Serve customers, don't ram products down throats: Everett

Satisfied customers should not be the measure for financial services firms to use to gauge their business conduct, FMA chief executive Rob Everett says.

Wednesday, November 28th 2018, 6:00AM

He spoke to the Institute of Directors about the importance of creating an ethical culture in businesses, and how to regulate it.

He said, while culture was a big concern for any financial services regulator, the damage caused by rotten corporate culture was not unique to the sector.

Everett said, while customers, regulators and taxpayers were invested in keeping business culture on track, shareholders often did not share the concern to such an extent. Share prices recovered quickly when problems were uncovered.

“One of the greatest challenges for directors of listed companies today is how to balance the interests of shareholders - who may appear to care little for customers, employees or society - with those of the broader stakeholders.”

Everett said the FMA wanted the industry to show that it could put customer interests at the top of its priorities.

"You want to be at a point where serving the needs of the customer ranks more highly than how much you can ram down their unsuspecting throats.

"Having happy or satisfied customers is not necessarily the best measure to focus on.

The fact a customer happily bought a product, or paid a fee for a service, does not mean it was a good or proper sale, or that the service that was well delivered, Everett said.

"This is made more problematic because a lot of life’s most important financial decisions can take years to be proven good or bad decisions. And usually by the time you know, it’s too late to do anything about it."

Good conduct and culture needed to start at the top, he said. Boards should ask whether they had the processes, training, checks and balances in place to generate good long-term customer outcomes.

"The board can start by asking themselves what behaviours they are exhibiting. The anthropologists and sociologists will tell you about learned behaviour. About children learning from their parents and most of us learning from those we look up to. The signalling that board directors and senior executives do by their actions cannot be under-estimated. Even for the most articulate of board chairs or CEOs, actions speak louder than words."

Tags: conduct FMA Rob Everett