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The Operating Landscape Post-Hayne
In the 18 months since the Hayne Royal Commission reported its findings, most large financial institutions have undertaken an organisation-wide scan for potential remediation topics. As a result, they are now in a far better position to understand the breadth of possible issues they must deal with.
The fact that remediation is here to stay, rather than a one-off issue is now largely accepted. The Banking Executive Accountability Regime (BEAR) has prompted many boards and executive teams to think proactively about remediation and the operating environment that can best facilitate it, rather than reacting to issues as they arise.
ASIC’s recent speech at the AFR Banking & Wealth Summit in November of 2020, reinforced their expectations that organisations need to utilize best practice in the delivery of outcomes to their customers.
What Does “Good” Remediation Look Like?
International examples, particularly from Europe and North America, are being sought out to assist in deciding what good looks like. What operating model, tools, resources, skillsets, and partnerships are needed to deliver remediation effectively and efficiently? Which approach provides the best customer experience?
In our opinion, based on helping design and run remediation programs around the world for nearly two decades, this is a complex conundrum and something well worth investing in. Setting yourself up for success, with clear roles and responsibilities and a consistent approach to executing remediation pays back in spades.
How Does an Operating Model Drive This?
A clearly defined operating model accelerates remediation activities by reducing complexity. Further, it supports internal accountability and visibility over remediation decision-making and customer outcomes. More consistent remediation outcomes then support regulatory relationships and then, crucially, become a cornerstone for rebuilding customer trust.
Remediation challenges companies to think about the benefits of centralisation versus maintaining ownership in the front line. Additionally, it begs the question of who is responsible for ensuring that the root cause has been identified and that learnings are driven back into teams that deal with customers every day.
There is no magic bullet, and the answer to all the questions will be that “it depends”. It depends on existing organisational structure, resourcing and risk appetite. It depends on the types of matter that are being considered. In our experience thinking deliberately about the remediation value chain and challenging yourself on whether there is a better way to do it at every stage is worthwhile. We’ve developed some thinking that shows the breadth of capability needed to successfully complete remediation and around the different operating models that can be deployed.
What Operating Model is Most Appropriate?
For some, a centralised approach will be best suited, others may wish to run a model that keeps responsibility within the Business Unit where the remediation is needed. The middle ground sees some centralisation to drive efficiencies in investment (e.g. tools) and consistency in outcomes (e.g. consistent compensation calculations).
In large organisations all variations of operating models - Centralised, Semi-centralised and Decentralised - may need to be deployed. Because there is no one size fits all answer, the most critical thing is to have thought about it and have a framework to identify, categorise and execute remediation.
The maturity of thinking in this space is growing each day. Looking again to Europe, where there is now a long track record of regulatory intervention and requirement for remediation across retail, business, insurance and wealth matters, it is hard to think that Australia will fare much differently. Increased community expectations, increased regulatory powers and increased customer complaints will likely mean that efficiency and effectiveness in this area is a key priority for many, both now and into the future.
Where to Next?
Our thinking takes organisations on a journey to define what remediation is, to make choices and prioritise the skills and capabilities that are needed to execute remediation and based on these outcomes to help build the right operating model, resourcing structure and key partnerships that are needed.
We are helping senior leaders grapple with these questions as well as supporting on the delivery of some of Australia’s largest and most complex financial services remediations.
Get in Touch
Deloitte Managed Solutions is the Australian market leader in remediation design and execution. We prioritise customer outcomes and pragmatic decision making in our work. We know what issues are likely needed to be overcome and compromises that will need to be made. We bring international expertise, a proven framework to facilitate design discussions and insights from delivering remediation projects for nearly two decades in the public and private sectors.
Malcolm is a Financial Services and Conduct practitioner with 20+ years’ experience across the UK, Indian and Australian markets. He leads our Managed Solutions practice in Australia and helps clients solve large, complex business issues impacting them as a result of regulatory remediation, legal challenge or operational issues. He specializes in strategy creation and project delivery, with a specific focus on pragmatic thinking, customer focused decision making and ensuring lessons learned are built back into the clients BAU operations. Recent projects have involved Australia’s largest and most complex customer remediation exercises relating to financial advice, fee charging, declined life insurance claims, direct insurance sales, Consumer Credit Insurance and a broad range of other topics.
Hannah is a manager within the Melbourne Deloitte Managed Solutions team. She brings to Deloitte several years of experience within financial services, specialising in credit and regulatory reporting. Hannah’s experience supporting customer remediation programs spans across the banking, superannuation, insurance, consumer finance and public sectors. Within these programs, Hannah helps clients perceive and prepare for disruptive operational change. As a certified change management practitioner, she has implemented change activities within various programs, leading to smoother and more structured program delivery.