Market Conduct
Consumer Protection Challenges
Catherine Simmons
Managing Director and Head of Government Affairs Asia Pacific
September 2014 Bali Indonesia
The Framework
Conduct Risk
oComprises a wide variety of activities and
types of behaviors
oOutside main categories of risk such as
market, credit, liquidity and operational risk
oRefers to risks attached to the way a firm
and its staff conduct themselves
oGenerally agreed to incorporate customer
treatment, staff remuneration and
management of conflicts of interest
Thomson Reuters Conduct Risk Report 2013
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Key Ideas in Behavioral Economics
Present bias
Reference dependence and loss aversion
Regret and other emotion-driven preferences
Overconfidence
Over-extrapolation
Projection bias
Mental accounting and narrow bracketing
Framing, salience and limited attention
Decision-making rules of thumb
Persuasion and social influence
Bounded willpower
Bounded rationality
UK FCA Occasional Paper 1 2013 Annex and Speech
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Emerging Concepts
Responsible
Finance
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Treating
Customers
Fairly
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Customer
Charter
Impact on Company
A Commitment to Responsible Finance
Business Conduct that is:
 Transparent
 Prudent
 Dependable
Citi Global Citizenship Report 2013
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How Do We Do Business
Citi Code of Conduct 2013
 Outcomes
We strive to create the best outcomes for our
clients, shareholders and communities with
financial solutions that are simple, creative and
responsible.
 Treatment
Treating our customers fairly and in a nondiscriminatory manner is deeply rooted in our core
principle of responsible finance
 Commitment
 Trust
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All of our products, services and programs reflect
our commitment to serving our customers with
fairness, transparency, prudence and
dependability.
We must fulfill this commitment by listening to our
customers, understanding their needs and offering
appropriate solutions so we can continue to earn
what matters most – their trust.
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Conduct Risk Targeted Reviews
Assess business plans and
strategy for forward-looking
indicators of conduct risk, such
as products with asymmetric
bargaining power, high profit
margins, and/or an imbalance of
the risk/return ratio.
Business
strategy
Conduct Risk
Program
New product
approval
processes
Pay attention to areas
that could give rise to
conflicts of interest.
Conflicts of
interest
Incentive-based
compensation
Reexamine incentive
compensation plans
through the lens of
conduct risk. Place an
emphasis on those plans
that might increase the
risk of mis-selling.
Review processes governing approval of new
and their output to identify potential conduct
risks.
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Responsible Marketing
Our Objectives
 We seek to fairly represent our products and services and to communicate
with clients in a straightforward way that is jargon-free and transparent.
 Lawyers, and/or compliance officers, review our advertising and marketing
materials to ensure they clearly and fairly represent the offer, satisfy any
product-specific disclosure and contractual demands, and comply with all
legal and regulatory requirements
 In Japan, we have developed easy-to-read guides to account features and
fees to support credit card holders available on paper and digitally.
 In the United States, our easy-to-read guide to account features and fees,
Plain Talk about Your Products, is part of account opening processes
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Promoting Financial Inclusion and Economic Progress
Our Program
 We look to provide financial opportunities, access, knowledge and
support for underserved communities and individuals worldwide.
 We strive to treat our customers fairly and support them in times of
financial difficulty, as embodied in our commitment to Responsible
Finance.
 The Citi Foundation donated $78 million in 87 countries, enabling 1.3
million people to make progress towards financial inclusion and economic
progress
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Financial Education
The Indonesian Example
BUSINESS RESPONSIBILITY : Responsible Advice to
Customers & other Consumers
COMMUNITY RESPONSIBILITY : Support for Low
Income | Disadvantages | Advocates | Practitioners
1
Activities
Intermediate
Outcomes
2
Financial
Education
Save & Invest
Wisely
Financial Capability
The ability to make informed judgments and effective decisions about the use and management of one’s money
Financial skills, knowledge, understanding,
awareness of rights
Final
Outcome
Full Financial Inclusion
Access for individuals to appropriate financial products and services. This includes people
having the skills, knowledge and understanding to make best use of
those products and services
Save & Invest Wisely
Publication | Seminar | Economic Outlooks |Financial Literacy Survey |
Educational website
1. Fin-Q
Financial Literacy Survey
Indonesian Fin-Q Survey
•
Between 7-14 October 2013, Citigroup’s Asia Pacific research partner conducted a total of
500 online interviews across Indonesia.This survey has been conducted on annual basis over
the last 7 years
•
In order to be eligible for the study, all respondents had to be over 18 years of age and have
either a bank account or own a major credit card.
•
The questionnaire was administered via an online survey methodology.
•
The questionnaire consisted of over 80 questions and covered a range of topics related to
making smart financial decisions and having good financial habits.
•
The average interview length was 29minutes.
•
At the country level, the results of a sample size of N=500 are said to be accurate to within
+/-4.5%, at the 95% confidence level.
Citi Fin-Q Survey (Oct 2013)
Citi Fin-Q Score Result Summary
Looking at the individual elements of the Citi Fin-Q Score revealed the following:
•
The combined Citi Fin-Q Score for Indonesia was 60.7 (up 3pts) points out of a possible 100 points – this
represents the highest score since research started in 2007.

The overall results show that two-thirds of Indonesians (69%) have a Fin-Q Score of 50 or more.
•
The demographic data show that males typically outscore females and that the average Fin-Q Score tends to
increase according to one’s age, income and retirement savings.
 Only 36% make and stick to a monthly budget, a further 55% make a budget but don’t always stick to it
 Only 56% believe they have enough insurance to protect both them and their families
 Only 31% have a formal retirement plan and 9% have an up-to-date will
 66% set aside or save some money every time they get paid
•
71% pay off their outstanding credit card balance in the average month
•
80% are somewhat/very satisfied with their current quality of life
•
89% are somewhat/very optimistic about their financial futures
Citi Fin-Q Survey (Oct 2013)
Comparison 2007 vs 2013
2013
2007
•
Indonesia’s Fin-Q score: 52.2 (out of 100)
•
Indonesia’s Fin-Q score: 60.7 (out of 100)
•
If they lost their jobs tomorrow, most
respondents said their savings would last
them less than 11 weeks
•
52% of Indonesians think their savings would
last more than 3 months if they lost their job
•
6 out of 10 Indonesians do not plan for their
retirement
•
74% of Indonesians express confidence with
their retirement savings
•
Less than 25% have a formal retirement plan
•
31% have formal retirement plan
•
58% admitted an “average” understanding of
personal financial management
•
65% feel they had a “good” or “very good”
understanding about money management and
personal finances
Source: Citi Indonesia Fin-Q (Financial Quotient) Survey 2007
Source: Citi Indonesia Fin-Q (Financial Quotient) Survey 2013
2. MYWEALTH
Educational Website
3. USE CREDIT WISELY
Localized Credit Tools & Advice
10,000 booklets produced & distributed
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4. SEMINARS & EVENTS
Outreach to Customers & Investors in collaboration with major
industry players
Citi Pension Fund Seminar 2012
The importance of risk management for pension funds was top of the agenda at the Citi Indonesia
pension fund seminar held on October 11th in Jakarta.
Citibank Financial Education Series
A journalist class with the theme of “Opportunity and Investment for Indonesian Women” was held to
give a better understanding on a better financial management for women.
Citibank Financial Education Series
Citi conducted the Financial Educations Series to help customers understand investor psychology as
well as alternative investments.
Citibank Financial Education Series – Journalist Class
A journalist class with the theme of "Multiply and Protect your Wealth" was held to give a better
understanding on investment to the journalists
Citi Coaching Clinic for kids
Community
Youth Education | Financial Capability | Microfinance
Committed to the economic empowerment
and financial inclusion of low-income
individuals , families and communities in the
areas where we work so that they can improve
their standard of living
Microfinance
Financial
Capability and
Asset Building
Enterprise
Development
Youth Education
and Livelihoods
In each of our focus area,
we strive to partner with
organizations that
demonstrate a
commitment to
sustainability and
incorporate sound
environmental practices in
their programs
Citi Foundation in Indonesia
Focus Areas
• In 2013 , Donated USD 860,000
• Since 2004 has donated around USD 6 Million
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1. Petualangan Agen Penny
Partner : Yayasan Mitra Mandiri dan Teater Koma
Partner Since 2007 (7 years)
Partnership Goals
• Financial education through theater showcase for school children
• Saving program for children of ages 6-14
• Awareness of Banking products
Key Beneficiaries: Students in urban and rural areas
Geographical Coverage
- Elementary School JABODETABEK Areas
Current Reach
•
•
•
•
•
•
•
•
•
36.322 Students watched Agen Penny performances
6.595 Students started to save their money after watching Agen Penny show
390 SHOWS up to April 2013
432 SCHOOLs organized Agen Penny shows
455 CITIpeka Volunteer participated
2.160 TEACHERS accompanied students during Agen Penny
5.000 STUDENTS registered as follower on Agen Penny Facebook
10.400 COMIC given to several school library
74.600 VISIT Agen Penny website
Partnership Highlights
Financial Education Program for children of ages 6 – 14 (Elementary
School Grade 5 & 6 ) through a theater performance and comic book
More than
website
74.600
visitors on Agen Penny
&
5000
More than
media and Facebook.
follower on Agen Penny social
Yayasan Mitra Mandiri Indonesia develop website www.agenpenny-id.com , social
media and Agen Penny Facebook as communication and interactive media for the program
in order to expand the coverage area of Agen Penny program
2. Urban Youth Financial Education
Partner : Plan International & Prestasi Junior Indonesia
Partner Since 2012
Partnership Goals
•
Contribute to increased economic security of targeted youth in
school and improve their employability through provision of the
financial education and entrepreneurship trainings
Key Beneficiaries: Students in lower income areas (Jawa Timur)
Geographical Coverage
- 10 Senior High School in Surabaya & Sidoarjo
Current Reach
•
4,008 students trained | 1,033 students maintain monthly
budgets for at least 3 months
•
968 students opened saving accounts | 889 students reported
increase in saving balance by 20%
10 student companies established | 200 students participated in
student companies program
•
Partnership Highlights
This program is to inspire students on entrepreneurship concept and
banking products | including to start a company
3. Citi Micro-entrepreneurship Awards (CMA)
Partner : UKM Center FEUI
Partner Since 2005
Partnership Goals
•
To motivate and inspire micro entrepreneurs across Indonesia
in order help them grow, be an independent and increase their
economics scale
Key Beneficiaries:
Micro entrepreneurs in rural areas with turnover < IDR 100
million/year or with nett income around IDR 3million/month
and having loan from LKM
Geographical Coverage
- All over Indonesia
•
Current Reach
•
4,403 participants
•
82 Winners from 2005 – 2012
•
Involving more than 130 Citi volunteers
Partnership Highlights
To leverage micro entrepreneur knowledge in business and financing
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4. Financial Education for the Poor
Partner : Lembaga Management Fakultas Ekonomi Universitas Indonesia
(LMFE-UI)
Partner Since 2007
Partnership Goals
• Expanding financial education curriculum for unprivileged society through Training
of Trainers (ToT)
Key Beneficiaries: People in urban and rural areas
Geographical Coverage
- All over Indonesia | 28 urban area
Current Reach
• Participants up to 600 people
• More than 300 organizations participated in ToT, they are:
• Koperasi | Lembaga Keuangan Mikro (BMT, Credit Union) | Lembaga Swadaya
Masyarakat | BPR (Bank Perkreditan Rakyat)
• Trainer (Dinas Kelautan dan Perikanan, Dinas Pertanian, Dinas Peternakan dan
Dinas Kehutanan)
Partnership Highlights
Participants who have completed the training will directly go back to their
society-communities which are built by BPR, Koperasi, Lembaga Keuangan
Mikro non-bank as trainers
5. Housing-led : Financial Education Program
Partner : Habitat for Humanity
Partner Since 2012
Partnership Goals
•
•
•
To help in making better house financing decisions
To empower financially excluded 600 low-income families living in Jakarta and
Surabaya in making better financial decisions, particularly regarding their housing
goals.
Delivered FE to beneficiaries in a financially sustainable manner by partnering
with PKK Dukuh Kupang Utara (in Surabaya) & Koperasi Yayasan Cinta Anak
Bangsa (in Jakarta)
Key Beneficiaries: From low-income families with children
Geographical Coverage
- Jakarta & Surabaya
Current Reach
• 350 participants in Jakarta | 250 participants in Surabaya
• Participants increased their level of financial knowledge & awareness
significantly in 4 areas: budgeting, savings, debt management and planning for
housing needs.
• Target individuals demonstrated at least one of the following skills and
attitudes: (i) budgeting and (ii) savings.
• Trained women actively involve in their household financial decisions
6. Financial Education for Mature Woman
Partner : Asosiasi Pusat Pengembangan Sumberdaya Wanita (PPSW)
Partner Since 2011
Partnership Goals
• Participants will acquire financial knowledge and practical skills on self-financing,
savings, loan management and financial independent in mature age
Key Beneficiaries:
Underprivileged mature women (above 40 years old) in urban & rural areas
Geographical Coverage
• 6 Provinces
•
Aceh | Riau | Kalbar | Jawa barat | DKI | Banten
Current Reach
- more than 730 women graduated from the program
Partnership Highlights
Financial program for mature women (above 40 years) first in Indonesia
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Financial Education for Mature Women Training
ACEH
BANTEN
•
•
RIAU
JABAR
JAKARTA
KALBAR
6 Months Training to learn 6 financial Modules with 4 sessions per module for 2hours
Number of participants from batch 1 & 2 are 731 people (reach 120% from the original target of 600 people)
GRADUATION OF FINANCIAL EDUCATION OF MATURE
Last year, there are 731 successfully
graduated from the Financial Education
Program for Mature Women.
To be judge by their presence in class and
having financial planning
7. UANG ANDA
Partner :Yayasan Ladang Media
Partner Since 2007
Partnership Goals
•
Financial Education to all society
•
Financial inspiration
Key Beneficiaries:
•
For families, employees, college students, and SME including
individuals with personal financial problems
Geographical Coverage
•
Across Indonesia 34 provinces | B-C segments
•
Have approx. 4million viewers
Current Reach
•
TVRI every Thursday at 07:30AM - 8:00AM
•
website: 1,036,789 visitors
•
facebook: 5,000 friends | facebook group: 2,478 likers
•
Twitter: 2,911 followers
•
Number of questions: 372 questions | Direct phone calls : 138
persons | Number of episode : 27 episodes
Partnership Highlights
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Since 2007, this program is becoming source of information and
interactive TV program for all B – C segments viewers
The End
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