Where do we go from here?

To build trust with consumers, brokers need to adopt a holistic approach to business practices, writes Gold Seal’s Sheila Baker

Where do we go from here?

To build trust with consumers, brokers need to adopt a holistic approach to business practices, writes Gold Seal’s Sheila Baker

In his opening remarks at a recent regulator forum, ASIC’s new chair, James Shipton, talked about the “trust deficit” in the financial services industry. Talking about raising professionalism and trust in the industry is easy. As Mr Shipton said himself, it’s not a matter that can be legislated overnight. Consistency in the use of good business practices and demonstrating those practices to the point where public opinion is changed are different matters.

Internationally, Mr Shipton’s remarks also reflect sentiments expressed by the London market related to conduct risk and the upward trend in the industry toward professionalism. Most brokers are valued advisors to their clients and are trustworthy, respected businesses in their communities, but the insurance media regularly reports on ASIC bans and fines, emphasising that not everyone is perfect. I’m reminded of a recent industry e-news bulletin with an ironic double subject line: “Aussie brokers finest in the world; disgraced broker to avoid jail and more”.

The scrutiny of the financial services industry is more intense than it has ever been, and the royal commission will ensure that intensity won’t diminish any time soon. So the question is: Where’s the disconnect between how we see ourselves and public perception?

To build a culture of trust, we recommend to clients that business practices not be viewed in isolation, but as interactive with each other, and the resulting platform as ‘holistic’. When we talk about business practices, we mean the activities undertaken in a business such as business planning, compliance, people and performance measurement, and learning and development – matters that aren’t revenue-generating but that form the underlying platform the company uses to allow its people to ply their trade effectively.

A holistic approach to business practices is a concept coined by one of our senior industry practitioners, Leigh Stalker, general manager of Capital Innovations Insurance Group and Insurance Solutions Tasmania, who actively seeks to implement such a platform.

“Consistency in the use of good business practices and demonstrating those practices to the point where public opinion is changed are different matters”

We all know that when businesses operate in silos that don’t communicate, they are less efficient and more vulnerable to criticism. They open themselves up to issues ranging from client service to compliance deficiencies and higher error rates. This is the danger zone, because lack of transparency throughout the business readily makes itself known publicly.

A holistic, documented framework encompassing consistently high business practice standards is one of the best defences against criticism. The best way to change public perception is for each and every one of us to demonstrate why we are trusted advisors from a tangible perspective with every contact we have – not just with clients, but also inside the business.

We believe this is a process of continually doing the right things in the best interests of the client, even when there is an easier, cheaper or more profitable option – and reinforcing the same to our teams. Gold Seal’s holistic approach to building a trust culture starts with five key steps.

First, ensure business practices, such as risk management frameworks, IT, records management and business continuity, are managed to a high standard. Second, have a business plan that clearly shows a link between the organisational objectives and the objectives of the individuals who will execute the plan. Third, ensure your business practices are not only in place, but also documented and understood by all your people.

Fourth, check that people management practices are in good order – from your employment agreements, job descriptions, recruitment processes, induction programs and performance management through to adequate training and qualifications. And finally, ensure adherence to financial management standards is evident.

Sound business practices underpin every customer touchpoint and ensure that you have a consistent, demonstrable approach that will continue to build the perception of trust within your community and of our industry. We stand by our mantra of delivering excellence. Sometimes it isn’t the easiest thing to do, but I’d rather that than be used as an example by a royal commission – or the court of public opinion.

Sheila Baker is managing director of Gold Seal, the Australian insurance intermediary industry’s largest business management, compliance, learning and people development organisation.

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