“You know you are successfully implementing a good strategy when people actively discuss good client outcomes in their decision making”
As part of the knowledge exchange in the lead up to the Compliance and Conduct Risk in Financial Services Forum (June 21-22, London), Ethical Corporation sat down with Vinita Ramtri, Vice President, Head of Conduct Risk, Wealth, Wealth Governance and Control at Barclays.
Ethical Corporation: Where do you feel most progress has been made, and where is there most still to be done?
Vinita Ramtri: I believe there has been good progress on clarifying the difference between Treating Customers Fairly and Conduct Risk. While definitions are not strategies, having a consistent definition that works for the individual financial services organisation underpins the strategic positioning of conduct; in other words, it sets the scene as to whether conduct is viewed as a standalone risk type or as a key risk under operational risk, or even as a value or behaviour to aspire towards. There is more to be done in terms of how financial services organisations can measure good conduct and I think that there will be some trial and error until organisations find the measures that are right for them at a given point in time. Given that horizon scanning and predictive indicators are a key part of managing conduct risk, I would expect that this is a case of continual evolution.
EC: What do you think will impact conduct risk the most in the next 12 months, and also over the next three to five years?
Vinita Ramtri: The Senior Manager Regime (SMR) came into effect on 7 March 2016. While conduct is usually focussed on ensuring good client outcomes, SMR is focussed on senior managers and their accountability for the business decisions that drive these good outcomes. I don’t believe that financial service organisations will manage the two in isolation. As businesses get more mature in handling the coexistence of Conduct Risk and SMR, they will draw out synergies for more effective management. I think that this will impact Conduct Risk – in a good way.
In the medium term, I think it will all be about ensuring business growth – albeit growing the right way. Customer tolerance for poor conduct will continue to decline and good conduct will become an increasingly pronounced component of good customer service. The winners will be those who are nimble enough to take advantage of all the changes impacting them without compromising their conduct. Organisations will become more efficient at managing conduct risk in parallel with change and volatility.
EC: How do you establish what everyone’s role is when drawing up and implementing a conduct risk strategy?
Vinita Ramtri: The best conduct risk strategies are integrated within the business. Informed by the context of its overall strategy and purpose, a business can identify their Conduct Risks.
For example, at Barclays, our purpose is ‘helping people to achieve their ambitions – in the right way.’ Having a strategy that is focussed on clients is the start point. It is everyone’s responsibility to consider conduct in their day-to-day role. At Barclays, the way we do business is set out in our Code of Conduct ‘The Barclays Way’. For example, managers and business areas play a key role in ensuring a strong cascade and local alignment with overall organisational purpose. Effective tools include incorporation into team and personal objectives, reporting metrics, rewards and recognition, etc.
EC: How do you know if you’re successfully implementing a good strategy? How do you establish your KPIs, and your measuring and reporting methods?
Vinita Ramtri: You know you are successfully implementing a good strategy when people actively discuss good client outcomes in their decision making and, likewise, call out any conduct risks that they see. Good conduct should be a long term plan and is integral to running a sustainable business that enjoys the trust of its customers and clients.
KPIs and reporting guidelines should be drafted carefully so that they are aligned to the overall governance structure. It is important to have pre-defined thresholds and triggers which will help guide individuals when determining what is to be reported to whom.
EC: How do you balance Risk and Compliance?
Vinita Ramtri: When organisations decide their goals, they also determine how much risk they are willing to take to achieve that goal. This defines a firm’s risk appetite.
Firms then need to be compliant with the risk appetite that they have defined for themselves.
Compliance is a support mechanism that helps ensure that businesses respect risk and delineates the regulatory parameters within which the level of risk being assumed is understood.
EC: How do you address the issue of conflict of interest, and transparency, in cases of whistleblowing?
Vinita Ramtri: Across Barclays, policies and statements of intent are in place to ensure consistent governance. Any failure to act in accordance with the values and behaviours or breaches of our Code of Conduct are taken very seriously. Employees are strongly encouraged to speak up about behaviours and practices that contradict the Barclays Values or relate to wrongdoing or unethical behaviour. Doing the right thing, and having the courage to speak up is an important aspect of the Barclays Way.
Employees can raise concerns through their Line Manager or to the Global Compliance Whistleblowing Team, directly to the local regulator or through an external third party company. The telephone numbers, email addresses and information for all contact points are published and available to colleagues. Colleagues are also reminded of who they can contact within the annual training modules.
Vinita Ramtri will be speaking at the upcoming Compliance and Conduct Risk in Financial Services Forum (21-22 June, London). Download your brochure for the event here to find out more about the other industry experts you could meet, learn from and network with.risk strategy compliance transparency
June 2016, London
The 2nd annual forum brings together leadership from Compliance, Conduct risk and European Regulators to deliver a holistic view on how compliance and conduct risk are each changing financial services.