CISI were delighted to be part of the Irish Banking Culture Board’s recent workshop for over 80 retail banking staff. Richard Bennett, Assistant Director, gave our Speak Up workshop to an engaged audience with plenty of discussion and opinion on the scenarios presented.

A great start to the year with our first event at CISI Ireland. It was a full house to hear Des Lawrence, a senior strategist at State Street Global Investors, give a guided tour of what maybe the single biggest topic in asset management today - ESG. This was a real world approach to the issue and the Q&A session showed how engaged the audience were. Des produced survey results to show how asset managers are increasingly seeing this as a core part of their of their business development and how trustees are seeing it as a core to their fiduciary duties. The trend to ESG is irreversible driven by regulators, governments and investors. Des pointed out how sophisticated portfolio construction enables a fine tuning of outcomes to meet investor demands. The watchword for managers, trustees, and investors according to Des is "Inertia is not an option".

SSGA very kindly hosted the event.

As we come to the end of 2019, I would like to wish all our members and particularly overseas members, who have recently taken up positions here in Ireland, a very Happy Christmas.

2019 was a stand-out year for CISI in Ireland. A key topic which our members asked that we focus on was on the area of culture. The increased interest in this area is evidenced by a significant increase in demand for its Ethics and Integrity workshops. These now form an integral part of many companies training and development programmes.

There was standing room only when we welcomed the Central Bank for two presentations on ‘Are you Fit & Proper’ with Deirdre Norris and Rebecca Coyle. This was followed in September with Brenda O’Neill, Head of Division, Securities and Markets Supervision Directorate presenting on the topic of Wholesale Market Conduct.

Particular highlights during this year were having John Moran, former Secretary General of the Department of Finance giving a very timely presentation on ‘Time to move on from Brexit - Repositioning Ireland in an Increasingly Divided EU 27’, which followed the European elections. This was again a fully booked event.

A seminar on the future of Absolute Return Funds with an excellent panel of speakers from Aberdeen Standard, BlackRock, GillenMarkets and Clarus Investments ensured a very lively debate and contrasting views. An update on the pensions industry by George Nolan from New Ireland in the light of the decision to roll out auto enrolment met with considerable interest.

Copies of these presentations are available in the CPD archives when you log in to MYCISI. For 2020, we have put together a series of events on such diverse and thought provoking topics as

• The Future of Asset Management- Do asset managers have a future?
• The Inexorable rise of ETFs- Any hidden dangers?
• ESG Common Mistakes
• Business and ethics-The Regulator’s perspective

These will include speakers from the Central Bank, SSGA, Lion Trust and Blackrock. Details of these events will be posted on the CISI Ireland webpage.

To ensure that CISI continues to meet and evolve with members’ needs I would ask you to complete the survey below. It will take just a few moments of your time and will help ensure that your voice is both heard and listened to.

On a personal note, I would also like to thank the members of our National Advisory Council, whose contribution has proved invaluable and whose commitment is very much appreciated. I would also like to thank Deirdre Heffernan, Ireland manager for CISI, for her tireless work throughout the year. Deirdre is happy to discuss with you and your firms all matters relating to memberships and the provision of tailored CISI courses to financial organisations.

Congratulations to all those who have successfully completed your CISI qualifications this year. We look forward to recognising award winners and achievers at an awards ceremony in April.

Thank you again for all your participation and very best wishes for 2020.

Frank

Winter is coming and the Turkeys are starting to get a bit nervous about their fate as the shops start to stupidly put their Christmas decorations up even before the fireworks have started.  With only the Dundee event remaining we are bringing an end to the years CPD events especially since the Bank of England had to pull out of the events in Glasgow and Edinburgh as they’ll be under purdah restrictions until after the election.    
In Edinburgh last week we held a fabulous event at Blackrock where we heard from Royal London on the Hot Topics for Pensions, Legal & General on ESG Investing and Dimensional discussing Perspectives & Possibilities: Boomers, Gen X and Millennials. If you missed it then head on up to Dundee on 21st November.  
Clare Moffat of Royal London presented on the legislation changes relating to the State Pension, before moving onto discussing the main concerns raised by the Retirement Outcomes Review and how you can comprehend the issues with IHT and pensions.  After a short coffee and a Tunnocks Tea Cake (thanks Blackrock) Dan Attwood took to the floor. His talk on where ESG Investments where and how using active ownership L&G are trying to help improve the corporate agendas.  Finally, Blair Anderson from Dimensional took us through the Dimensional survey to their network of IFAs which was looking at the attitude of the different age groups regarding investments and financial advice.  Its comforting to know that although there are differences between the ages that there is more that bind us although when relaying this to my teenage son, he still rolled his eyes, sake!
There was still a chill in the air for the start of the Glasgow event this week as I walked up Bath Street to the Adobe Hotel for the 9:30 start. Jeremy Martin of Just started the day off with a couple of hours CPD presenting on the Six steps to better retirement outcomes. He took us through the developing consistent and robust advice processes before we had a lively debate on recognising the importance of establishing the client’s capacity for loss.  We then turned to the sustainable income and the recognition of guaranteed income within your retirement.  The last section touched on cash flow modelling, withdrawal policy and the review process.  
Just before the lunch was served George Kinder arrived.  If you haven’t heard of George before then his bio says that he is internationally recognised as the father of the Life Planning movement, revolutionised financial advice for over 30 years by training over 3,000 professionals in 30 countries in the field of financial Life Planning. This was his first visit to Glasgow; he was taking the opportunity to discuss his latest book A Golden Civilization and the Map of Mindfulness. This was a slight departure from our usual events but for those in the room it was quite inspiring.  He started talking about his 3 questions, but his key thing was to listen to your client; not how we normally do but really listening and on focusing solely on them.
After a cup of tea, George invited us to imagine a thousand generations had passed and humanity had at last accomplished a golden civilisation. What did it look like and what structures got us to this utopia before asking what is stopping us from making the change in just one generation? I’ll let you read and investigate yourself on his ideas and make up your own mind. In the room however there was a willingness to listen, learn and debate.  A truly unique talk and if you want to know; do I now have his book? the answer is yes.
Maybe a different perspective to be considered but the feedback from the room was fantastic and maybe we should be considering CISI events can deliver something more than just hours.

Another quality session with George Nolan, pension specialist at New Ireland Assurance, at CISI Ireland today. George was back by popular demand to give an informed and incisive view on the state of play across the Pensions landscape in Ireland. Progress on the government’s pension roadmap has been, according to George, “sticky” reflecting complexity of local structures and Brexit “diversion”.

Auto enrolment target dates now appear very challenging.

George presented a deep dive into the critical and complex issue of pension transfers and highlighted above all else the need for sound advice.

George also highlighted the risks and rewards involved in international pension arrangements.

This lunchtime seminar was very well attended with the audience fully engaged throughout.

British TV presenter and political columnist Steve Richards was guest speaker at the event, held on 5 September at DoubleTree by Hilton Glasgow

Read the full article in the online Review.
Click here to view the event photo gallery.

The CISI Board of Directors attended the event, celebrating ten years of the CISI Cyprus National Advisory Council (NAC).

Click here to view photos from the event.

A truly engaging and thought-provoking CISI Southern Branch CPD event was held at G Live in Guildford on the morning of 17 September 2019.

With a good turnout, Keith Churchouse, President of the Southern Branch, introduced the speakers for the event.

The Southern Branch was pleased to welcome Suzette Jones, Health & Wellbeing Adviser for the Church of England in Guildford, as the first speaker. Suzette gave a powerful and moving presentation on modern slavery, how and where this takes place, how we can recognise those enslaved and what we can do about it. As Suzette clearly conveyed, modern slavery is a serious and organised crime and often unseen. It hides in takeaways, hotels, car washes, nail bars and private homes. There is no typical victim of slavery. Victims can be men, women and children of all ages, but it is normally more prevalent amongst vulnerable, minority and socially excluded groups in society. A key message was that if it looks or feels wrong, it probably is, and Suzette’s slides provide a range of contact numbers for reporting concerns.

The second presentation was given by Marie-Claire Gale, Mental Health Trainer with the Work Well Hub. Marie-Claire’s presentation focused on mental health awareness in the workplace and was an excellent and extremely informative session which helped attendees to better understand common mental health disorders, how to manage them more effectively and where to turn to for support.

Our thanks go to both the speakers for two stimulating presentations. If you would like a copy of the slides, please visit the CISI website or contact a member of the CISI Southern Committee.

The event will be repeated on 16 October in Reigate for those members who were unable to attend the September session. Highly recommended!

Your Committee meets on 19 September 2019 to look at the next events across Surrey and if you would like any financial topic discussed then please let Keith Churchouse know.

Keith also noted that he will be standing down as Chairman for the Southern Branch at the end of the year and invited all to consider joining the Committee.

Keith Churchouse CFP Chartered FSCI
President, CISI Southern Committee

CISI Ireland members got to hear directly from the Central Bank on what they expect from financial institution as regards risk, at another highly successful and very well attended seminar on the 10th September. The keynote address was given jointly by Brenda O’Neill and Steven Clark, Head of Wholesale Market Conduct Policy and Implementation Team at the Central Bank. Brenda is the Head of Division, Securities and Markets Supervision Directorate.

The theme of the presentation was that for financial services firms, future success will not just be about avoiding incidents of misconduct but rather about a better culture and overall behaviour.

The seminar was attended by representatives from over 20 financial services firms including banks, asset managers and stockbrokers.

Ms O’Neill emphasised that it was not just about the numbers but culture and behaviour measured rigorously. “Mis-conduct doesn’t define conduct” she noted. Traditional models for financial services are changing at a rapid rate and part of the Central Bank’s remit, through its Market Scan process, requires looking ahead to see what might over the horizon and the extent of Irish financial services firms resilience and readiness to mitigate any attached risks.

It is also essential, Mr. Clark pointed out, that all employees in the financial services sector involved in risk management fully understand the true underlying risks and not just be experts in process.

2019 will prove to be a tumultuous year whichever way you look at it for the UK and much has and will change in the investment and advisory world over the coming months.

With our CISI Southern Branch agenda largely set for 2019 for events both in Guildford and Reigate, we hope that you have enjoyed the programme so far and, looking forward, more can be found on the event page of the main CISI webpage for the remaining events (Guildford & Reigate) across both locations for 2019.

Your CISI Southern Branch Committee will reconvene in September to look forward to 2020 and the year ahead.  It would be great to hear from members and attendees on what you would want to see on the agenda in 2020, and any constructive changes you would like to see. As examples, you might want to consider:

• Do the venues work for you?
• Do the timings of events (we try to mix them up a bit) suit?
• Do the topics and division of timings help your CPD development?
• Did you attend the ‘Super-Event’ and would you want this style/type of event again?

As you can guess, this is not an exhaustive list, but I wanted to see if any constructive feedback can be used to enhance our CISI offering still further.

Thanks and we look forward to welcoming you to a CISI Southern Branch event soon.

Keith Churchouse CFP Chartered FSCI
President, CISI Southern Committee

CISI Yorkshire has continued to support its members by offering a variety of events over the last year covering diverse subject matters such as Smart Beta, Ethical Investing, VSTs, Cyber Security and SMCR.

 

We are also delighted to support CISI’s new Young Professionals Network "YPN" , and invited Claire Young to our launch event on 7^th March where she inspired our members by talking about how she has made a successful career for herself in the media and as a public speaker following on from her being a runner up in BBC’s ‘The Apprentice’.  We intend to run at least a couple of specific YPN events throughout the year with the aim of providing a platform for our younger members to network and develop their careers.

 

CISI have continued to enhance their online offering with a vast repository of learning materials.  To make the most of membership benefits, I encourage members to utilise the Professional Refresher, CISI TV and Online Magazine resources.  Slides from our local CPD events can also be found on My CISI.

 

Total membership in our region now stands at 1180 (including student members) which is an increase of 80 members compared to last year.

 

We are always looking for ideas for future CPD events, so please get in touch if there is a particular topic you would like to see covered.

 

I would like to thank my fellow committee members for their ongoing commitment they make so that we can continue to provide a varied events programme for the region.

A report sent to the regulator is misleading about how phased changes will be implemented. Vikram, a member of the working group responsible for those changes, becomes aware that the report is factually incorrect. What should Vikram do?

Toby works as a fund manager for a mid-size firm of asset managers which has been the subject of a recent regulatory visit. A number of procedural weaknesses in the firm’s processes were identified. The principal one in which Toby was involved related to the fact that fund managers were permitted to initiate, book and execute their own trades.

In response to this criticism, Toby and his fellow managers said that they were not responsible for introducing the system; they were merely following the firm’s procedures. Accordingly, if the firm wanted them to do something else, it should tell them what to do. However, it all seemed a bit of a storm in a teacup as it had not given rise to any problems. Nevertheless, the firm undertook to the regulator that it would modify its procedures.

Shortly after having provided this reassurance to the regulator, one of Toby’s colleagues initiated a trade to buy Norwegian Government warrants, but accidentally placed an order for ten times the required value. With the unaltered system still in operation, this was not picked up immediately, coming to light only when it was queried by the settlements team because it was outside the normal run of transactions.

This failure was reported to the regulator, which insisted upon an urgent skilled person’s review of the firm’s systems, with an early date for remedial action to prevent similar and potentially more destructive events. The firm was given a deadline for the implementation of these changes and told to report these to the regulator.

In response to this requirement, the firm set up a working group with representatives of all those areas affected by the regulator’s requirements. Toby was somewhat irked to be nominated to represent his area. Over the following weeks a number of meetings were held and new end-to-end processes were designed. Some parts of these were put in place, although it was felt that the introduction of the complete package should be phased in to ensure that the individual stages were working effectively.

Meanwhile, a report was written for submission to the regulator, having been signed off by the head of compliance and the chief executive. This was circulated to the working group only after having been sent to the regulator. Toby read it and was alarmed by statements that a number of new procedures had been introduced, which was not the case, as they were a part of the phased introduction which had not yet occurred. He raised this in the working group, from which he received a variety of responses, ranging from “we must do something – can we get the letter back”, to “we didn’t sign the letter so it’s not our problem”, together with a variety of more considered comments.

The upshot of the meeting was that Toby should convey the group’s concerns to the head of compliance. Toby met the head of compliance and told him of the working group’s concern that the letter sent to the regulator was factually incorrect, since it stated as fact that processes had been put in place which, although they had been designed, had not yet been implemented. The head of compliance responded that, personally, he was quite relaxed about this, saying that it was really only an issue of timing, and that during the next few weeks the statement would become fact. Accordingly, he had no intention of telling the CEO that he had been induced to sign a letter to the regulator making untrue statements.

Having been told effectively to mind his own business, Toby’s initial reaction was to let the matter drop. But he communicated the view of the head of compliance to the working group, from which the consensus was that further action was now outside its remit, because the group existed to ensure smooth introduction of the new processes.

Toby was unsettled by what he knew had taken place, and while he was not happy about it, he felt that because of the seniority of those involved, it was really out of his hands. After all, the CEO must have known what he was doing and besides, introduction of the new processes was occupying his every waking minute. A short while later, Vikram, a fellow working group member, came to see Toby and told him of his discomfort at being aware of the position of the firm, should the regulator discover that it had been misled and that staff knew about this. Surely they all had a responsibility to be honest, but he was in a quandary as to what, if anything, he could do without being implicated. Vikram’s concerns echoed those of Toby himself, who had tried to identify some plausible actions.

He set these out for Vikram:

• Let matters take their course. Undermining senior executives, especially the CEO, would be career suicide. Anyway, the new processes will soon be up and running and the problem will disappear.
• Arrange to speak to the CEO and tell him what has happened.
• Arrange to speak to the firm’s senior independent non-executive director.
• Use the firm’s Speak Up telephone line.

 

Click here to view the photo montage from the CISI Jersey Branch Annual Dinner 2019.

CEO Harriet must decide what the correct protocol is when a supplier repeatedly tries to give a personal gift against company policy.

Harriet is the CEO of a small wealth management firm with about 100 staff members. The company has a gifts policy in place which states that all gifts received must be declared to the HR manager. Items of low value or items that have been personalised or engraved (such as pens or calendars) may be kept after being declared. Additionally, gifts may be kept if they have been given as a result of a personal connection or relationship – but this is subject to Harriet’s discretion. Otherwise, all gifts are held by HR and staff members are given the chance to enter a raffle and win one of the gifts on the day before the office closes for the Christmas break.

One of the firm’s suppliers is a small, privately owned printing company, Rainbow, to whom the firm has sent all of its printing for a number of years, and where Harriet has a friendly relationship with its Managing Director, Herman.

In early December, a package arrives from Rainbow containing six bottles of wine, with a generic note saying: “Thank you for being such a great customer this year. We hope that your staff members enjoy this contribution to your Christmas gift raffle.” This is not unusual – Rainbow has sent the same gift for the past two years in a row – and the package is given to HR to be declared and added to the collection of other gifts received throughout the year.

However, a week later another package arrives from Rainbow, addressed personally to Harriet. This is a bottle of wine, which Harriet knows is more expensive than the wine already received. It is accompanied by a slightly cryptic note from Herman to Harriet: “I know your policy is to share gifts between your employees at Christmas, but I did not want you to feel left out.”

Harriet sends this gift to HR to be added to the Christmas raffle and sends a polite note back to Herman thanking him for the wine, saying she is glad that he has enjoyed working with her, but that she is sure that Herman will understand that she cannot ignore the firm’s rules just because she is the boss.

A week or so after returning to work following the Christmas break, Harriet receives an email from Herman inviting her to lunch with him in a few days’ time. Harriet is happy to accept as it does not appear that Herman has taken offence over the note she sent to him regarding the bottle of wine. Herman says that he will meet Harriet at her office and they can go on to the restaurant together.

As arranged, Herman calls for Harriet at her office, and tells Harriet that he has booked a table at a well-known restaurant, just a short walk away. Harriet has not been there before as it is considerably more expensive than she would normally choose for a business lunch. Nevertheless, she enjoys a convivial lunch with Herman, whom she is able to reassure that the firm has no current plans to change its suppliers and they part on good terms.

A few days later, Harriet arrives home late after attending an evening function and is greeted by her partner who says that they have received a package, which she opens to discover two bottles of rather good claret in a very nice presentation box. There was a note from Herman, which said simply: “Enjoy!”

Slightly irked by the prospect of having to lug the heavy box in to work at a time when she is very busy, Harriet thinks no more about it and goes to bed.

With Harriet’s heavy schedule, the matter of the wine slips from her mind until a few weeks later when preparing for a dinner party. Her partner says that he has opened the wine that Herman sent as it looks rather good.

On hearing this, Harriet sighs, remembering that she had meant to take the wine in to work and give it to HR to hold until Christmas. Clearly this is no longer an option.

What should Harriet do?

• It’s just a couple of bottles of wine given to her personally, so she can enjoy them with a clear conscience. Cheers!
• She must find out the price of the gift package and contribute an equivalent value of wine to the staff ‘Christmas fund’.
• Recognise that the action that Herman has taken is a deliberate attempt to circumvent the firm’s policy on gifts, which he is aware of. This calls into question his overall standard of integrity. Might this extend to his business dealings? She must review the firm’s dealings with Herman.
• She must write to Herman, from the office, in polite but strong terms, telling him that his generosity was misplaced in sending the gift to her home, as he knows that she cannot accept it. She will warn him that he is in danger of upsetting their previously good professional relationship.

Fran is a senior member of the team in her bank which works on providing a ‘reward programme’ to account holders who meet various levels of activity on their bank account and related credit cards. She has recently been responsible for introducing a new reward scheme to her bank customers, in partnership with a well-known airlines group.

Shortly after the fanfare of the launch it transpires that the amount being credited to customers’ loyalty reward accounts has been wrongly programmed by a factor of 100. As a result, millions of travel miles have been wrongly credited to account holders. News of this has spread like wildfire, particularly within the bank, where a number of members of staff appear to have taken advantage of the error to book extensive and expensive overseas travel. The cost to the bank and the airline of honouring all of these unearned ‘miles’ could run into many millions of pounds.

As soon as Fran is made aware of the problem, she contacts the administrator of the scheme, who quite quickly identifies a ‘computer operator error’ as the cause and asks Fran what they should do. Fran feels that she must lose no time in informing her superiors of the problems with the incentive programme but that she must offer them solutions to the problem at the same time.

Fran suggests to the administrator that they suspend the scheme immediately, but is told that they could only accept such an instruction in compliance with the terms of their contract with the bank. Accordingly Fran would have to get the agreement of a senior executive of her bank to amend the contract.

Knowing that she will be unable to avoid raising the matter at the highest level in her bank, Fran considers some recommendations on how to proceed. Recognising that there are a number of parties involved, including customer, bank and reward provider, she feels that any recommendation that she makes must take each of them into account.

Her initial thought is that the most straightforward course of action would be to cancel the scheme and start again, crediting everyone with the correct miles.

Unfortunately, when investigating who within the bank had used the reward scheme, Fran is surprised to see her own boss, a number of other senior executives and even two directors. Accordingly, she feels that she had no alternative other than to report the matter directly to the CEO.

The CEO has already been made aware of the problem by his opposite number at the airline and thanks Fran for bringing him the details. However, on reading the list of names, his immediate response is to ask his PA whether the Chairman is in the office, as he must see him immediately. Taking Fran with him, he hastens to the Chairman’s office.

The Chairman listens with increasing dismay as the CEO recounts what has happened and the potential cost. He is even more concerned to hear the names of those bank personnel who have taken advantage of what was, manifestly, a mistake. In his anger, his initial response is to suggest that the bank should dismiss all those staff who have taken advantage of the mistake.

At this, the CEO interjects and says that he thinks that might cause more problems than it solves and so offers the Chairman a number of potential ways forward:

• Offer all staff the chance to reimburse the bank for the equivalent value to the travel booked using the rewards.
• Tell staff that their actions have breached their responsibilities to their employer, who will take disciplinary action against them commensurate with the seniority of the member of staff.
• Dismiss all those staff involved, irrespective of the impact that this may have on the operations of the bank, on the basis that their behaviour amounts to dishonesty.
• Accept that the bank was partly responsible and offer to share the cost of any use made of the rewards with the individual concerned.

Background

Richard is the newly appointed department head of the operations department, whose poor reputation has led senior management to focus on it. He has a reputation for being a demanding, some would say ruthless, manager and the department views his appointment with some trepidation.

On his first day, Richard tells the section heads that he is determined to improve the performance of the department by eliminating the unacceptable number of errors which occur. He says that section heads have a key role in driving the performance of their teams and his department, adding that he is aware of his reputation, which he admits is not undeserved.

A week later Richard sees the section heads again and draws their attention to the weekly errors report which, he tells them, far from showing an improving trend, contains more errors than ever before. He then reads a letter to them, which he intends to send to department staff, stating that if all work is not checked and the failure to do so results in unacceptable errors: “it is highly likely that the individual…will face disciplinary action, which could result in dismissal.” The new regime will be enforced immediately.

The impact of the letter is a sepulchral hush in the office and the working of longer hours by many staff, especially the section heads.

A week later, unprompted by Richard’s ultimatum, the internal audit team carries out a snap audit of the department, as a result of which they identify a number of errors, most of them historic. However Richard’s attention is drawn to one specific item, which is still current and includes entries passed two days previously. An instruction to make automated dividend payments into a client’s account has been set up wrongly, resulting in a series of duplicated payments being made. Although none of the amounts is more than £25 and a total of about £200 has been wrongly paid, it is the apparent failure of his letter to make any difference which really upsets Richard.

Exasperated that this should have occurred so recently, he asks who should have checked the entries and is told that it is Nadia, a long-serving section head, who has a mixed track record.

The Dilemma

With a copy of his letter and the internal audit findings in his hand, Richard storms into the office of his divisional head. He demands that, following on from his warning, disciplinary action be taken, saying that he expects the divisional head’s support, as crucial in achieving an effective department.

The divisional head is going to a meeting, so tells Richard that he will see him later on. Before doing so, he contemplates a number of key issues that he considers should be addressed before making a decision. It is essential that any action that is contemplated is fair and scrupulously follows the firm’s procedures but, bearing this in mind:

• What sort of culture does the firm want?
• Is zero tolerance acceptable?
• Does this operational failure meet that criterion?
• Do you want people to own up when they have erred?
• If so, how do you incentivise and encourage them to do so?
• Do you want to reward appropriate behaviour? How can you do so in this case?
• How will Richard feel if his divisional head does not support him?
• Should you weigh the materiality of Nadia’s failure against the potential impact on the authority of your new manager?
• If you think disciplinary action is warranted, which may lead to dismissal, what should Nadia have done to avoid being dismissed?
• Where do you draw the line and what message does this send to other colleagues?

Options

Having considered these questions, the divisional head sees that he has a number of potential courses of action, all of which have some merit and he wonders which he should choose. Should he:

• Support Richard in his proposed course of action, to the maximum extent that is permitted within the firm’s employment policies, because he was selected to do a job and failure to support him at this stage will fatally undermine his authority?
• Support Richard in taking action, but ensure that it is proportionate to the actual incident, irrespective of the warning that he gave?
• Suggest that no action should be taken without involving HR, even if that results in losing the shock and awe impact for which Richard clearly hopes?
• Suggest that no action should be taken that may have unintended consequences?

Consideration must be given as to whether taking a hard line will improve or worsen the situation.

The verdict

He should support Richard in taking action, but ensure that it is proportionate to the actual incident, irrespective of the warning that was given.

Further reading

Background

Calliope is a small business which provides technical and educational support to the financial services industry. It is well regarded by its customers, who rate its products and services highly in helping them meet the increasingly stringent standards required by the industry regulator. Calliope is not the only business which undertakes these activities, but it is an industry leader.

Alex, the chief executive, is conscious of the need to maintain leadership in the sector, but is happy to share the firm’s experience with other bodies, which do not compete directly with Calliope, believing that the promotion of a professional approach by the sector will benefit the industry generally. Accordingly, when he is approached by Terry, the head of Sorex, a small charity, which is seeking to follow the same path as Calliope, but lacks the resources to do so, he is happy to lend a member of staff to provide advice and guidance. Relying on Sorex’s charitable status, Alex is confident that it will not act in any way that is commercially detrimental to Calliope.

Greta has a background in educational development and is experienced in introducing new systems, which was a major incentive for Calliope to hire her several years previously, a decision which it has never regretted. As head of educational development, Greta regularly attends industry conferences and events, where she networks with her peers in similar bodies, as well as product developers looking to penetrate the sector. Because of this, she is well known in the sphere in which Calliope operates. Her reputation and recent attendance at a conference, where she spoke with a Sorex delegate, resulted in Terry’s call to Alex.

Greta spends two weeks helping Sorex to identify the processes that need to be revised to accommodate the new systems that it must adopt to be able to deploy its new technology successfully. She then returns to Calliope, where she resumes her regular work. Terry is full of praise for what she achieved at Sorex, telling Alex that the business would not have been able to make the necessary changes without her help.

The Dilemma

Alex is delighted that his altruistic approach has been beneficial, but his positive feeling towards Sorex evaporates when, two weeks later, David, Calliope’s head of development, tells him that Greta has given notice of her intention to resign, because she has been offered another job, which will allow her to lead her own division, reporting directly to the chief executive. This is a challenge which she eagerly anticipates, as she feels that she does not have the level of responsibility at Calliope which she really wants and which, she believes, her experience warrants. She will also receive a significant boost to her salary.

David tells Alex that Greta will not tell him the name of the potential new employer, saying that it is too early and that she is giving notice immediately, so that Calliope has as much time as possible to find a replacement. Alex is understandably dismayed by this news, saying that he hopes it is nothing to do with Sorex and David responds that he cannot imagine that any organisation which claims to be a charity would act in such a manner.

Greta is working her three-month notice period, without revealing the source of her new job, when Alex meets Terry at an industry event. Terry tells Alex that Sorex has embarked on its new product introduction, thanks largely to Greta’s help, that he is extremely pleased that she has decided to join Sorex and that he is grateful that Calliope is not making her life difficult in the meantime.

Alex is flabbergasted by this news and considers how to reply.

Possible Options

• Alex wonders whether he is being over-sensitive and should simply accept that people move on. On the other hand, perhaps he has cause to feel justifiably outraged that Sorex has stolen a key member of staff from Calliope, who acted charitably towards them and he should tell Terry and his chairman this.
• Alex also wonders whether he should try to block Greta’s move, if possible, even to the extent of entering into litigation, but he is reluctant to consider offering Greta a substantial salary increase and restructuring the department to make her the head, in order to keep her.

Verdict

Alex should tell Terry that he feels outraged at Sorex’s actions and that he will also communicate this to the Sorex chairman.

Further reading

Background

Pandora is a manager in a major firm of investment managers, where she is involved with the firm’s graduate recruitment programme, interviewing and evaluating many students and hopeful recruits every year.

One of the areas about which her employer is particularly concerned is the increasing use of social media, such as Twitter and Facebook, by students and candidates, both before recruitment and once they have joined the firm. Although the firm recently introduced policies concerning social media use, they appear to be practised more in the breach than in the observance.

Greg applied to join the firm while he was at university, where he had a wide circle of friends, with whom he enjoyed an active social life. Much of this was organised using social networking sites, which also carried frequent exchanges among the students and their friends. Many of these postings were light-hearted, some contained things that the writers might wish they hadn’t said and some were possibly actionable.

Greg’s older cousin, Bill, has been working at the firm for several years, in a different unit from that to which Greg has applied and is a valued employee. He has kept in regular touch with Greg, and other colleagues, both by email from his account at the firm and more recently via Facebook, which he has only recently started to use.

On more than one occasion, Bill has communicated, via Facebook, with Greg and a small circle of friends and colleagues, expressing frustration with senior management of the firm, in a negative manner. Bill did not realise that Sam, who is friendly with Bill’s supervisor, Howard, is among the recipients of these communications. Sam felt strongly that Bill’s messages were inappropriate and did not reflect well upon the firm, especially among potential recruits. Greg has also responded to Bill’s messages with some dismay, wondering whether the firm is right for him. Accordingly, Sam felt obliged to report the nature of these messages to Howard and to the firm’s human resources department.

In the meantime, Greg has spent a number of days going through a rigorous selection process and was pleased that he has been offered a job, in a different unit to Bill’s, subject to satisfactory references and confirmation of his academic achievements.

The firm’s recently instituted social media policy states that: “excessive use of company email for non-business purposes could result in limitations on the use of email by the individuals concerned.” It further states that: “negative comments made publicly by an employee about the firm, whether in written, oral or electronic form, could result in disciplinary action being taken against the employee.”

Having been informed of the content of Bill’s negative messages, the human resources department contacted not only Howard, but also Pandora, who was about to confirm the job offer with Greg, whose references and academic achievements were exemplary. They also examined Bill’s company emails and discovered numerous examples of internal and external communications, which were more of a social than a business nature. There were also some messages that were critical of the firm.

The Dilemma

The next day, Howard asked Bill into his office to discuss the matter. Bill was taken aback. He admitted occasional use of company email for purposes that were not strictly corporate, but claimed this was by no means excessive; and he said that his critical comments of the firm were not indicative of his actual sentiments, but were delivered jokingly, and in retrospect, foolishly. He maintained that the Facebook communications were a private dialogue between him and a few close friends and did not contravene company policy in terms of any public derogatory remarks. He sought to minimise any potential damage that might have been done to the firm as a result of these remarks, saying that Greg seemed keen to join the firm. Bill expressed deep regret at what may have been perceived as malice or sarcasm in his Facebook communications, which like his emails were delivered in a tongue-in-cheek spirit. Howard listened, then reinforced the firm’s policy with Bill, ending the meeting inconclusively.

Immediately following this conversation, Bill telephoned Greg outside of the office to seek further information on what the firm may have seen on Facebook and warned him that this could negatively impact them both. He also wondered whether it was within the firm’s rights to delve into his personal communications.

Possible Options

Both Howard and Pandora were uncertain about what to do next, with regard to Bill and Greg. On the one hand, Bill has appeared to act improperly in his use of the firm’s email to make critical remarks about the firm, as well as sending quite a few messages of a non-business nature.

On the other hand, these appear to be relatively isolated instances on the part of an otherwise valued employee. More problematic, however, is the consideration of the external Facebook communication with Greg and a few others, which could be viewed as a private conversation, albeit electronically recorded.

Pandora also has to consider how this may affect Greg, who is poised to join the firm and is not in apparent contravention of policy. The firm must act fairly with regard to Bill and Greg and be seen to do by the outside world. This is particularly important as the social media policy has only just been instigated and this will be an initial test of it.

These thoughts led to Howard and Pandora considering four possible options:

1. Bill should be let off with a warning and Greg should be hired, with reinforcement to both of them of the firm’s policies.
2. Disciplinary action should be taken against Bill (which could include termination of his employment) and Greg’s recruitment should be terminated.
3. Greg should be hired as planned, but Bill’s employment should be terminated for his conduct.
4. They feel unable to deal with it and decide to refer the matter to the compliance and legal department.

Verdict

Bill should be let off with a warning and Greg should be hired and the importance of adherence to the firm’s policies should be stressed to both of them.

Given that the firm’s policy is still relatively new and untested and the private nature of the communication, this response is softer than is likely to be the case as the policy becomes more established.

Further reading

Background

Paul was a senior manager in Visible, a long established firm of financial advisers which also offered investment management services and was seeking to position itself as a leading wealth manager. As a part of this plan, Paul was charged with reviewing all of the businesses, investment products and services offered by Visible with a view to introducing a new investment platform to provide a class leading proposition to its clients.

Paul identified a number of potential platform providers and after viewing the products of a number of IT firms and carrying out a competitive tender, the firm of Spectral, a long established IT provider, was chosen as being the most able to identify with Visible’s vision and provide what was envisaged.

Paul was very pleased that Spectral had been chosen and was confident that they would be able to deliver and good progress was made. Inevitably, a number of unforeseen difficulties arose, which resulted in some delay, added to which as the project progressed a number of additional features were required which further delayed the launch.

However the Visible platform was finally ready and launched to a largely positive reception from the investment community and customer response was very good. As a result of this experience, the Visible executive determined that their configuration of the Spectral platform represented a valuable asset that could be marketed to other users, provided they did not represent a direct threat to Visible.

Paul was again charged with managing this exercise because of his in-depth knowledge of what the Visible platform offered and the competitive advantages it was felt that it would bring to a user. Paul approached a number of suitable potential users of the platform and after discussions with a number of firms received a positive response from Grey Bank, a high profile name, but one who did not provide direct competition to Visible.

Following a period of intense testing Grey Bank determined that the Visible platform which had been specifically customised to meet their requirements was acceptable and Paul was waiting keenly for them to sign a formal agreement. This would be accompanied by a high profile launch, with considerable fanfare, and Paul was quietly pleased at the prospect which he felt could only be highly positive for his career aspirations.

However, this satisfaction was short lived because at an industry meeting shortly before the scheduled signing day he bumped into representatives of Spectral , who told him that on the back of their successful platform sale to Visible, Spectral had managed to conclude a very good deal with Indigo Bank.

Paul was somewhat taken aback on hearing this news, since Grey Bank and Indigo Bank were similar types of organisation and therefore would be appealing to the same types of customer. More significant was the fact that Visible had sold their platform to Grey Bank on the basis that it offered unique advantages.

The Dilemma

If Indigo could now offer a not dissimilar product, how might Grey Bank view their proposed agreement with Visible? Might they accuse Visible of misrepresentation, or more importantly for Paul, might Grey Bank decide not to sign the agreement, or at least to delay signing? Paul wondered whether he or Visible had actually done anything wrong and whether he should make Grey Bank aware of the fact that the platform that they were offering to their customers was based on a product from Spectral and that, inevitably, there would be some operational aspects that they both shared, albeit that they looked quite different.

Paul was very conscious of the importance that Hugo, his Director, attached to this project which would earn them both great credit if it went well, but Paul as the project leader would be the one in the spotlight if there were any problems. Consequently, before discussing the matter with Hugo, Paul examined Visible’s agreement with Spectral to see whether it contained any language that said or suggested that Spectral could not sell their platform to anyone else without Visible’s agreement and was concerned to note that it did not.

Options

Paul then considered the various options which he could recommend to Hugo as the best way to proceed, which he felt were:

• That Hugo should immediately contact his opposite number at Grey Bank and tell them what Paul had learnt, but seek to reassure them by pointing out that the Indigo Bank product would not contain any of the enhancements made by Visible, nor any of the Grey Bank customisation, leaving it to Grey Bank to decide whether to proceed.
• Visible should carry on as planned, without saying anything about the Spectral sale to Indigo, since the Grey Bank product was similar only under the skin and so no direct comparison could be made. If Grey Bank subsequently complained, and they might not, Visible could deal with that when it happened.
• Paul should immediately contact Grey Bank and without mentioning anything specific, encourage them to sign and launch their new platform as soon as possible, warning them that he had heard Indigo Bank was also about to launch a new platform which might steal Grey Bank’s thunder.

The verdict

The fairest and most transparent approach is for Visible to alert Grey Bank to Spectral’s sale of a platform to Indigo Bank, and leave the decision to Grey Bank. This should avoid any potential problems in the future

Further reading

Background

Ray had completed nearly a year of his first job in a small branch of the bank, which he had joined straight from school and was very happy to receive a good appraisal saying that he had performed well and showed great potential. Accordingly, he was not very surprised to be told by the Assistant Manager that, the branch manager, Christine, wished to see him at 4 o’clock.

Christine congratulated Ray on his performance and said that although, as a rule, staff were not able to participate in the bank’s bonus scheme until they had completed 12 months service, because Ray had performed very well she wished to encourage him. Accordingly, she had made an exception in Ray’s case and she handed him an envelope, saying that she hoped that Ray would be pleased, adding that because of the special nature of the payment and the bank’s rules on bonuses generally, he must ensure that he did not discuss it with anyone. Ray felt a little embarrassed to have been singled out but pleased to have made a good impression.

Quickly Ray went into the staff room where he opened the envelope and was pleasantly surprised to find £150 in new notes, as well as a letter from Christine saying that the bonus was her personal recognition of Ray’s hard work and good performance. Ray was a bit surprised at the comment which left him unsure whether the “bonus” was from the bank or from Christine herself.

Although Christine had told Ray not to mention the award to anyone, which was the bank’s normal rule regarding bonus payments, he felt unable to keep his apparent good fortune to himself. On the way home sent a text to his friend Dan, whom he had met on the bank’s induction course when he joined the bank, suggesting they meet later for a drink. Dan, who worked in another branch but lived nearby, readily agreed.

When he got home, Ray relayed his good fortune to his mother who said how pleased she was, adding that she hoped he would do something sensible with the money. Later that evening when Ray met Dan he told him that he had had a spot of good fortune and offered to buy him a drink, “not just the usual pint, but anything you like” said Ray extravagantly and Dan asked him to bring the cocktail list.

When Ray returned with the drinks and sat down, Dan asked him what had prompted this unusual generosity and Ray said that he was not supposed to tell anyone, but that he had received a bonus. Dan expressed surprise saying that as they had not been in the bank for a year they did not qualify for the bank’s bonus scheme and anyway, staff had been warned that bonus payments would be very limited, so Ray getting one must surely have been a mistake!

Ray responded by telling Dan that Christine his Manager had said that the bonus was personal and despite Christine’s warning he showed Dan the letter. Dan read the letter and said that he was very surprised and it looked as though Christine had given Ray the money out of her own pocket. He said he thought that was rather unusual and added that he hoped Ray had not been asked to do anything unusual by Christine. Ray asked what Dan was implying adding that he did not actually have much day to day contact with Christine.

Dan said that he thought it was unusual to give people any sort of payment in cash, because it could imply all sorts of things but, even so, he was enjoying his drink bought with the proceeds of Ray’s good fortune. Ray replied that he was sure that he had done nothing that he should not have done and suggested that they talk about something else and the conversation turned to more controversial matters, such as football.

At the end of the evening Ray and Dan went their separate ways not having said any more about Ray’s bonus, but Ray awoke in the early hours and had difficulty going back to sleep because he wondered whether he had done anything wrong in accepting the money or whether anything that he had done at work might have been at all “suspect” but he could not think of anything.

The Dilemma

Ray wondered whether he should raise the matter with anyone either in the branch, and if so who? Or should he perhaps phone the helpline number that he was given on his induction, but he was unsure to whom he would be talking and whether it would get back to Christine that he had called. That seemed possibly to be worse than doing nothing. In the end, after tossing and turning some more Ray fell asleep with the matter unresolved.

Options

In this case, Ray rightly has some suspicions of irregularity by Christine. Does Christine have an ulterior motive for awarding Ray the bonus in this way? It seems clear that the bonus payment was not made according to normal procedures.

Accordingly, Ray has four main options:

1. Approach Christine directly to clarify the situation and return the bonus.
2. Notwithstanding that he had been told not to discuss it with anyone, Ray should report it to whoever is responsible for HR matters in the branch.
3. Call a staff helpline, with whom he could raise the matter.
4. Nothing. He was very fortunate to have received a bonus in these difficult times.

Confronting Christine directly raises the stakes and could have potentially serious consequences for both Christine and Ray. It is still not clear what motivated Dale to take the action that he did.

If Ray reports the matter to HR, it could also have serious implications for them both, with Christine at particular risk of being fired. Nonetheless, the firm’s bonus procedures appear not to have been followed and the situation needs to be resolved.

Although the call to a staff helpline might provide some useful advice, were it to be anonymous, there could be the risk that this matter is reported by the staff helpline, which would have a similar result to the scenario of reporting it to HR.

In any case, any investigation is likely to determine that Christine has acted improperly, and so has Ray by accepting the money. This could damage their professional careers.

By doing nothing, Ray is implicating himself in a process that is neither open nor fair, and not overly honest.

The verdict

The best course of action is for Ray to report the situation to the staff helpline and get further advice. He should in any case return the money to Christine, citing his confusion, as a new employee, around the process and the secrecy of the transaction, and leaving the next steps, if any, up to Christine. While this may not improve his standing with Christine, he is acting with integrity in seeking to ensure that the bonus process is open and transparent, and leaving it to Christine to unwind a very sticky situation.

Further reading