Comment: pragmatism Vs pointless process

Wednesday 13 June 2018

When you are busy, there can be few things more irritating than a bureaucratic 'box-ticking' exercise, which seems to have little, if any, purpose.

It's something we've all experienced, and today Express columnist, The Insider, urges senior managers to find the strength to do something about it.

"I was driven to despair for 45 minutes this morning by a string of pointless questions from my High Street bank, as it went through the process of a ‘safeguarding anti-money laundering review’ (obviously their safeguarding, not mine).  It made no difference that I have banked with them for 30 years, or that the inactive bank account in question had less than £500 in it.  It also made no difference that they had all of the information in question related to other bank accounts in a different department.   They had to complete the process, “for regulatory reasons” - clearly nobody benefited from the exchange.  

I spent the rest of the day ranting about how ridiculous the system was, to be trumped by even worse stories.  I have concluded that there is no point moaning about the millions of pounds wasted every year in the financial services sector in complying with pointless process, driven by the fear of not complying with ineffective regulation. During my various rants, I was told a more extraordinary story about various processes within a major States department. Clearly the blind application of process, with no common sense, by weak management, is deeply rooted in the private and public sectors.  

Moaning about it makes no difference without more effective management at the top driving change.  A more constructive approach is to put forward a practical example of an alternative approach.  I have chosen the area of insurance.  Almost all of us have insurance whether house, life, car, or medical.  There are some areas where we are compelled by the law to actually have insurance, whether we believe that we need it or not. So, this is an area where improvements would benefit us all.        

Very few of us have cause to call on the use of insurance, but when we do, we take it for granted that the insurance company will pay out.  Indeed, in the case of professional indemnity insurance, the regulatory system is to some degree depending upon it.  Insurance companies are, however, using more and more obscure reasons not to pay out, leaving the consumer in an ‘Alice in Wonderland’ state of confusion.  

The insurer will argue that they are complying with their regulatory obligations, whilst hiding behind the small print in their vast terms and conditions, which their regulator insists they send us to keep us “better informed.” Almost nobody has read the terms and conditions because they usually run to the same word count as a novel, and use obscure language.  Even if you have read them, I defy anybody to argue that they are better informed as a result.

For most people, insurance is there to cover an unexpected event.  A consumer can’t be expected to have considered every potential scenario and contributing factor and to have cross-referenced it to the terms and conditions.  The insurer may be complying with regulation, but they are not complying with our moral expectations, or the stated intent of the regulator.

What is required is an asymmetric response which involves ‘smart’ regulation. 

Here is an action plan for ‘smart’ action which would be simple, cheap and effective whilst demonstrating an actual tangible benefit for the consumer. It would require little effort on the part of the Jersey Financial Services Commission, who would simply:

• publish a letter to all insurance companies selling simple insurance in Jersey setting out the expectation that they not only comply with the regulatory framework, but that they operate fully aware of the moral expectations of a reasonable person to be paid out in response to an unexpected event for which they are insured;

• undertake a review of ‘pay-out’ behaviour in 2019 - not of policies and procedures or compliance with them, but of outcomes which can be easily determined by the collection of basic statistics which are already held by each insurance company;

• these statistics can then be cross-referenced by asking the public to add their own experiences to a database of bad behaviour;

• rather than engaging with ‘bad actors’ by undertaking a long regulatory skirmish, which has no real tangible benefit for the consumer, the report should be passed to the States who should,

a)    publish the outcome;

b)    stop using the ‘bad actors’ for all States business;

c)    encourage the person on the street to stop using the bad actors.

The result would be a better informed and insured public, and some commercial pressure which would be more effective than a more one-dimensional approach.   

If I was trying to apply simple logic to the public sector I set up a small team and ask the staff and public to email me with examples of “stupid processes or a lack of common sense,” and use that as the basis for change.  I would suggest that this is likely to be more effective than hiring a new team of PR people as, however hard you spin it, the end user knows when they are on the end of a pointless process or an injustice. 

I think there is a growing sense of frustration, in both the private and public sectors, that weak management is failing to apply common sense solutions."