Corporate Responsibility
The way we do business
For the first time in 2004, HBOS has set out its statement of business principles, entitled “Our Commitment to the Way We Do Business”. The statement was agreed by the Board in February 2004, and communicated internally to all HBOS colleagues in April. It was published in the HBOS Corporate Responsibility Report “Taking Care of Tomorrow” and on the Group’s website www.HBOSplc.com/community in July.
HBOS: our commitment to the way we do business
HBOS has over 2.5m shareholders, 20m customers, 71,000 colleagues, and many thousands of suppliers. Our commitment to these groups and to society in general is that collectively and individually we aspire to act responsibly and to high standards at all times. This is set out in our statement of business principles, called The Way We Do Business. The full statement is published below.
The statement refers to the Group’s key stakeholders and sets out how we will manage our relationships with them. It refers to transparent, value-for-money products, a safe working environment, developing the skills of our colleagues, relationships with suppliers, and to a range of social and environmental issues, including human rights, bribery and corruption, charitable donations, financial literacy and money advice.
The Way We Do Business is supported by 48 key performance indicators (‘KPIs’) published in the 2004 Corporate Responsibility (‘CR’) Report. Each of our stakeholders, and the main CR dimensions of marketplace, workplace, community and environment are addressed by these comprehensive KPIs. Measures have been adopted for customer satisfaction, including complaint handling, tracking the number of “best buys”, product quality as perceived by financial journalists, and our colleagues’ view of their rewards and benefits. We are committed to publishing our progress on these measures internally and externally each year.
Governance
HBOS has extensive policy formulation, governance and monitoring mechanisms in place for CR (Corporate Governance is specifically dealt with on pages 54 to 58 of this report). There is an annual review of corporate responsibility policy and performance by the Board, on which Phil Hodkinson, Chief Executive, Insurance & Investment Division has overall accountability for co-ordinating the HBOS response to CR issues. Phil chairs the Group’s Corporate Responsibility Forum comprised of senior managers from each business division and key business functions such as Procurement, Diversity, and Community Banking. This meets quarterly and reports to the Board annually.
"Our commitment to the way we do business"
Shareholders
We will promote the interests of our shareholders by seeking to increase the value of their shares and dividends, and through sound corporate governance. We will communicate with shareholders regularly and in doing so will seek to be clear, comprehensive and balanced.
Customers
We will be honest, fair and open in our dealings with our customers and endeavour to help them at all times. We are committed to providing them with value for money products, designed and promoted in a simple and transparent way, and made as widely available as possible. When things go wrong, as they sometimes do, we will resolve problems as quickly and fairly as we can.
Colleagues
We will create a safe working environment which encourages openness, honesty and mutual respect, and where colleagues can constructively challenge and ask questions. We will offer equal opportunities for all. We will provide the opportunity for all colleagues to develop their skills and knowledge, and to enjoy fulfilling careers. We will offer competitive remuneration with total rewards linked to individual and collective performance, and the opportunity for colleagues to participate in the success of HBOS.
Suppliers
We will deal openly, fairly and honestly with all our suppliers and business partners. We will not demand of them standards that we do not apply to ourselves but we will seek to understand their approach before doing business with them.
Society
Our main contribution to society is the value we can add through our success in business. We will seek to be a positive influence on those social and environmental issues which, having listened responsibly to our shareholders, customers, colleagues and suppliers, we think are important, for example upholding human rights.
We will observe the laws and regulations of all countries in which we operate, not just in the letter but also the spirit. We will not countenance bribery, corruption, insider trading or the concealment of conflicts of interest.
We will contribute to the development of the community by making charitable donations to initiatives relating to financial literacy and money advice, and by providing opportunities for colleagues to support the development of the communities in which they live and work.
Delivering our commitment
We will measure our progress against this commitment and report this regularly to shareholders, customers, colleagues and suppliers. Wherever possible, we will independently benchmark or verify that it continues to meet their expectations.
The HBOS Customer Contract Forum was set up in 2004: James Crosby chairs this group of senior executives. It includes the Heads of Group Risk, Marketing and Customer Relations and focuses on how HBOS designs, promotes and sells products. The Forum will contribute to the task of regaining public trust in financial products and services, through a focus on our marketing activity, product pricing, policies and processes.
James Crosby also chairs the Diversity Leadership Group, responsible for the Group’s Diversity policy. CR leadership within the Divisions and businesses is provided through new CR Forums in Corporate Division and Group Procurement.
Risks and Opportunities
Corporate responsibility for HBOS is first and foremost about our products. We believe that corporate responsibility is not something that can be pursued separately from our business goals, and we have therefore built CR into the Group’s risk evaluation process. The following examples demonstrate how we are doing this across our business.
Marketplace
We recognise that there are issues about public trust in financial services, and opportunities for HBOS to differentiate our products from competitors by focusing on fairness, value-for-money and transparency. This is a significant agenda, and we have some way to go in order to achieve our objectives and aspirations.
In Retail, our market leading current account, credit card and savings products again generated a significant increase in new customers joining HBOS. In 2004, we opened 1 million new bank accounts and 1.2 million credit card accounts, and increased our savings and banking credit balances by £8.4bn. In Insurance & Investment, our “level-load” range of simple bancassurance products has produced 12% sales growth and confirmation of HBOS as the UK’s leading bancassurer.
Responsible lending is an imperative for HBOS, although we acknowledge that we do not always get everything right. The One card launched in 2004 by Halifax and Bank of Scotland is a good example of our focus on responsible lending. This product features risk-based pricing, so a customer’s good credit history is rewarded with a lower interest rate. Currently the pricing ranges from an APR of 9.9% through to 12.9%, 15.9% and 18.9%. Unusually in this market, the One card is available to both new and existing customers. In practice, over 80% of customers are offered either the 9.9% or 12.9% rates.
