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Treating Customers Fairly Policy

  1. Introduction

The overriding principle central to Coronation’s culture and ethos is that clients come first. Coronation is committed to the fair treatment of all clients, irrespective of size or vehicle through which they access our investment products. Coronation recognises that client satisfaction is the foundation on which to build an investment business which is sustainable over the long term. Delivering optimal customer outcomes is an enterprise-wide responsibility and requires participation from all parts of the business. Apart from any legislative or regulatory obligations, treating customers fairly is a business imperative. Without clients we have no business. As an independent asset manager with no tied assets we are very conscious of the fact that assets under our management can leave us on 24hrs notice. Hence, putting clients’ needs at the forefront of what we do is a key business priority.

2. Client Charter and Values

Our client centric business model is reflected in our “Client Charter” and “Values”:

Client Charter:

  • We strive to always put the interests of clients first;
  • We have an unwavering commitment to the building of long–term sustainable client relationships;
  • We focus on producing investment performance over meaningful periods that meets our clients’ investment objectives and expectations;
  • We are uncompromising about applying ethics and good governance across all areas of our business.

Values:

  • Ownership
  • Always put clients first
  • Long-term thinking
  • Team-based organisation
  • Always act with integrity
  • Strong performance culture

Our Client Charter (communicated publicly since 2009) and Values (communicated publicly since 2003, and established since the start of our business) are key drivers of our strategy as well as our day-to-day dealings with clients.

3.  Treating Customers Fairly: the Financial Services Board (FSB)

The FSB published its “Treating Customers Fairly (“TCF”) Roadmap” in March 2011 as a first step towards achieving TCF fairness outcomes and culture framework requirements. In particular, the FSB requires firms to measure their activities against six TCF fairness outcomes (the “Outcomes”) that aim to reduce market conduct risks and protect consumers of financial products:

Outcome 1 (“Culture”): customers are confident that they are dealing with a financial services provider where the fair treatment of customers is central to its culture;

Outcome 2 (“Products and Services”): products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly;

Outcome 3 (“Clear and Appropriate Information”): customers are given clear information and are kept appropriately informed before, during and after the time of contracting;

Outcome 4 (“Customer Advice”): where customers receive advice, the advice is suitable and takes account of their circumstances;

Outcome 5 (“Product Performance Expectations”): customers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and what they have been led to expect;

Outcome 6 (“Post Sale Barriers”): customers do not face unreasonable post-sale barriers to change product, switch provider, submit a claim or make a complaint.

Coronation fully supports the FSB’s TCF Outcomes, to the extent relevant to our business and our role in the investment product value chain. Most of the principles that support the Outcomes are expressed in our Client Charter and Values, referenced above.

We have a process in place whereby we periodically evaluate ourselves against the Outcomes and we always strive to improve the manner in which we live and/or evidence our adherence to the TCF principles. The TCF principles are a business imperative, embedded in our strategy, governance and daily processes, as more fully described below:

Investment Philosophy

We rely on a proven, single investment philosophy and process that are consistently applied across all portfolios. The key tenets of our investment approach are:

  • Long-term time horizon
  • Proprietary research
  • Integration of environmental, social and governance (ESG) considerations in the fair value calculation process
  • All client portfolios reflect the Coronation DNA – best investment view

Appropriate Product

  • Complete institutional offering across asset classes and geographies governed by management agreements as agreed with clients
  • Focused range of domestic and international unit trust funds grouped by investor need
  • Innovate and develop products only when we believe that a new mandate can sustainably meet a clearly defined investor need, and in areas where we have adequate capacity, resources and expertise to deliver competitive results over meaningful periods
  • The product range is reviewed periodically to check suitability for investors

Clients

  • Service excellence: consistent with our Client Charter and Values, which encapsulates the culture that guides our behaviour, putting clients’ needs at the forefront of what we do is a key priority.
  • Engagement with our institutional clients takes place on an ongoing basis through frequent interaction at client meetings, investment report-backs and operational due diligences, as well as via the monthly and quarterly reporting process. Dedicated client relationship managers and fund managers ensure that client requests for information are attended to timeously.
  • Within the retail business, a team of client service professionals respond to all client queries in accordance with strictly monitored turnaround times. The specialist communication needs of the professional advisor market are serviced by our investment specialists and regular, formalised platforms including a comprehensive round of report-back presentations, Conversations with Coronation, hosted in all the major regions of SA and aimed at covering key investor needs. We aim to provide excellent levels of service to all our clients, measured through ongoing client experience surveys with our direct retail investors and annual qualitative research within the independent financial advisor market. The key principles of our retail client service philosophy are accessibility, accuracy and simplicity. We have therefore set demanding client service benchmarks to ensure that our client service team remains focused on delivering on these principles.
  • Client Data: Coronation recognises that technology, although playing a vital role in enabling channels of business, also presents a risk of exposing confidential client and company data. Coronation is dedicated to the protection of clients’ personal information, and therefore ensures that business processes are protected by appropriate governance and controls. Coronation uses external providers to assess its customer security framework to ensure that appropriate information security considerations, process architecture frameworks and standards are properly identified, managed, understood and embedded throughout all transactional interactions with clients.
  • Product Information and Communication: Coronation assesses, in aggregate, not in isolation, the cumulative impact of all client communications, for consistency of messaging and its impact on clients. To ensure consistency of messaging, all formal communication to clients goes through a rigorous review and sign-off process.
  • Product related updates are regularly communicated to Coronation’s clients and intermediaries through “Coroconnect” (monthly newsletter), “Corospondent” (quarterly fund, market and product commentary) and “Corolab” (technical booklet on investment considerations). Product performance and current key information and statistics are published monthly through Coronation’s monthly fact sheets, in accordance with Board Notice 92. Specific product and/or regulatory changes that directly affect the product-holder are communicated directly to the holder, usually by way of email but often by physical post, as and when is appropriate or required. Coronation publishes, on its website, all documentation and risk profiles of all unit trusts available for investors. 
  • Clients receive regular communication covering a range of topics, including thought-leadership articles, industry trends, market insights and business news. We host comprehensive institutional and retail roadshows, meetings and presentations throughout the course of the year and conduct focused research at multiple customer touch points.
  • Post-sale barriers: Coronation is committed to ensuring the clients do not face unreasonable post-sale barriers to changing products, switching providers or making complaints. There are no barriers to switching between funds at Coronation. Coronation does not impose any exit penalties, surrender fee or other charges to discourage clients to withdraw from products, other than anti-dilution levels in selected portfolios, where the aim is to balance the interests of short-term liquidity seeking and long-term investors. Coronation does not charge initial fees or switching fees. All product related features are disclosed during the purchase process. The only access constraints applied are those required by law, in the case of, for example, investments in individual retirement products,
  • Client criticism, both positive and negative, is a crucial feedback mechanism in prioritising our focus and resources. Coronation has a formal “Complaints Procedures: Guidelines for Clients” that is available to clients on our website. Coronation is committed to handling client complaints in a timely and fair manner and has implemented systems and procedures to satisfy this commitment (see the Complaints Policy for more detail). Coronation provides a number of avenues for clients to provide feedback and/or log a complaint, namely: Call centre; walk-in facility; email; post; fax; and/or through their relationship consultant (if applicable). Coronation also conducts surveys at the point of client interaction to assess the quality of the interaction and an annual “Financial Advisor Survey” to analyse longitudinal trends with respect to service levels, product performance and opinion. Clients are kept updated throughout any complaints process to ensure that their expectations are managed throughout.

Other examples of TCF principles evidenced in our approach to daily business:

  • Best execution and fair allocation of trades to all client portfolios (see the Order Execution Policy). Coronation does not favour any products or portfolios over and above others.
  • The use of dealing commissions to only pay for execution and substantive research services (see the Transaction Costs Disclosure Policy).
  • Achieving low dispersion of returns within GIPS composites. To ensure consistency of performance across similar mandates and product types Coronation ensures that portfolios with similar objectives, mandates or strategies are managed consistently. 
  • Coronation invests its own retirement & long term incentive funds in its own product/s and unit trusts.
  • Coronation has a 100% track record of reimbursing a client in the event of any trade or mandate errors.
  • Coronation has a consistent fee methodology that is reviewed across all product vehicles and mandate spectrums.

Governance

  • Coronation maintains a robust corporate governance framework, effected through a unitary board, various subcommittees, management forums, the appointment of an independent internal auditor and other independent assurance providers. The regulatory environment continues to evolve, both in South Africa and internationally. We are proactive in shaping a safer financial sector as contemplated in National Treasury’s “A safer financial sector to serve South Africa better”, through our involvement with the Association for Savings and Investments of South Africa (“ASISA”), and direct engagement with our regulators.
  • Our global risk and compliance department, with advice from external risk, legal, regulatory and compliance experts, ensures that we comply with the full regulatory universe applicable to our business. Risk management follows an integrated approach and is well entrenched in the Coronation Group.The board ensures that the group applies all significant governance principles in King III and that it is fully compliant with all significant Listings Requirements of the JSE. Coronation continues to place a high priority on ensuring it complies with all regulatory and statutory obligations, as well as industry best practice. The principles supporting the TCF Outcomes are at the centre of the board’s decision-making processes.

Staff

  • At the heart of the Coronation DNA are our people.
  • Staff enjoy an open-door policy, providing for ongoing dialogue with management on any aspect of the business.
  • Staff compensation is directly linked to the strength of investment performance and service delivery to clients. Variable compensation is utilised to reward staff for their contribution towards the success of the company, including acknowledgment of exceptional performance. In line with our long-term focus, the bonus pool is also utilised to allocate investments in Coronation shares and unit trusts to staff, which vest over a predetermined number of years (ranging from 1 to 7 years). We rate and reward our people on their ability to add value to our clients and the business.

Regulators and Industry Bodies

We undertake to always engage in an open and transparent manner with our regulators. We engage with the following regulatory bodies in the various jurisdictions in which we operate:

  • Financial Services Board (South Africa)
  • Financial Conduct Authority (UK)
  • Central Bank of Ireland (Ireland)
  • Non-Bank Financial Institutions Regulatory Authority (Botswana)
  • Securities and Exchange Commission (USA)

Through our membership of industry bodies we are able to lobby our views on proposed legislation and potentially influence legislation, with the aim of ensuring that the interests of investors and the industry are taken into consideration. Coronation is well represented on the ASISA committees and working groups, which ensures our awareness and participation in all industry initiatives. To support the globalisation of our business, we have formalised our engagement with global regulators through our membership of ICI Global.

Shareholders

All key focus areas of our business combine in the execution of our strategy to create shareholder value. The sustainability of our business lies in our ability to produce consistent superior long-term investment performance, provide client service excellence, ensure client retention and the integrity of our business.

Developments

The TCF framework designed by the FSB is a set of principles/norms that will find their way into law via existing legislation, regulation and guidelines. There are many examples of the TCF Outcomes already incorporated into the existing regulatory framework, however the FSB is considering a “Conduct of Business Act” with specific “Codes of Conduct” to give further legislative effect to their stated goals.

On the basis that regulation around TCF is yet to be fully defined, this Policy will be subject to routine review as the regulatory environment becomes clearer.