UNI Europa Finance Conference 2009 - 09 - Sales vs advice: towards stricter legal obligations and a charter on responsible sale of financial products – Draft 1f __________________________________________ 1/3

UNI Europa Finance Conference, Dublin, Ireland, 10-11 December 2009

Item 09:

Sales vs. advice: towards stricter legal obligations and a charter on responsible sale of financial products

UNI Europa Finance approach Introduction The financial crisis has been a reminder of how vulnerable financial markets are to imprudent behaviour and uninformed choices of financial products by customers. Irresponsible sales practices have been a key factor in triggering the crisis. They constitute a continuous risk factor to the property market, private economies and the economy at large.

The work for responsible sales of financial products is a key priority for UNI Europa Finance. A new long-term orientated and risk-conscious business model should be developed that empowers customers and staff. Internal operating procedures and practices should be transparent and the way employees are motivated and constrained in performing their jobs must be clear (remuneration, incentives, skills, and working conditions).

In 2010, a number of activities and events will be launched to address the issue and to draw the attention of policy makers, companies and the public at large.

UNI Europa Finance has adopted a two-fold approach. Its elements are:

• to assess and describe the problems related to inappropriate sales practice – including working conditions and sales pressure – as well as proposing solutions and recommendations;

• to explore, discuss and develop ways that finance employees and their unions can contribute to improving regulation, supervision and risk management of the industry;

The aim is to present the results to regulators, supervisors and companies’ risk management in order to ensure that internal business practices are considered in the risk profiles of financial institutions.. UNI Europa Finance fights for complementing the prevalent ‘top-down’ perspective by a ‘bottom-up approach’ that puts the factor “employees” into the equation of financial regulation, supervision and risk management.

Finance employees and their unions must be empowered to contribute to developing solutions to challenges in the financial markets. Employees in financial institutions have knowledge on how current regulation works and first-hand experience of problems relating to responsible sales of finanical products. They are those who deal with these issues on a daily basis.

UNI Finance Global Union

Version: Draft 1f

Date: 20/11/2009

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Finance employees and their unions should therefore be fully involved in the whole process of shaping implementing and monitoring regulation, both in respect to the relevant authorities and companies’ internal risk management. Structured dialogue with finance unions should be in place at all levels to address operating procedures, work practices affecting companies’ risk management and the stability of the financial system.

A key element in the bottom-up approach is the development of a model ‘charter on responsible sales of financial products’. Each financial company should develop such a charter agreed between management, unions and other stakeholders. Such charters should make explicit, public and verifiable the principles being followed in advice, sales and marketing as well as in operating procedures and work practices. The charter is described in detail in circular U076/2009.

Events and activities 2010 To implement these policies, UNI Europa Finance will organise the following events and activities in 2010. The EU Commission provides financial support.

Early in the year, an expert network will be formed. It will consist of experts – from company, national, European and global level – with concrete experience on issues of sales and advice as well as related regulation. The task of the network will be to finalise the model charter and to constitute a forum for collection and exchange of good practices.

The network will also play an important role in developing and implementing the bottom-up approach. It will provide a platform for systematically delivering information on impact of sales and advice practices on the risk situation of companies. Recipients are supervisors at national, European and global level as well as internal risk management in finance companies.

The aim of the sales and advice campaign is to reach outside Europe and create – with the involvement of finance unions across the world – a global platform for exchanging information and experience. Input to the campaign will thus be collected also from outside Europe, in particular through the UNI Finance G20 network. Results and assessments will be used to feed into the G20 process as well as into the International Monetary Found and the Financial Stability Board based on best practices in the industry.

February The network will meet in a workshop in Brussels to discuss the practical implementation of the bottom-up approach, i.e. how finance employees can feed in with their experiences on internal business practices (in particular sales and advice practices) to supervisory authorities at different levels. The workshop will also explore possibilities of negotiations in individual companies between EWCs, trade unions and management on the charter.

March External researchers will make short research reports mapping out sales and advice issues in seven different countries.

April On the base of these reports and the discussions during the 2009 UNI Europa Finance Conference, the sales and advice expert network will discuss and finalise the model charter at a workshop held in Brussels.Other relevant stakeholders will also be invited.

June A dissemination conference will be held in Copenhagen to raise awareness of the charter and its contents and ensure the broadest possible dissemination.

September

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This will be followed by a workshop in Brussels, inviting companies and EWC’s to discuss the model charter and its possible implementation at company level.

Day of action Affiliates across Europe and the world have the sales and advice issues on the agenda. They already carry out campaigns and surveys to address the issue and shed light on its scope and character.

Sales pressure increases in many countries in spite the lesson to be learned from the financial crisis. Problems relating to sales and advice are present in everyday work for many bank employees. In the UK, people risk to loose their jobs if they do not achieve their sales targets. In Germany, employees are told: "You're not advisors, you're sellers. Advising is done by the Consumer Advice Bureau". In Denmark, employees report that the products they sell are so complex that keeping up to date is hard work even with a good educational background.

UNI Europa Finance is planning a coordinated “day of action” at European and global level to take place in March or April of 2010. At this day, affiliates are invited to organise events, seminars, campaigns, press conferences and the like, addressing issues of sales and advice. UNI Finance will coordinate activities and launch a media campaign to accompany the action day. Keep the secretariat informed about activities The numerous activities already carried out by affiliates to address the issue, are of interest and value to colleagues all over the world.

Affiliates are therefore encouraged to keep the UNI Europa Finance secretariat continually informed about activities in order to share and distribute experience and knowledge.