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Bank regulation: Affects on banking workforce

Bank regulation: Affects on banking workforce

​​NFU report insights from Nordic Financial Union President Michael Budolfsen​​

The following interview is featured in the third quarter edition of WSBI-ESBG News & Views​​​.

>> Read the study​

​BRUSSELS, 14 August 2018

Why was the survey done now? What was the issue for Nordic Financial Unions and the banking workforce in the Nordic region? 

This year marks a decade since the devastating financial crisis of 2008, after which the European Commission initiated a major over-haul of the EU financial legislation. This reform was in many ways much needed and wellintended. However, little thought seems to have been put on how the rules would play out once implemented at national level. That is why Nordic Financial Unions decided to survey how regulatory requirements on documentation, information to consumers and Know your customers, stemming from EU regulation, effect employees in the Nordic financial sectors. The result suggests that financial consumer protection reforms are not working as intended, as employees struggle to cope with compliance and at the same time provide quality advice and customer service. 

What results surprised you most? 

The fact that over 80% report that employees’ workload and 75% that employees’ stress levels have increased due to the requirements do I not only find surprising, but gruesomely worrying. Not only does the pressure pose a threat to our members’ health and well-being, but also to the service they will be able to provide to customers. Our data indicates that this is a huge issue for the financial sector as a whole. A better balance is clearly needed. In addition, the fact that as much as 49 percent report a conflict of interest between compliance tasks and customer service is a surprisingly high figure, and of course very problematic.

What results did not surprise you so much? 

Unfortunately, I am not surprised that 38% says that finance employees are met with negative reactions from customers when they try do their job and ask KYC-related questions. With the new rules on AML, policing tasks has been put on financial institutions. I am convinced that our members are happy to do their part in contributing to a healthy, sustainable and wellregulated financial sector, but they need support from managers, super - visory authorities and legislators, in order to do so. 

Analysis of data seemed to show a need to devote more time and resources by employees in the Nordic finance sector to “do a good job”. In fact, you are quoted as saying as much in the press release. Could you expand on what that entails? 

Sufficient time, resources and training are key for finance employees to be able to do a good job. Our members want to focus on providing good service to customers rather than spending hours on administrative tasks that appear pointless. The data however indicates that the time-demanding compliance tasks have been put on top of employees’ other work, with little or no adjustment of performance targets. As regulatory requirements increase, the over-all workload needs to be adjusted accordingly to make sure that employees have sufficient time and resources to both comply with regulation and provide customers with suitable financial advice. 

The report identifies a “conflict of interest” between employees offering good customer service while at the same time following rules and regulations. In what ways can that tension be addressed? What can financial institutions and/or your members do to address that tension? 

Providing good customer service and following rules and regulations are two equally important tasks for financial institutions and finance employees should not be forced to choose between them. In order to address this, cooperation and dialogue between management and trade unions and their representatives at sector and company level is essential. By doing this, potential areas of conflict of interest for employees could be identified and dealt with proactively. 

And finally – and this is a long question – the results put into the question whether the rules live up to the legislators’ original intent of banking rules and regulation to improve customer understanding of financial products and raise quality of financial advice and support overall-financial stability. This reality aligned well with WSBI-ESBG’s position for a proportionate approach to legislation. If there is only buy-in from some employees, and questionable outcomes for customers, should the rules be reworked and proportionality taken on to help make the rules work better? 

Basically, regulation should create value for society, workers and companies. Saying this, I am a firm believer that excessively complex financial legislation should be avoided, and that a fair, balanced and transparent framework that supports quality financial advice and sustainable sectors should be promoted. This is evidently not the case today, where finance employees are struggling to cope with compliance regimes not adding value nor meaning for the consumer. A thorough review of the cumulative effects of financial regulation in practice is needed to make sure that the framework is proportionate and fit for purpose. As trade unions, representing the vast majority of the Nordic finance employees, we are happy to be a part of these discussions, not least by cooperating with the sector and providing more detailed knowledge on the topic in the future.​

Proportionality; Regulation