed by password holders.

General documents to be filed

Further examples of documents that must be retained under the various

legislations that we have covered in this section are listed below. The

filing and storage of these documents is the responsibility of the

licensee.

These documents include:

 Tax records

 Employment details

 Workers Compensation Insurance Policies, Public Liability Policies

 Professional Indemnity Insurance Policies, Superannuation Payments

and Policy Documents

 Registration with industry bodies

 Completed training programs

 Business Name Registration

 Business reports, and

 Minutes of Meetings with Company Directors (if registered as a

business).

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Section 4 Identifying sustainability issues for the

financial services industry

The World Commission on Environment and Development published a

report called “Our Common Future” (The Brundtland Report 2007) which

brought the concept of sustainable development onto the international

agenda. It also provided the most commonly used definition of

sustainable development describing it as:

“Development which meets the needs of the present without compromising

the ability of future generations to meet their own needs.”

The Brundtland report described seven strategic imperatives for

sustainable development:

 Reviving growth

 Changing the quality of growth

 Meeting essential needs for jobs, food, energy, water and sanitation

 Ensuring a sustainable level of population

 Conserving and enhancing the resource base

 Re-orienting technology and managing risk

 Merging environment and economics in decision-making.

It also emphasised that the state of our technology and social

organisation, particularly a lack of integrated social planning, limits the

world's ability to meet human needs now and in the future.

Sustainability is being embraced by a range of financial institutions in

Australia. We will address sustainability in this section.

The Global Financial Crisis (GFC) and

sustainability

Climate change and sustainability continue to dominate corporate and

government agendas around the world. Organisations not only face

regulatory impacts, but also expectations for action from a wide range of

stakeholders, including employees, investors, lenders, customers and

suppliers.

On the one hand, climate change and sustainability can drive new

opportunities, but on the other, these issues can also pose significant

financial and reputational threats.

For many organisations, a clear vision that identifies and addresses the

inter-related financial, economic, strategic and risk management aspects

is key. Striking a balance means embedding climate change and

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sustainability into core business activities, to achieve both short-term

objectives and to create long-term shareholder value.

In 2009 Peter Sands, Group Chief Executive for Standard Chartered

Bank, made the following statements regarding sustainability issues

facing global financial services providers as a result of the GFC:

“If anyone needs convincing of the importance of taking a sustainable

approach to business, then the extraordinary dislocation and disruption

in financial markets in 2008 provided dramatic proof. Banks with

unsustainable business models collapsed or were rescued by

governments. The sudden reversal of unsustainable levels of leverage

across many financial markets caused immense damage to the real

economy. Not surprisingly, public trust and confidence in banks and

political support for the industry declined sharply.

The market environment remains volatile and challenging. The process of

correcting the unsustainable macro imbalances, the over-leverage and

the excess liquidity, is far from over. In 2009, almost every economy in

the world faced slower growth, rising unemployment, and corporate

failures. Although markets in Asia, Africa and the Middle East did better

than those in the West, they were still being significantly affected.”

He also stated:

“Banking inherently involves taking risk. This does not necessarily create

a problem, as long as the risks of each activity are well managed and

appropriate to the economic value of such activities. Yet over the last

few years, many banks have lost sight of the risk-return trade-off, both

for themselves and for society as a whole. Some of what banks have

been doing – the products, the business models – have turned out to be

unsustainable.”

Since sustainability began making its way onto corporate agendas, the

financial services industry has been a leader in incorporating

sustainability reporting into its business practices. Now, with the

convergence of world economic and sustainability crises, the industry’s

urgent tasks include elevating sustainability into the most senior levels

of management and strategic plans.

Lessons to be learnt from the GFC

A number of lessons can learned from the GFC and incorporated into

developing strategies for sustainability.

All financial institutions, which lend money, and in particular banks,

need to ensure their strategies, business models and products are

sustainable. This does not mean that every institution has to be equally

successful, but the system of regulation needs to be able to anticipate

and catch the failures before they become catastrophic.

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Another lesson is that every market is interconnected. The notion of

‘decoupling’, that somehow the Asia-Pacific region would be immune to

the travails of the West, has been demolished. This means that

responses to global crises need to be coordinated.

Principles of sustainability

The National Centre for Sustainability (NCS), states that when developing

a model for sustainability it should be based on the following principles:

 Organisations and individuals should recognise their ability to act

sustainably in all they do

 Play an active role in promoting more sustainable practices

 Through education, promote a behavioural change which exemplifies

sustainable practices

 Do not compromise the possibilities of future generations through

unsustainable activities

 Encourage consideration of alternative and more sustainable solutions,

strategies and perspectives in addressing concepts, problems or issues

in business, government and communities.

Guiding steps for achieving sustainability

Working towards sustainability involves the following:

 Developing an environment which supports human dignity through

gender and racial equality and promotes intergenerational respect

 Developing honesty and integrity in daily life

 Encouraging the fair distribution of wealth

 Working to strengthen local communities and safeguard the health and

safety of all

 Committing to maintaining and enhancing the integrity and biodiversity

of the natural environment

 Using natural resources, such as water and land, wisely and aiming to

reduce consumption

 Treating our refuse by reusing, repairing and recycling it

 Where possible buying “green” products, locally produced with reduced

packaging

 Understanding the synergies between advances in technology and

behavioural change to achieve sustainability

 Encouraging ethical business practices

 Developing business strategies which promote good corporate

governance

 Encouraging financial success through openness and transparency.

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Triple Bottom Line (TBL/3BL) Reporting

Sustainability reporting involves companies and organisations

demonstrating their corporate social responsibility through measuring

and publicly reporting on their economic, social and environmental

performance and impacts. It can be delivered through the company's

annual report, a stand-alone sustainability report, a triple bottom line

report or an environmental or social impact report.

Activity 10 – Standard Chartered Bank and

sustainability

You can read Peter Sand’s statement in full by clicking on the

following link: www.standardchartered.com/sustainability-review-

08/ceo/en/index.html

List six key areas of the bank’s sustainability strategy.

Check the model answers section

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The triple bottom line (abbreviated as “TBL” or “3BL“, and also

known as “people, planet, profit”) captures an expanded spectrum of

values and criteria for measuring organisational (and societal) success:

economic, ecological and social. In the private sector, a commitment

to corporate social responsibility implies a commitment to some form of

TBL reporting. This is distinct from the more limited changes required to

deal only with ecological issues.

In practical terms, triple bottom line accounting means expanding the

traditional reporting framework to take into account ecological and social

performance in addition to financial performance. The concept of TBL

demands that a company’s responsibility be to stakeholders rather than

shareholders.

In this case, “stakeholders” refers to anyone who is influenced, either

directly or indirectly, by the actions of the firm. According to the

stakeholder theory, the business entity should be used as a vehicle for

co-ordinating stakeholder interests, instead of maximising shareholder

(owner) profit.

“People, planet and profit” succinctly describes the triple bottom lines

and the goal of sustainability.

People

Also known as human capital, people pertains to fair and beneficial

business practices toward labour and the community and region in which

a corporation conducts its business. A TBL company conceives a

reciprocal social structure in which the well-being of corporate, labour

and other stakeholder interests are interdependent.

A triple bottom line enterprise seeks to benefit many constituencies, not

exploit or endanger any group of them. In concrete terms, a TBL

business would not use child labour and would monitor all contracted

companies for child labour exploitation, would pay fair salaries to its

workers, would maintain a safe work environment and tolerable working

hours, and would not otherwise exploit a community or its labour force.

A TBL business also typically seeks to “give back” by contributing to the

strength and growth of its community with such things as health care

and education. Quantifying this bottom line is relatively new,

problematic and often subjective.

The Global Reporting Initiative (GRI) has developed guidelines to enable

corporations to comparably report on the social impact of a business.

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Planet

Also known as natural capital, planet refers to sustainable environmental

practices. A TBL company endeavours to benefit the natural order as

much as possible or at the least do no harm and curtail environmental

impact. A TBL endeavour reduces its ecological footprint by, among

other things, carefully managing its consumption of energy and non-

renewables, reducing manufacturing waste as well as rendering waste

less toxic before disposing of it in a safe and legal manner.

“Cradle to grave” is uppermost in the thoughts of TBL manufacturing

businesses, which typically conduct a life cycle assessment of products

to determine what the true environmental cost is from the growth and

harvesting of raw materials to manufacture to distribution to eventual

disposal by the end user. A triple bottom line company does not produce

harmful or destructive products such as weapons, toxic chemicals or

batteries containing dangerous heavy metals for example.

Currently, the cost of disposing of non-degradable or toxic products is

borne financially by governments and environmentally by the residents

near the disposal site and elsewhere. In TBL thinking, an enterprise,

which produces and markets a product, which will create a waste

problem, should not be given a free ride by society. It would be more

equitable for the business, which manufactures and sells a problematic

product to bear part of the cost of its ultimate disposal.

Ecologically destructive practices, such as overfishing or other

endangering depletions of resources are avoided by TBL companies.

Often environmental sustainability is the more profitable course for a

business in the long run. Arguments that it costs more to be

environmentally sound are often specious when the course of the

business is analysed over a period of time.

Generally, sustainability-reporting metrics are better quantified and

standardised for environmental issues than for social ones. A number of

respected reporting institutes and registries exist including the Global

Reporting Initiative, CERES, Institute 4 Sustainability and others.

Profit

Profit is the bottom line shared by all commerce, conscientious or not. In

the original concept, within a sustainability framework, the “profit”

aspect needs to be seen as the economic benefit enjoyed by the host

society. It is the lasting economic impact the organisation has on its

economic environment.

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This is often confused to be limited to the internal profit made by a

company or organisation. Therefore, a TBL approach cannot be

interpreted as traditional corporate accounting plus social and

environmental impact.

The relationship between the three “Ps” and how they are integrated

into a corporate sustainability report is depicted in the following

diagram.

Corporate social responsibility and sustainability

reporting

Corporate Social Responsibility (CSR) is the way companies manage

their businesses to produce an overall positive impact on society

through economic, environmental and social actions.

With demand for action on climate change now driving the

mainstreaming of sustainability as part of core business strategy and

operations, traditional service providers are being forced to rethink their

offerings. The big accountancy, legal and strategy houses, management

consultants, marketing agencies, PR and communications firms and

government relations specialists are all working on how climate,

sustainability and the broader corporate social responsibility (CSR)

agenda can fit with them and their clients.

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Triple bottom line core characteristics

What are the observable characteristics of triple bottom line? In its

widest sense, triple bottom line is a philosophy that guides overall

corporate performance. In a narrower sense – and the one that applies

in this study – it refers to the approaches adopted for measuring and

reporting on business performance beyond the financial dimension and

towards an integrated view of business processes and impacts in

environmental, social and economic (including financial) domains. While

strategy and management practices feature to some extent in this

study, the focus concerns why companies might consider publicly

reporting on non-financial matters and how that is being achieved.

The following points represent the essential behaviour and attitudes that

are manifest in those companies that seek to manage and report

according to the idea of the triple bottom line.

Accepting accountability

Triple bottom line is founded on the assumption that companies are

accountable not only to shareholders for generating returns but also to

stakeholders for contributing, within their context and capabilities, to

sustainable development. Endorsing this notion of accountability most

often features in the vision or core beliefs of a company.

Being transparent

Companies also have an obligation, within commercial limits, to be

transparent about their activities and impacts beyond financial performance.

Recognising the legitimacy of stakeholders’ ‘right to know’ and disclosing

multi-dimensional results and impacts is a powerful idea embodied in the

triple bottom line and is most often reflected in the core beliefs of a

company, its dialogue practices with stakeholders and in the actual content

of its public reporting. Transparency is essential for sound governance.

Integrated planning and operations

For a company to contribute to economic prosperity (including returns to

shareholders), environmental quality and social well-being requires all

these dimensions to be reflected in strategic planning, the range of

operational management systems and reward schemes. In other words,

building these economic, environmental and social considerations into

the core processes that drive a company is a precondition for measuring

and reporting according to the triple bottom line.

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Committed to stakeholder engagement

Interacting with internal and external stakeholders is a process that

informs business objectives and is developed from a base of rigorous

research and dialogue. A commitment to considering stakeholders’

perspectives and to developing strategies for engagement is embraced

as a core business strategy that adds value.

Multi-dimensional measurement and reporting

Systematic analysis and verification of economic, environmental and

social performance, together with structured communication on the

results, is most often the main mechanism for making concrete what a

company stands for, how it behaves and how it delivers on its promises.

This publication by The Allen Consulting Group gives a very informative

insight into TBL:

www.environment.gov.au/archive/settlements/industry/finance/publicati

ons/triple-bottom/pubs/parta.pdf

CSR and triple bottom line reporting

CSR is all about the obligations of an organisation or company to be

accountable to its key stakeholders across all of its operations, with the

aim of achieving “sustainable” development not only in the financial

dimension, but also in the social and environmental dimensions. The

focus is on “sustainable” economic activity and returns.

CSR and triple bottom-line reporting are variants of the same theme. At

its very core, CSR has nothing to do with "feel-good" or saving the

planet. It is a risk-management and resource optimisation tool and, as

such, provides a balanced management tool to decision making.

Often the internal process of developing a CSR report provides more

value than the report itself, because it forces a company or organisation

to assess as well as develop strategies and actions to counter its risks

across the entire spectrum of its social, environmental and economic

impacts on its stakeholders.

The potential benefits include:

 Better risk management and balanced management decision making

makes good business sense

 Improved management of intangible assets such as brand and human

capital

 Improved corporate governance

 Institutional recognition of a "well-managed" company

 Impact on staff/recruitment and corporate culture - working for a

"responsible and caring" company.

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Sustainability and the Australian financial

services sector

Many financial services organisations in Australia are taking significant

steps to develop and communicate policies on climate change, the

environment, sustainability and corporate social responsibility. A

number of organisations have adopted and applied CSR principles and

triple bottom line reporting.

Many have implemented sustainability policies aimed at generating

business and social benefits such as a greater emphasis on waste

reduction, fair trade and procurement policies and sustainability

practices that include monitoring the people, energy and environmental

policies of suppliers.

A growing number of financial organisations now issue sustainability

reports that set benchmarks and report on sustainability performance.

Each year, the Australia/New Zealand banking sector alone contributes

around A$90 million to community organisations.

Australian financial services organisations are among the world's leaders

in conforming to corporate social responsibility and greenhouse

standards promoted by organisations such as the Dow Jones

Sustainability Index, the Carbon Disclosure Project and the Corporate

Responsibility Index.

Implementing sustainability

Sustainability may be implemented in a financial services organisation

by focusing on areas such as:

 Protecting the environment by reducing its environmental impact and

helping others to do the same

 Sustainable finance by addressing the environmental, social and

governance risks and opportunities involved in doing business with its

customers

 Access to financial services by making finance more accessible to

people excluded from formal banking services

 Tackling financial crime by detecting and preventing activities such as

fraud and money laundering, corruption and terrorist financing

 Responsible selling and marketing by treating customers fairly through

the highest levels of service, transparency and responsible banking

practices

 A great place to work by attracting, developing and retaining the best

talent by making its people feel valued, included and engaged

 Community investment by using its expertise and resources to help

communities develop and economies grow.

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These priorities should be supported by appropriate business practices

and policies. These should be underpinned by an organisation’s Code of

Conduct, which aims to ensure that it does business in a lawful and

ethical way, in line with its core values.

Responsible selling and marketing

The GFC highlighted the critical role of responsible selling and marketing in

the financial services industry. Retail and corporate investors suffered

losses in certain products that had historically provided an enhanced yield

in return for investors taking increased risk. Questions are now being asked

about whether these products were suitable for the customers who bought

them. Whilst the Federal government has introduced new legislation, such

as the new Credit Act, to protect consumers’ financial institutions need to

strive to achieve best practice in customer service.

Product design should be based on customer segmentation so that

products are targeted at appropriate customer groups, according to their

experience and sophistication as well as the customer's willingness to

accept different levels of investment risk. Product suitability assessments

and explanation of product features, benefits and risks should be

embedded in the sales process for all investment products.

These identify the customer and client’s financial needs and allow sales

staff to meet those needs with appropriate financial solutions from the

financial institution’s range of products.

The National Consumer Credit Act (NCCP) obligations require disclosure

by credit providers to consumers about the application and assessment

process as well as prohibiting credit providers from making loans that

are unsuitable for borrowers.

Responsible lending requires lenders to show they have taken into

account a customer's ability to repay. The lender's assessment of

affordability must be based on their own enquiries rather than using

information provided by the borrower without checking it.

There should also be plausibility checks on income and outgoings;

information from applications and other statistics should be used to

maintain and update this information. This may involve lenders needing

to contact the borrowers' employers to verify employment status and

plausibility of income (e.g. check overtime, bonuses, working hours).

Lenders will need to give appropriate consideration to customer's

circumstances and ability to maintain repayments in retirement; they

will need to look at the part of the mortgage that will be outstanding at

retirement; and the number of years until retirement and check the

plausibility of customers' claims that they would work beyond normal

retirement date.

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Sustainable finance

By far the biggest impact a lending institution may have on society and

the environment is through support for the business activities of its

clients. Its financing decisions, who and what it will finance, enable it to

make a very strong contribution to sustainable development.

The environmental, economic and social costs of climate change are well

known. Their impacts are becoming increasingly evident, especially in

those countries that have limited capacity to mitigate against, and adapt

to, the key risks associated with climate change.

A financial institution can respond to these challenges in two ways:

 Supporting clean and renewable technologies that will reduce

greenhouse gas emissions

 Embedding a sustainability approach in its financing decisions and risk

management.

Responsible investment

You may have heard a range of terms such as ‘ethical’, ‘green’,

‘sustainable’ or ‘socially responsible’ investment. These are all different

names for what is now known as ‘responsible investment’.

Responsible investing, also known as sustainable, socially conscious, or

ethical investing, describes an investment strategy, which seeks to

maximise both financial return and social good.

This includes the effects of climate change, a global population that is

growing and ageing rapidly, funding for healthcare, the scarcity of food

and water or the social and environmental practices of companies.

These issues represent serious value drivers with serious costs attached;

whether short or long-term, devastating or incremental or the very real

cost of missing an opportunity.

Responsible investment (RI) provides investors a way to base financial

decisions on their convictions, end up with solid returns, and make a

positive contribution to our world.

Investors use two basic strategies to maximise financial return and

attempt to maximise social good. These strategies may satisfy the

ethical principal of non-harming, but with the exception of shareholder

activism, they do not necessarily create positive social impact.

Negative screening excludes certain securities from investment

consideration based on social and/or environmental criteria, for

example, many socially responsible investors screen out tobacco

company investments.

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Positive screening involves making investments in activities and companies

believed to have a positive social impact and suggest a broad revamping of

the industry’s methodology for driving change through investments.

Popular sectors include environmentally friendly technologies such as:

 Waste reduction

 Emission-reducing products

 Bio-technologies

 Alternate energy

 Natural gas

 Health care.

Ethical funds were slower to emerge in Australia than in other parts of

the developed world, but this has changed in recent years as a result of

strong consumer demand. Today some of our biggest institutions,

including BT and AMP, have added ethical funds to their portfolios. The

list is still comparatively small but it is steadily growing.

Activity 11 – CBA’s Sustainability Report 2014

You can read about how an Australian financial institution, CBA, is

addressing sustainability by accessing CBA’s sustainability report

for 2014 using the following link:

www.commbank.com.au/sustainability2014/index.html

The report identifies five sustainability foundations. What are they?

Check the model answers section

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Section 5 Participating in and facilitating work

team activities

The health of an organisation and its long-term standing is definitely

influenced by the people who work in the organisation. It is people who

run the show and make decisions, not machines or computers and it is

people who build client relationships. Over the last few decades the

corporate world has accepted and adopted teamwork as an effective

way to manage a business.

The team is the unit that evaluates problems, develops strategies, and

takes decisions on various aspects pertaining to the business. Their

effectiveness or ineffectiveness can have a direct impact on the

performance of a business. Ineffective teams can potentially damage the

reputation of a business. Quite often, poorly performing teams are

responsible for clients or customers taking their business to a rival firm.

Intense competition in several business segments means the teams

have to be faster, better, offer more value, and display a distinct edge.

When an organisation has highly motivated, effective teams managing

various aspects of its business, the benefits to the organisation are

enormous both in the tangible and intangible space.

Sustaining effectiveness in teams

Sustaining team effectiveness can specifically help in the following areas:

 It helps an organisation build its credibility and reliability among its

clients

 It helps build long-term client relationships and therefore retain client

and sales revenues over an extended period of time

 It helps an organisation maintain continuity of work teams, especially

for large clients or projects. This means less need to train new

members and then incorporate them into an already established team

 It helps an organisation maintain quality in work output and

consistently meet client expectation or even surpass expectations

 It helps an organisation attempt new business development and new

initiatives with total confidence in the ability of its teams to deliver

great work and great results

 It positively impacts business growth and this has a direct bearing on

the bottom-line of the organisation.

An organisation has to strive to get the best out of its teams and to do this

they have to make the right investments in training and development. This

helps their business run a lot more efficiently, and more importantly it

builds favourable credentials for the business in corporate circles. Every

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organisation has the capability to make their teams effective for the long

haul; they just need the right inclination to take that first step forward.

Facilitating effectiveness in teams

You often hear of examples of excellent teamwork on a particular

project and how well a team performed on a certain task, but as we all

know, one-off performances don’t count for much in business. As they

say, you are only as good as your last performance.

If the team does a bad job on the next project and falls off its pedestal,

then the team will be put under a magnifying glass to gauge what’s

wrong and who is responsible. It is therefore important to aim for

measures that can help a team sustain its performance.

A simple framework that any organisation can easily apply to stimulate

effective teamwork is TIER and comes into the picture after you put

together a team-mix that you believe has the right composition of

expertise, experience, and personality traits to suit the project or

business task set out.

TIER stands for:

 T: Develop the Team. Design team building programs and

experiential workshops that provide guidance on issues such as team

behaviour, cohesion and teamwork.

 I: Develop the Individual. Facilitate ongoing job training, upgrade

skills regularly, and offer scope for personal growth.

 E: Enable the Team Process. Steer a team in the right direction by

clarifying roles, specifying business objectives, encouraging discussion

and good productive conflict to optimise the team output.

 R: Recognise and Reward. Recognise and reward both the individual

effort and team effort. Good teamwork deserves a pat on the back and

so does outstanding individual contribution.

Once a team has been formed, you basically keep adding layer upon

layer of organisation input to facilitate a consistently high performance:

 Layer 1- You invest in developing the team on a continuous basis

 Layer 2 - You pay attention to individual progress

 Layer 3 - You steer the team in the right direction by setting the

framework for the team process

 Layer 4 - You monitor progress and develop methods to recognise and

reward both the team and the individual in order to motivate, inspire

and enthuse them to greater performance heights.

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Developing the team

There are various stages in team development. It all starts with

breaking the ice and getting the communication going. Then various

team effectiveness issues have to be addressed through ongoing team

building activities. There are issues such as building trust, goal setting,

decision making, accepting and managing change, creativity, out-of-the-

box thinking, cohesion, and so on.

Develop the individual

The investment that an organisation makes in an individual in the area

of training and development could range from teaching proprietary

techniques and upgrading job related expertise, to skills development or

soft skills training.

The aim should be to effectively develop the individual so that the team

performance is sustained in the long run.

Enable the team process

Poor role clarity and understanding of organisation objectives are two

key factors often cited as reasons why a team becomes ineffective. The

starting point for enabling good teamwork on a consistent basis is to

ensure that there is absolutely no ambiguity whatsoever. Whether that

is in the team’s understanding of their roles and responsibilities, or their

understanding of the overall organisational goals that the teamwork has

to support.

The other concern area that is usually assumed to stand in the way of

effective teamwork is conflict and improper conflict resolution. There is

good and bad conflict. Divergent viewpoints and disagreements during

the course of discussing a strategic issue can actually be classed as

productive conflict.

This can be healthy for the team since disagreements often provide a

means to explore various ‘problem–solution’ alternatives. When there

are differing perspectives within a team it helps the team examine the

issue thoroughly before arriving at recommendations. An important

aspect of enabling good teamwork is to encourage frank and open

discussions so that the output from the team is truly based on the

collective thinking and experience of all the team members.

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Recognise and reward

It is important for the top management of an organisation to recognise

and reward individual contribution, in order to encourage each individual

to do his or her best in contributing to the team effort. Rewards are

motivators and provide a psychological stimulus that can drive people to

strive harder and aim for excellence. When a team does well at a task, a

word of appreciation can work wonders for team spirit and enthusiasm.

Team recognition boosts team morale and heightens motivation levels

on future projects. It creates a sense of camaraderie among the team

members and the collective thrill that the team feels reflects positively

in their work. Therefore, both types of recognition are important and

give you the same result, i.e. they enhance motivation levels and

provide a stimulus for a better team performance. There are many ways

that management can show appreciation for individual and team efforts

including:

 Express thanks with a public thank you - sometimes a simple

“thank you” can do wonders, especially in a public forum – like an all-

company meeting or an email blast.

 A hand-written card - in an age of emails and texts, a simple

handwritten note really stands out.

 Small gifts - thoughtful, yet inexpensive gifts like gift cards to a local

coffee shop, movie tickets, chocolates or flowers.

 A wacky and fun award – at one company they have a monthly

award whereby employees get to nominate peers who deserve to be

recognised for their contribution. The winner is announced at an all-

staff meeting and the employee gets to have a large green shoe

on their desk for the entire month.

 Covering commuting costs - paying for parking or public

transportation, offer a reward of one month of free parking, a bus pass

or a fuel card.

 Feature top employees on company blog or newsletter -

featuring top employees in a company blog or newsletter provides

recognition and broadcasts what the company value in top employees.

 Schedule an all-company activity - an impromptu activity that

gives employees a few hours off from work i.e.; physical team

activities, wineries day, day at the races

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Sustaining effective teams

Though TIER is a process that requires layer upon layer of organisation

input, it is actually a continual process, which is why it works so well in

sustaining effectiveness in teams. It is this continued effort that fosters

consistently high performance in teams.

Communicating with customers

For an organisation to grow its business, it is necessary for their

customers know what it does. What does the business really do? What

are the products or services on offer? How does the business interact

with new and existing clients?

The initial information provided is critical to building a relationship with the

client and must be clear, concise and honest. Information can be in a

variety of forms including paper, audio, video or website. However, it must

clearly explain what is on offer. Unclear information may result in lost sales.

Therefore it is important that any promotional material must:

 use plain language and simple diagrams.

 not use technical language, abbreviations or jargon.

 contain information that is accurate and concise, clearly displayed and

able to be mailed.

 always contain the most up-to-date information

 meet all legislative requirements.

Financial Services institutions are under pressure to attract new clients

and retain current ones and to do more with less—keep service costs

down even while increasing acquisitions and pushing for greater share of

existing clients’ business.

Activity 12 – Maslow’s hierarchy of needs

One of the most well-known theories associated with team

building is Maslow’s Hierarchy of Needs, which was first published

in 1943. Research Maslow’s Hierarchy of Needs and how it may

apply to motivating a sales team.

1. What are the five levels of ‘needs’ identified?

2. What significance does this have for managers and their sales

teams?

Check the model answers section

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In order to succeed in both, customer service must be made

personalised and more relevant to client needs. At the same time,

service processes must be more efficient for the business.

Best practice

Of course, as much as Financial Services institutions try to meet the

requirements of their clients, there will always be room for improvement.

Maintaining service standards and satisfying every client need is not

always possible. Many Financial Services institutions have attempted to

incorporate best practice systems into their organisations. Best practice is

the way an organisation runs, using methods or techniques that

consistently show results superior to those achieved by other means.

These methods or techniques are regarded as a benchmark within the

industry that other organisations try to emulate.

However, despite all such efforts clients will expect more and getting client

feedback about products and services on offer is vital. This is usually done

via customer feedback forms, online surveys, or talking directly to clients.

The feedback received can be positive or negative and it is important for

management to take on board, in order to ensure that there is ongoing

improvement of customer service standards.

Most clients will not always have the time or the know-how to respond

to feedback requests. So when things go wrong, they will usually

complain-either verbally or in writing.

Complaints

Complaints are an important way for the management of a business to

be accountable to their clients. They provide a valuable prompt to

review performance and the conduct of people that work within it or as

their agents and representatives.

An effective complaint handling system provides the following key

benefits to business:

 It resolves issues raised by a dis-satisfied person in a timely and cost-

effective way.

 It provides information, which can lead to improvements in service

delivery.

 Where complaints are handled properly, a good system can improve

the reputation of a business and strengthen public confidence in its

processes.

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Typical steps in handling and resolving a complaint are:

 Assess the complaint

 Ensure that those handling the complaint have the proper powers and

authority

 Select and plan the appropriate investigative approach

 Obtain evidence

 Consider resolution as quickly as possible

 Make recommendations and document them

 Inform the client

The steps mentioned above are just some of the measures that an

organisation might undertake. It is by no means prescriptive and will

vary from organisation to organisation depending on their internal

policies, procedures and workflow processes.

Due to the onerous legislative and compliance requirements in the financial

services industry, dealing with client concerns and complaints is extremely

crucial. A situation which, if allowed to escalate, could not only lead to bad

publicity (thereby harming the image of the organisation) but in extreme

situations, may lead to intervention by the regulators. This could then lead

to more serious consequences as they may wish to investigate matter

further. It is therefore imperative that a quick resolution is always sought,

when dealing with complaints.

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Section 6 Planning

Taking into consideration time, resources and

other constraints

In order to work effectively in your organisation, you will need to

understand your goals and how you will go about achieving them. Knowing

how to plan is an important skill that will help you meet your goals.

In this section we will consider:

 Prioritising

 Scheduling, planning with others

 Resource planning

 Planning in the organisation

 Planning for change.

Goal setting

Knowing what tasks to be achieved will start by first looking at what goals

you have set for yourself.

You may have heard the saying “Dream, Believe, Achieve”. However, it

is only by setting goals and establishing action plans that you can start

to make progress.

We set goals for ourselves every day, some simple, others complex,

some long term, others short term. For goals to be achievable, they

must be clear and concise. Goals should meet the SMART criteria:

 Specific

 Measurable

 Achievable

 Relevant

 Time framed

SMART Goals will provide focus and direction and are more likely to be

achieved. By the use of action plans, you can monitor and control

activities to achieve goals.

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Developing a plan

The next thing is to look how you will achieve these goals through

planning. By developing an action plan you focus on what you want to

achieve, when it will be completed, how it will be done, what you will do

first and how it will be measured.

The following example provides a format for helping you to organise

your action plan.

Goal Action Who Date

Write ‘X’ number of insurance quotes per month

1 July, 20XX

Review all brochures and product information sheets (such as the PDS) to develop better understanding of the features and benefits

Me This week

Listen carefully to all customers to identify opportunities to suggest insurance products

Me Ongoing

Attend training program on insurance Me Next week

Keep track of all insurance quotes Me Ongoing

Try to increase the number of quotes each week by at least one

Me Check beginning of each week

Reach target within 30 days Me Week 4

Attend branch meeting to review progress Me End of Week 4

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Turning your goals into plans

As a starting point for setting personal work goals, consult your own

position description.

Choose one of your personal goals and one organisational goal. Use the

table below to help you set out an action plan for each.

You will need to:

 Break your goal into achievable sub-goals that are both realistic and

motivating

 For each sub-goal set what needs to be done, who will do it and, when

it needs to be completed

 Build an overall timetable, so that you can monitor the achievement of

each sub-goal and be on track to achieve the long-term goal

 Keep a written record of your progress as a reminder and a stimulus to

keep moving forward.

For example, an organisation’s goal may be to make a profit of $X by

year-end or to hire two new employees by month Y. Your personal goal

may be to write X number of loans per month.

Use the format below to write down your ideas.

Personal Goal Action Who Date

Organisational Goal Action Who Date

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Planning resources

Resources that you will use in your business can be divided into

three main areas. They are:

 Human Resources – these include any labour that is used in the

organisation, from management to employees and sub-contractors

 Physical Resources – these include raw materials, information

technology and equipment

 Capital Resources – these include the funds to support workplace

activities, plant and major items of equipment.

When planning any activity you need to identify the resources you will

use. You could use the following questions as a guideline in order to

plan your resources effectively:

 What is to be done? (your objective/s)

 When is it to be done? (your timeline)

 Where will it be done?

 How will it be done? (tasks involved, physical materials needed,

available funds)

 Are there any special requirements? (taking into account safety

requirements, environmental factors, quality, and time constraints)

 Who will do what? (allocating your human resources)

Time management

One other specific area in resource management is time management.

Time is a unique resource and it needs to be used both efficiently and

effectively.

The following observations are of particular relevance to professionals in

the financial services industry:

 Each of us has the same amount of time as every other person. None of

us has any more or less than anyone else.

 Time cannot be stored for future use.

 Time is totally inflexible - it cannot be expanded or contracted to suit

your personal wishes.

 It cannot be stopped or reversed. Destroying your alarm clock at 6:00

am will not stop the flow of time or put off the time when we should

start work.

 Time cannot be replaced - an hour or a day wasted is gone forever.

Managing this valuable resource will be your biggest hurdle, and the

most rewarding. Better use of your time will allow you cost savings,

greater job satisfaction, reduced stress and improved productivity.

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Effective management of time and resources

A business must utilise its time and resources effectively. Resources will

include company assets such as equipment, money, and its people.

Company resources will also include factors required to put these assets

to use such as water, electricity, gas, stationery etc.

Resources that are inefficiently utilised could lead to a sloppy work

culture, wastage of company assets and loss of customers. This will

eventually lead to financial loss and if the situation is allowed to

continue it will threaten the very survival of the business.

There are several ways to ensure that time and resources are well

managed. This means that people must:

 Allocated goals. The goals must be SMART (specific, measurable,

achievable, relevant, time framed).

 Always plan and prioritise tasks.

 Be disciplined with the management of time. Diaries and calendars are

valuable tools to remind them of key dates and milestones.

 Always anticipate and provide for unexpected events, challenges and

problems.

 Use technology to automate routine, mundane tasks that would

otherwise take a lot of time.

 Delegate tasks if they are in positions of responsibility and authority.

This frees up their time to attend to other more strategic issues.

 Use company assets responsibly. This could include equipment, money

as well as other employees. Waste must be avoided and a work culture

must be created whereby valuable resources such as water, electricity,

gas, lights, stationery etc. are utilised only as when required.

 Engage in sustainable work practices.

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Planning in business

Strategic planning involves developing a plan or model of a business

future, that is, where it would like to be. It also establishes overall

objectives and seeks to provide direction for the business.

How we intend to achieve goals is detailed in our operational plans, the

step-by-step process required to get there.

We have already discussed how you as an individual financial service

professional are continually setting, analysing and evaluating goals and

determining the most efficient and effective way to achieve these goals.

Planning is an essential element for the successful achievement of goals.

It is an integrated process containing strategic planning elements,

operational planning elements and results planning elements.

For success to occur, these elements must be vertically and horizontally

integrated throughout the organisation.

Take a sporting team for instance. It may have several brilliant

individuals. However, the team’s greatest success will be achieved

through the development of a plan and a coordinated effort by all team

members, coaches, trainers and management alike.

Strategic planning and operational planning

Strategic planning is the longer term and higher level of planning,

whereas operational planning is shorter term and occurs at lower levels

of a business.

Strategic planning is long term, looks at the whole business, is less

specific and is the responsibility of the owner or senior managers.

Operational planning is short term, very specific, applies to small units

or sections and is developed by the people in those units.

It is very important to understand that operational plans contribute

to the achievement of strategic plans. That is, when businesses

develop strategic plans they do so to create long-term goals and

objectives.

The operational plan is created from the strategic plan as a type of

action plan. The table below shows how they are related and

interconnected.

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STRATEGIC OPERATIONAL

 developed by owner/senior management

 developed by unit managers

 applies to the entire business  applies to each individual section of the business

 responsibility of the business

owner/senior management

 conducted by formal work groups

 focuses on the desired future of the organisation

 focuses on achieving the short term goals of the organisation

 long term 3-5 years  short term under 1 year

 covers a broader area and is less specific

 scope confined to the unit and is very specific

 includes formulation of objectives  offers ways of achieving objectives

As discussed earlier, a business may work on a number of levels and

within each level there are separate units. In considering your

performance, targets and business plan we must ask, “How do our plans

fit in with those of the rest of the business?”

Are we contributing to the business overall performance and are we

helping to achieve its mission and strategic objectives. Let us now move

on to look at change, and how we need to handle change as effectively

and efficiently as we can.

Adapting to change

We are bombarded by changes every day. There are many areas of

change - social, environmental, physical, political, economic and global.

As a professional in the financial services industry, you will be dealing

with changes in your own business, that come about because of changes

in legislation, economics, technology or other matters beyond your

control.

Workplace changes that may occur in your business can be broken down

into two areas:

 Internal

 External.

Internal changes are usually the result of your management decisions

on issues such as future strategies, the implementation of new

technology and the introduction of new products.

Changes in the external environment can stem from currency

movements, new competition, customer attitudes and legislation.

You rarely have the ability to change the external environment, but you

will need to deal with the consequences of those changes.

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Barriers to change

In order to run an effective and successful business, you need to adapt

to the changes, specifically changes in work organisation and

technology.

Often people put up barriers to change because:

 They are happy with the present situation

 They fear the unknown

 The risks involved in the change are unacceptable to them

 The changes may disadvantage them

 They do not trust management and their decision-making ability.

Role of teams in the workplace

A typical place of work will consist of a number of individuals. It is

important that the individuals work together as a team, so that common

aims and objectives are achieved.

Team and teamwork must be encouraged in a workplace as it

strengthens the bond among the employees. It allows for the sharing of

workload that would otherwise be too much for a single individual.

Benefits of team work

Research has consistently shown that people feel motivated and valued

when working as part of a team and this leads to better performance

from individuals. Teamwork in the workplace allows people to become

more familiar with each other and learn how to work together.

Activity 13 – Strategic and operational planning

1. Explain Strategic Planning.

2. Explain Operational Planning.

3. What is the difference between Strategic Planning and

Operational Planning?

4. How are the two linked?

Check the model answers section

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There are several ways in which teamwork is important and vital to the

success of a business:

A) Helps in delegation of tasks

A team that works well together understands the strengths and

weaknesses of each team member. One of the benefits of strong

teamwork in the workplace is that team leaders and members become

proficient at dividing up tasks so they are done by the most appropriate

people. Without strong teamwork, it can be difficult for managers to

determine which staff members can best accomplish job tasks.

B) Promotes efficiency

Work groups and teams develop systems that allow them to complete

tasks efficiently. A well-trained and efficient team is able to work at a

good pace. Tasks therefore, get completed quickly and accurately. This

allows the business to accept more work and generate more revenue

without having to employ more people.

C) Generation of ideas

Teams in the workplace often meet to discuss how to solve issues. When

a team works well together, it allows members to feel more comfortable

in offering suggestions. Team members become accustomed to

participating in brainstorming activities and a variety of suggestions may

be raised as a result.

D) Support to members

There are challenges each day in any workplace, and a strong team

environment can act as a support mechanism for staff members.

Members can help each other improve their performance and work

together toward improving their professional development. Team

members also come to rely on each other and trust each other. These

bonds can be important when the team faces a particularly difficult

challenge, or if the group is forced to deal with the loss of a team

member, to maintain productivity.

E) Building effective team work

The key to effective participation in teamwork is communication. Activities

that will promote team work and participation from members include:

 Team and individual goal setting

 Getting involvement from members in decision making

 Building trusting relationships

 Encouraging people to accept and manage change

 Encouraging creativity, “out of the box” thinking

 Recognising and rewarding participation.

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Importance of role models and effective leadership

The work environment can be a chaotic one if there is no leader to steer

it in the desired direction.

Depending on the size of the firm, there may be several leaders each in

charge of their own designated functional areas. People in leadership

roles must exhibit the required traits necessary to operate effectively

and to move the organisation in line with its desired objectives. Some of

the traits they must possess include:

 Organisational skills

 Interpersonal skills

 Time management skills

 Communication skills

In addition, leaders are be expected to positively influence work

decisions, as well as the people that they lead. A good team leader

should be a good role model, in order for others to follow their lead.

A good role model is someone who:

 People will look up to.

 Will not shirk from a challenge or responsibility.

 Is always willing and happy to help others.

 Is able to “walk the walk and talk the talk”.

 Whose work is exemplary!

 Will attempt to solve issues rather than point the blame at others.

The above are just some of the characteristics an individual should

possess in order to be a successful role model.

Where do individuals fit in?

In the work-planning phase, it is important that individuals are made

aware of tasks that require individual effort as distinct from those tasks

that are to be achieved as a group.

Group tasks require a good team leader who is nominated by the group

or allocated by a manager.

Managers should ensure that people are allowed to exercise some

degree of autonomy in their work, in order to develop and nurture the

skills and capabilities of these people.

At the same time, it is also important that people do not always serve

their own self-interests (through too much autonomy). Exposure to the

dynamics of a group is just as important in the development of the

individual.

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Technology and collaboration

Technology makes it easier for people to communicate and collaborate.

There are several tools that people in the work place could use in a

positive way, including:

 E-mail

 Texting

 Skype

 GoToMeeting

 Zoom

Social media platforms can help people in the workplace effectively

communicate and collaborate with one another:

 Closed Facebook/Messenger

 WhatsApp

There is also a move towards using time management and project

management tools to monitor the activities and output within a

business. This allows the business to measure and track tasks and

projects as well as set budgets and better understand cashflow.

There are many systems available that will integrate, to allow the

business to use a range of tools covering different functions. For

example; Trello is a project management system that will integrate with

Clockify, a time management system.

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Section 7 Developing and maintaining personal

competency

Maintaining current skills and knowledge is critical in keeping abreast of

industry changes current polices and products and ensuring professional

practice.

Completing ongoing professional development (CPD) is a requirement of

ASIC. ASIC RG206 outlines the minimum standards for professional

development for responsible managers and representatives who provide

home loan credit assistance. However, they do not set specific training

requirements for all other representatives, such as employees. For these

individuals the credit licensee should determine what is appropriate and

relevant.

The table below outlines extracted from RG206 outlines the standards

for both initial and ongoing training which is measured in hours:

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In addition to ASIC requirements, industry associations and licensees

(namely aggregators or business owners) have also set minimum CPD

hour requirements. The associations ensure CPD information is readily

available to members via their websites. Each association may have

differing requirements. In addition to the hours prescribed to meet

membership renewal, the associations may also outline which activities

may be acceptable for professional development with a ceiling placed on

some of these activities. Evidence of these activities is required to be

provided with annual membership renewal.

CPD hours and activities must be stored for a minimum of 7 years and

should include not only a table of activities (similar to that pictured

below – extracted from the AAMC Training CPD tracker system) but any

registers, certificates, receipts or evidence pertaining to these activities

should also be stored in case of audit or if/when required by the licensee

(these forms of evidence are generally not required at the time of

industry association membership renewal).

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Whilst meeting the industry standards for compliance is important

across a range of activities, it is also important to ensure that

development of skills pertain to areas requiring improvement. Seeking

feedback from customers and peers on an ongoing basis is important to

understand professional and personal improvement requirements. Once

these requirements have been determined, it is then important to set

goals to achieve the development of these skills.

Professional goals

It is important pinpoint areas in which you personally need

development. To be able to do this effectively, it will be necessary to:

 Determine your level of existing knowledge

 Determine what knowledge you would like to gain

 Determine how you may implement the knowledge

Some tips for you to consider are:

 Establish a realistic target

 Determine what needs to be done

 Sequence activities in the order they are to be carried out

 Implement your plan

 Monitor your progress against your plan.

Setting goals

We will now consider how you may investigate options to develop the

missing skills.

My goal is to: (what you want to achieve/improve)

By:

(date goal to be achieved)

Research and articulate what skills/learning steps are required

to achieve your goal:

Reviewing your goals

You may want to improve your communication skills by completing a

public speaking course, or improve your knowledge of industry

applicable legislation, or bring your sales skills up to a special level by

attending a specific course.

Some examples of professional development goals may include:

 Increase the number of settlements by 10% within three months.

 Improve understanding of social media marketing

 Acquire a new referral source.

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Investigating personal development options

There are a variety of sources for professional growth – courses,

conferences, networking, discussion groups, professional associations,

workshops and reading of industry related media...

Some tips for top personal performance:

 Set milestones. Setting milestones can help you achieve both personal

and professional goals. ...

 Organize, plan and prioritize. ...

 Stay focused (and avoid distractions) ...

 Manage interruptions. ...

 Do one thing at a time (don't multitask!)

 Don't leave things unfinished. ...

 Read something new every day. ...

 Communicate effectively.

As previously mentioned, many of these activities are prescribed by your

licensee, business and/or association. So it is important to consider this

structure when deciding on activities for CPD.

Many brokers complete more than the mandatory set hour requirements.

This is due to either a need for improvement or a desire to learn.

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A successful professional and business experiences growth through

knowledge which allows them to better understand the marketplace,

provide better service and ultimately grow the business. It is therefore,

important to choose your professional development activities wisely to

ensure you are not wasting valuable time and money. An investment in

knowledge pays the best interest. When it comes to investing, nothing will pay

off more than educating yourself. Do the necessary research, study and analysis

before making any investment decisions. Benjamin Franklin

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Section 8 Industry Codes of Practice

Financial services Industry codes of practice (or conduct) are developed by

industry associations. Codes of conduct may also be set by individual

businesses. . The words industry code of conduct, code of practice or code

of ethics, may be used intermittently and in essence are one and the same.

Each code sets out the expected standards that members or employees are

required to adhere to, to maintain best practice.

Industry codes may vary in content, covering general statements of

principle about how industry operates, to listing specific industry

practices that are guaranteed by the code. They may provide a method

of dispute resolution or support any sanctions for non-compliance with

the code.

Voluntary codes of conduct typically make provision for minimum

performance standards whilst leaving it to the member’s discretion to

determine how standard will be achieved. It is therefore possible for a

number of banks to comply with their code of conduct, but to do so in

different ways. Industry specific codes allow variations and competition

within an industry, in a way that prescriptive legislation could not. That is

why codes of conduct are often called codes of practice.

The legal effect of a voluntary code depends on whether it is expressed

merely as a set of principles or whether it is intended to be contractually

binding.

For example, the Code of Banking Practice (CBP) is contractually binding

between a bank and its customers once it is adopted by the bank. If a

bank announces it has adopted the CBP but does not follow it, it could

be liable for misleading conduct under the ASIC Act and be guilty of

unfair conduct under NCCP.

Industry and professional codes of conduct

From an organisational perspective a code of conduct:

 Provides an ethical framework for organisational decisions and outlines

minimum standards of behaviour

 Provides guidance to staff on how to handle situations that arise

frequently

 Defines acceptable and unacceptable behaviour

 Encourages a positive organisational culture that will result in a healthy

work environment for everyone.

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Professionals who are members of their respective industry body will

usually have access to that body’s code of conduct (practice). There are

a number of other industry related codes of conduct (practice) that

financial services professionals should be aware of, and if appropriate,

adhere to.

Differentiating between professional and business codes of

conduct

There are structural differences between professions and businesses that

distinguish a professional from a business code of conduct or practice. A

professional code operates throughout a whole profession and sets the

standard throughout the profession. Furthermore, it operates in an area of

expertise that is known better by the profession itself, than by those

outside the profession. This point is significant in that it furnishes a

justification for that enterprise to police itself (at least partially).

A business code, however, may operate at the level of individual

businesses or organisations and may vastly differ. Additionally,

businesses with vast and different codes of conduct might even be in

competition with each other.

Professional and business codes set morals covering the activities of

professions and businesses. However, codes are not the whole moral

story and the success of the industry or business depends largely in

those within it, doing what’s right. . Both professional and business

codes of conduct or ethics play a significant role in modelling and

encouraging compliance within legislative requirements.

The major codes which impact on the financial services industry are

identified in the following table.

Name of Code Industry sector

Code of Banking Practice Banking

Mutual Banking Code of Practice Banking (NBFI)

Electronic Funds Transfer Code of Conduct Banking

General Insurance Code of Practice General insurance

Insurance Brokers Code of Practice Insurance

Financial Planners Code of Ethics and Rules of Professional Conduct

Financial planning

Mortgage and Finance Association of Australia (MFAA) Code of Practice

Finance

Finance Brokers Association of Australia (FBAA) Code of Practice

Finance

Privacy Credit Reporting Code of Conduct Finance

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The Code of Banking Practice

The Code of Banking Practice is a voluntary code of conduct, which sets

standards of ‘good banking practice’ for its members. Banks must follow

these practices when dealing with current or future customers.

The Code of Banking Practice is not applicable to accounts for business

purposes. It only applies to accounts operated for personal household

and domestic use.

It affects all products and services (including loans) offered by any bank

who adopts the Code, including all employees who make available or

support these products and services. If a bank announces it has adopted

the CBP but does not follow it, it could be liable for misleading conduct

under the ASIC Act and be guilty of unfair conduct under NCCP.

The provisions of the Code are legally enforceable by both the bank and

their customers. Once the Code is adopted by a lender it becomes part

of the customer’s contract with the lender.

The objectives of the code are:

 Disclosure of information

 Principles of conduct

 Dispute resolution.

Knowledge of the Code of Banking Practice is an essential element of any

employee or representative (such as third party originators of loans) of an

organisation who has adopted the Code of Banking Practice.

Mutual Banking Code of Practice

The Mutual Banking Code of Practice is a code of practice for Australia's

credit unions and mutual building societies. As of 1 July 2009, it

replaced the Credit Union Code of Practice.

The Code contains general principles applicable to its members and

customers, such as fair and ethical dealings, clarity in product

disclosure, responsible lending and fairness in complaints handling.

These principles are further elaborated in greater details in the

commitments part of the Code.

The Code articulates commitments to:

 Information about products, interest rates, fees and charges;

 Fair terms and conditions

 Responsible lending

 Credit limit increase offers

 Reverse mortgages

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 Account statements and balances

 Stopping direct debit and recurring payment arrangements

 Charge-backs on credit cards

 Debt collection and legal actions

 Complaints handling process.

The Code was developed by Abacus-Australian Mutuals (Abacus), the

industry association for credit unions and building societies in Australia.

Electronic Funds Transfer Code of Conduct

This code articulates the rules and procedures to govern the relationship

between users and account institutions in electronic funds transfers

involving electronic access to accounts.

It is a voluntary code, which provides protection for consumers who use

electronic means for making payments using:

 ATMs

 EFTPOS

 Credit cards

 Online payments

 Internet banking

 BPAY.

The code provides key consumer protections in cases of fraud and

unauthorised transactions.

General Insurance Code of Practice

The General Insurance Code of Practice covers all general insurance

products except:

 Workers compensation

 Marine insurance

 Medical indemnity insurance

 Compulsory third party insurance (even if driver protection cover is

linked to it).

It does not cover reinsurance. The Code also does not apply to life and

health insurance products issued by life insurers or registered health

insurers.

The Code is designed to raise the insurer's service standards for consumers

when they are selling insurance, dealing with insurance claims, responding

to disasters and catastrophes, and complaint handling.

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The General Insurance Code of Practice was first developed and

launched by the Insurance Council of Australia in 1994. In 2005 a

revised Code was developed and it took effect in July 2006. The Code is

monitored and enforced by the Financial Ombudsman Service.

Insurance Brokers Code of Practice

The Insurance Brokers Code of Practice applies mainly to general

insurance and life risk insurance practitioners. It also applies, to a lesser

extent, to associated services such as risk management, arrangement of

premium funding and valuation.

The Code also sets out standards of good practice for brokers when

dealing with customers, including the requirements to:

 Inform customers of conflict of interest and remuneration arrangements

 Establish an internal dispute resolution process.

Adoption of the Code is voluntary. All NIBA members are automatically

bound by the Code, although adoption of the Code is also open and

recommended to all brokers. Most brokers offering retail services in

Australia have subscribed to the Insurance Brokers Code.

Financial Planners Code of Ethics and Rules of

Professional Conduct

The Financial Planning Association (FPA) Code of Professional Practice

includes general standards of conduct to be observed by financial

planners. It comprises of three components:

 A Code of Ethics

 Practice Standards

 Rules of Professional Conduct.

It is to be read in conjunction with Guidance issued by FPA about the

Code.

The Code includes rules on:

 Disclosure statements to prospective clients;

 Financial plan preparation

 Explanation of financial plan

 Client service

 Complaints

 Education, competency, and supervision.

Planners who are members of the FPA are required to subscribe to the

Code.

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Mortgage and Finance Association of Australia (MFAA)

Code of Conduct

Formed in 1982, the MFAA is one the residential mortgage industry’s

key representatives. They work closely with the financial services sector,

the Federal and all State governments to set the direction and standard

for the mortgage industry. The MFAA assists both industry players and

consumers alike, by dealing with industry issues on behalf of its

members. It also provides an ombudsman scheme to facilitate resolution

of disputes and address borrower concerns.

To demonstrate the higher standards for members the MFAA has

developed a long-standing Code of Practice, set of disciplinary Rules and

other governance guidelines to assure customer confidence when

dealing with an MFAA member.

Finance Brokers Association of Australia (FBAA) Code

of Conduct

The FBAA is another major peak industry body for finance brokers. The

FBAA administers a code of conduct requiring its members act in the best

interests of clients by;

 providing full and accurate information;

 ensuring the validity and accuracy of all documentation;

 and providing advice and guidance to clients

FBAA members are required to comply with the FBAA’s Code of Practice

and Code of Ethics.

Commercial Asset Finance Brokers Association of

Australia (CAFBA)

CAFBA is the country’s peak professional body representing Commercial

and Asset Finance Brokers. CAFBA require that members operate to a

set of professional standards covering:

1. Professionalism

2. Duties to Clients

3. Business Management

4. Conflicts of Interest

5. Member Responsibilities

These five core standards, establish the minimum conduct standards

CAFBA expects of its membership. CAFBA members are required to

demonstrate their commitment to, and promotion of, these professional

standard

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Privacy Credit Reporting Code of Conduct

Together, Part IIIA of the Privacy Act and the Credit Reporting Code of

Conduct seek to apply information privacy principles to the specialised

area of consumer credit reporting. The information privacy principles

aim to protect personal information by emphasising the need for

information collectors to be open, fair and accountable in their use of

information, to ensure that the individual is given a measure of control

over the manner in which personal information about him or her is used

and disseminated.

The principles cover a number of areas including the following:

 Restricting collection of personal information to lawful purposes and fair

means

 Informing people why information is collected

 Ensuring personal information collected is of good quality and not too

intrusive

 Ensuring that personal information collected is accurate, up to date,

complete and not misleading

 Ensuring proper security of personal information

 Allowing people access to records of personal information held about

them

 Allowing people to obtain amendments to information about them

 Limiting the use of personal information to the purposes for which it

was collected

 Restricting the disclosure of information to third parties.

The Code of Conduct supplements Part IIIA on matters of detail not

addressed by the Act. Among other things, it requires credit providers

and credit reporting agencies to:

 Deal promptly with individual requests for access and amendment of

personal credit information

 Ensure that only permitted and accurate information is included in an

individual's credit information file

 Keep adequate records in regard to any disclosure of personal credit

information

 Adopt specific procedures in settling credit reporting disputes

 Provide staff training on the requirements of the Privacy Act.

Part IIIA and the Code of Conduct generally only apply to consumer

credit. As such, commercial credit is generally unaffected other than in

limited exceptional circumstances. Exceptions include where consumer

credit information relating to an individual is disclosed in the context of

a commercial credit application.

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The Code of Conduct, like Part IIIA of the Act, is legally binding. The

Code is accompanied by Explanatory Notes, which seek to explain, in a

systematic way, how Part IIIA and the Code interact.

ASIC’s role in industry codes of practice/conduct

ASIC has the power to approve codes in the financial services sector. It

has released a regulatory guide (RG 183) which sets out how it will

approve codes. Industry associations are not required to seek ASIC’s

approval of their code, but may choose to do so.

ASIC expects a code submitted for approval, to satisfy the following key

criteria:

 Freestanding and written in plain English

 Comprehensive body of rules (not a single issue guideline;

 Enforceable against subscribers

 Developed in a consultative way with key stakeholders

 Effectively and independently administered

 Adequately promoted

 That compliance with a code is monitored and enforced

 Containing appropriate remedies and sanctions

 Subject to a mandatory review every three years.

ASIC approves codes as set out in RG 183 and in accordance with

s1101A of the Corporations Act 2001. This is a statutory power to

approve voluntary industry codes of conduct. ASIC does not have the

power to mandate industry codes. Industry must decide in the first

instance whether to develop a code, and then whether to have that code

approved by ASIC.

Regulatory Guide 183 describes the key features of an effective codes

regime that can apply to both large and small sections of the financial

services industry. The policy further sets out the process by which ASIC

will exercise its approvals power.

ACCC’s guidelines

The ACCC’s guidelines for developing effective voluntary industry codes

of conduct, published in February 2005, outline the essential elements of

codes of conduct:

 Objectives of the code need to reflect specific stakeholder/business

concerns

 Ensure that the framework and language is clear to all stakeholders

 Set out the rules in the code that address common complaints and

concerns about industry practices

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 Establish a code administration committee and its functions in the code

 Include provisions for a complaints handling scheme in accordance with

AS4269

 Incorporate in the code commercially significant sanctions for breaches

of the code

 Provide for an independent review mechanism for when a complainant

is dissatisfied with an outcome

 Incorporate mechanisms in the code that ensure consumer awareness

 Incorporate mechanisms in the code that ensure industry awareness

 Include provisions for relevant data collection

 Specify a regular review process of the code

 Avoid anti-competitive implications in the code

 If anti-competitive implications are unavoidable seek ACCC

authorisation, and

 Incorporate performance indicators in the code.

Applying codes of practice

The de-regulation of financial services in the 1980’s saw the removal of

what was seen as obstacles to free trade and innovation, to achieve a

market-driven economy and greater opportunities for wealth creation.

It also resulted, some have argued, in spectacular corporate crashes and

losses as well as a number of unscrupulous practices. The latter stages

of the change of the past two decades, therefore, have been to see a

return to “re-regulation”.

This re-regulation, however, has been different from before.

Governments have been reluctant to return to intervention in the

economic practices of business. The process of deregulation had been to

remove government, as far as possible, from this sort of involvement.

The focus of the regulations has related more to ensuring that qualified

practitioners conduct business ethically and with integrity. The

Government’s reluctance to become the regulator at practice level has

been replaced by industries forming themselves into professional groups

called “industry peak bodies”, such as the ABA, FPA, FBAA and MFAA.

These organisations are formed from within the industry’s own

practitioners with the focus of setting and maintaining professional

standards for the industry.

Despite the need for new regulation, the industry continues to promote

two themes that underpin the conduct of professionals within the

industry.

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These are:

 The requirement for all financial services practitioners to operate

according to strict practices, and

 Codes of conduct, which ensure ethics and integrity.

The second of these themes reflects a commitment to ensure that retail

financial services clients are afforded the utmost protection from

unqualified or unscrupulous practitioners.

Ethical behaviour

According to philosopher and theologian Paul Tillich, "Ethics is not a

subject, it's a life put to the test in a thousand daily moments." In

essence, ethical behaviour is how we decide what is right from wrong.

Managing the ethical dimension is no less important, or valuable to

overall business success, than managing organisational risk and

regulatory compliance. It begins from a recognition that we bring a set

of personal values into a workplace that may or may not align with a

businesses stated values and the values implicit in its code of ethics.

New staff members may enter a business with already-formed views.

They need formally structured workplace opportunities to reconcile these

pre-existing values with those implicit in the workplace success formula.

Typically, in the absence of such learning opportunities, they will

continue to make decisions using their personal values.

Today, staff are expected to make more business decisions for

themselves. Businesses therefore need to make it very clear what they

stand for, what their corporate values or principles are and, importantly,

what behaviours are consistent and inconsistent with living these values.

More importantly, they need to equip their people to apply the

businesses values. Nowhere will this be more apparent than in applying

the responsible lending obligations.

Business ethical integrity is closer to what is sometimes referred to as

the spirit of the law. It encapsulates the ideal state that the law is

seeking to promote - the higher ground. As such, it encourages the

highest possible standards of behaviour rather than a minimalist

compliance orientation to avoid legal prosecution.

Sophisticated concepts such as the “fair play”, “trust”, “respect’ and

“mutual obligation” are the implicit aspects of “professional” behaviours

of everyday business life that fall into the ethical realm. Regardless of

what an individual or an organisation believes about business practices,

if society judges it to be unethical, that perception will directly affect the

organisation’s ability to achieve its business goals.

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The organisation’s accountability to this much wider range of

stakeholders often arises because it is dependent on the goodwill of

these stakeholders to continue to buy its product. .

Ethical business practice

A guide to principles of ethical business practice is as follows:

 Be trustworthy, as customers want to do business with an person they

can trust; when trust is at the core of a business, it’s easy to recognise

 Keep an open mind and ask for opinions and feedback from both

customers and staff

 Honour obligations and commitments

 Carry out business with due care, competence and diligence

 Conduct business with integrity and in a manner consistent with

fostering and maintaining the good reputation of the industry, and

refrain from any conduct that may bring discredit to the industry.

 Safeguard the confidences of staff and clients

 Be respectful and always treat other people with professional respect

and courtesy regardless of any difference in position, title, age or

background.

 Do not disseminate false or misleading information.

Identifying changes and implications of laws,

rules and regulations

The only constant in the Australian modern business environment is

change. There are external changes in politics, climate, laws, markets,

competition, and customer desires. There are internal changes of

ownership, products, services, processes, technology and measures of

effectiveness. Today’s businesses must be able to react quickly and

correctly to external change, while managing internal change effectively.

Even the most stable of businesses change.

External change, in many cases, is usually obvious and has immediate

impact. We often have no choice and must deal with external change in

order to survive, comply with new laws, meet customer requirements,

and to remain competitive.

The need for internal change is often less obvious, unless it is in

response to external change, and usually seems less immediate. This is

partially because changes we make to improve products, services and

practices may not have short-term results. Because internal change is

not necessarily forced upon an enterprise by outside factors, and

because results are not immediate, it is usually given less emphasis and

priority than enterprise reactions to external change.

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This is unfortunate, because only by carefully managing internal change

can an enterprise uniformly meet the challenges of external change.

Many changes have occurred within the last decade for the Financial

Services industry, especially in regards to lending - from deregulation to

state-regulation and now new Commonwealth Government legislation.

The need to keep abreast of any amendments is vital to your operation

as a loan consultant and the requirement to manage change in your

business to comply with any amendments to the laws that govern the

industry must be part of continuous good practice.

Primary regulations

The primary regulations relating to all businesses in the financial

services industry (to varying extents) are the:

 Corporations Act

 National Consumer Credit Protection Act

 Consumer protection laws (including the new Australian Consumer Law)

 Commonwealth Privacy Act

 Various Tax Acts (Commonwealth and State)

 Anti-Money Laundering and Counter-Terrorism Financing Act

 Banking Act

 APRA Prudential Standards

 Occupational health and safety laws

 Employment and discrimination laws

 Intellectual property laws

 Real property laws

 Environmental laws

 Insurance laws

 Contract and e-commerce laws.

Obtaining information

The internet provides businesses with the ability to research changes to

their environments within seconds of the change being published.

This has led to the development of web sites that are dedicated to

providing information to industry members of changes. This ensures

that members have an opportunity to respond promptly and

demonstrate compliance to enhance their professional conduct. It will

ensure they have ample time to bring into effect any change required in

the way they do business.

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The following links provide an indication of current and future legislative

and regulatory practice:

 www.afca.org.au

 www.asic.gov.au

 www.comlaw.gov.au

Maintaining contact with professional consultants

Establishing contacts with professional consultants is a critical

component of modern business. Lawyers and accountants are a

necessity in the industry covering some of the complexities of business

law, legislation, and regulation changes that are occurring in the global

environments facing Australian business.

Changes to federal and state taxes, insurance, superannuation and

employment laws, to name just a few, are varied and can be daunting to

many business operators. Therefore, the need for regular consultation with

professionals provides much of the information needed to adapt quickly.

The following web sites have published papers that have translated some of

the industry changes into a much more understandable language:

 www.findlaw.com.au/

 www.gadens.com.au/

Professional development

The commitment to ongoing professional development also provides

opportunities to stay up-to-date with changes. Whether by online

seminars or at an association function, peer networking and the formal

transfer of knowledge at these events is effective and useful.

ASIC in particular provides a number of methods for being updated on

the latest news and changes that may affect members of the industry:

www.asic.gov.au/asic/asic.nsf/byheadline/ASIC+credit+update?openDocu

ment

Communicating and implementing changes

Once changes to regulatory requirements are identified, they need to be

communicated to appropriate personnel in accordance with organisational

policy. Fortunately regulatory changes are made with sufficient notice and

consultation with industry so that implementation can be done effectively.

The process for communicating changes may vary considerably across the

industry and will be influenced by the size of each business and its

relationship to other organisations. For example, the traditional mortgage

broking business may receive updates from the main lenders and

aggregator with whom they are associated.

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Depending on the nature and extent of the change, a training course may

be developed to communicate new knowledge required. In many instances,

regulatory change will require amendments to policies and/or procedures.

Based on the nature and extent of the change/s, these amendments

may simply be circulated with an explanatory note or underpin a

complete training program.

Some of the areas that procedures may need to cover and be reviewed

are:

 Corporate governance

 Business structures and tax

 Confidentiality

 Conflicts of interest

 Staff recruitment and employment conditions

 Investor and shareholder relationships

 Anti-money laundering and suspect transaction reporting

 Environmental reporting

 Gifts and inducements

 Competition and unlawful trade practices

 New products

 New customers

 Strategic partnerships

 Proprietary information (who owns employees’ inventions)?

 Use of copyright materials and other IP (e.g. client logos)

 Handling media enquiries

 Customer complaints

 Trust accounts and client property

 Document retention

 Licence condition monitoring and renewal

 Reporting obligations (including continuous disclosure, if applicable)

 Whistle blowing

 Fraud reporting

 Litigation

 Dealings with regulators

 Equal opportunity, discrimination, bullying, harassment and

victimisation

 Occupational health and safety (licensing, training, first aid, accidents)

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 Technology use policies including email and internet abuse, weblogs,

Facebook, Twitter

 Relationships between staff

 Drug, alcohol abuse or gambling

 Bullying or discrimination in the workplace

 Account opening procedures

 Credit approval procedures

 Debt collection

 Marketing, including trade promotions and advertising sign-off and

website compliance

 Terms and conditions of sale

 Management accounting

 Insurance coverage and risk management

 Government grants

 Business acquisitions and sales

 Succession planning

 Property ownership and leasing.

Reporting and risk management

Reporting and risk management systems can also be affected by

regulatory changes. Generally, a regulation imposts some form of

reporting to the regulatory body who will update any required changes

to reporting through notification to those affected.

A major effect of all regulation is compliance and the controls required

to ensure compliance is achieved. These should be developed in the

organisation’s risk management framework. The events that might be

identified as risks include:

 Financial risks

 Obligations under the credit legislation and licence

 Governance

 Human resources (e.g. resignation of a key person)

 Technology and systems

 Business strategy

 Economic and environmental.

ASIC in particular provide extensive resources on regulation within the

financial services industry. They also issue Guidance publications, policy

statements, information releases, templates and FAQs to assist

organisations implement regulations and remain compliant.

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Most other regulatory bodies provide similar levels of assistance. Impact

statements are often prepared when major regulatory reform is

proposed, such as the NCCP.

Once plans are in place, compliance can then be monitored by:

 Making regular and/or ad hoc inspections of employees’ work

 Setting out reporting lines so that all staff are aware of the process for

reporting any instances of non-compliance

 Specifying frequency of reports and meetings about compliance issues,

whom reports should be given to, and who should attend the meetings

 Keeping minutes of all compliance-related meetings, copies of audit

reports on compliance, and results of reviews of representatives’

conduct

 Ensuring that if instances of non-compliance recur, arrange a review by

an appropriate person who can make recommendations about whether

changes are needed to the compliance arrangements.

To keep up-to-date with regulatory changes it can also be useful to:

 Formally review compliance arrangements e.g. every six months or

yearly, and updating them as required

 If appropriate, engage an external person to conduct an audit of

compliance arrangements and advise whether they are adequate for

the business as it develops

 Make someone responsible for reviewing instances of non-compliance

and making recommendations about whether any changes are needed

to the compliance arrangements to prevent a recurrence.

Impact of regulatory changes on products and services

An example of the impact of regulatory change on products and services

is the National Consumer Credit Protection Act 2009. This has been the

biggest change to the provision of consumer credit in Australia since the

UCCC was introduced and adopted in the late 1990s.

The changes impacted the development of credit products and services

(features, terms and conditions), how they are marketed, priced,

distributed, managed and reported on.

Without exception financial products and services contain some element

of technology, whether it is via electronic banking, account management

on a bank’s computer systems or web sites. Regulatory changes need to

be considered in light of the impact on the technology and systems used

to support each product and service.

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Assessment

Now you have finished this section, we advise you to download and

complete written Financial Services Legislation & Compliance

Assessment and address the Fin Serv Skills Signoff with a third

party.

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212 © AAMC Training Group Learning guide V3.2