You have recently moved to the marketing department for the retail division of a large bank. As part of your familiarisation, you are invited by your manager to accompany her to a meeting of the division’s product review committee, which convenes quarterly to consider all aspects of new products before they are released into the market. She tells you that she does not think that anything particularly contentious is likely to be discussed and asks you simply to take notes.
You attend the meeting, at which there are representatives from Marketing, Risk, Line Management and Compliance. All those present are senior to you and you feel pleased that you have been invited.
A number of relatively straightforward matters are discussed that generate very little comment and you simply take notes as requested by your boss. The meeting comes to the last item on the agenda, which is described simply as a fixed income fund-product replacement. The new product team sponsor introduces the product and stresses that one of the principal attractions is that it is really only a modification of a previous product, which was withdrawn a short while ago so as not to confuse customers. Although the products are broadly similar, the new product does have a number of features that are different, but nothing that should alarm the bank’s mainstream customers.

No customers will be disadvantaged by the proposed questionnaireThe line manager says that he is very keen to have the new product to sell if his team is to meet its sales target. He says that the fact that it is evolutionary rather than revolutionary will be helpful since it is always a challenge to convince customers to buy something new, particularly if it contains anything that is not very obvious.

Notes on a scandal

You listen to the discussion and make notes that stress the replacement nature of the product and the fact that the Risk department considers that it is no riskier than the product it replaces and can therefore be sold to customers with a similar risk appetite. Your boss then says that she has been considering how the bank can most effectively identify those customers to whom the product would be attractive, in order to improve the prospect of successful sales - the mass mailing of customers is rather unscientific and historically has a poor success rate. Accordingly, she suggests that the bank should take advantage of the widespread publicity within financial services about the need to ‘know your customer’ and introduce a ‘pop-up’ questionnaire into the online banking screen, asking customers to provide information about their finances.
She says that this will enable the bank to identify more easily customers who are more likely to buy the product and will immediately enable the bank to dismiss the great bulk of these, for whom the product will be unsuitable.
One of the other attendees, who you were told subsequently was from Risk, asks how branches, in particular, may react if customers ring up and complain about this ‘pop-up’ questionnaire. In response, your boss suggests that a simple question-and-answer sheet should be drawn up and circulated to accompany the branch marketing pack. This would stress the regulatory requirement of ‘knowing your customer’ and can be supported by quoting customers’ financial protection, as well as being part of ongoing anti-money laundering requirements.
The representative from Compliance says that this is something of an exaggeration but, since it is not false, he would not object to it. No customer will be disadvantaged by this proposal and it could be argued as being within the parameters of Treating Customers Fairly.
You return to your office and your manager asks you what you thought of the meeting. Not wishing to bring your career to an immediate halt, you hesitate before replying and various thoughts run through your head.


What would you do

• You are reassured that these sorts of things are discussed these days, as the last thing that banks can afford is another scandal of the payment protection insurance type.

• You are a bit concerned that the justification for asking customers questions that they may regard as an intrusion is not really valid.

• You feel that, as a newcomer to the team, you are not in a position to comment (subtext: you are appalled at what you regard as rather cavalier behaviour towards the bank’s customers).

• You feel strongly that the proposed justification for the questionnaire is entirely bogus and that if the team cannot come up with a good reason, it should approach customers in another way.

The CISI verdict
The Question Time dilemma appeared in the March 2014 edition of the Review, with members invited to register their favoured response and leave supporting comments in a survey on the CISI website.

A significant majority of respondents supported the view that if it was felt that the justification for the questionnaire was bogus, then the team must come up with another approach, which is reassuring. Nevertheless, you did not actually say anything at the meeting and it was not suggested by any respondents that thinking the right thoughts is all very well, but only a first step, towards taking the right action. In this case, making clear to your manager what was said and why, together with the decision reached and then making clear your concern at what was proposed.
Recent articles in the personal financial pages of national newspapers have drawn attention to the increasingly intrusive nature of questions being asked of both new and longstanding customers, not only of banks, but also stockbrokers, under the guise of both anti-money laundering and know your customer.
Whilst it is unlikely that this trend is going to decline, it is important that firms do not use these regulations as a smokescreen for general information gathering, which may equally well fall foul of data protection legislation.