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HOW TO END THE BLIGHT OF MISSELLING

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HOW TO END THE BLIGHT OF MISSELLING

Jack Mizel is the CEO of the Institute of Sales Management- the trade body for the sales industrywww.ismprofessional.com

The blight of misselling is one that has plagued the financial services sector for many years, with significant damage to both reputation and bottom line. But the vast majority was utterly avoidable, had a bit more thought gone into the business model.

Financial instruments, of whatever hue, need to be sold; this needs to be done in an ethical and professional framework where sales people are given the skills they need to do their job properly.

For starters, companies need to recruit the right calibre of staff: professional, ethical, conscientious diligent and with a desire to be successful. There are lots of assessments and psychometric tests that can act as the first stage filtration and we advise you to put your staff through that. That, in conjunction with the ‘sense and feel’ of the people you may be working with, will determine if the candidate has the right qualities to fit as part of the team.

But, with the exception of outstandingly experienced staff, these recruits have to be viewed as raw material to be nurtured and developed.  You need a framework of training and continuing professional development (CPD) that envelopes those people and shows them that they have a career path and that they are valued as much as others, such as analysts, accountants, marketing and so forth, within the organisation.It costs time and money to recruit staff but firms need to invest in them properly too. Otherwise churn rates go up. These people are expensive to replace and waste management time too.

The ISM exists to provide – though its approved training partners – a framework where that development can take place as we’re the only organisation of this type in the world that has approved qualifications.  Members are put through a vigorous assessment programme – that examines their strengths and weaknesses – and a bespoke training programme is then created.

However, this isn’t just about training and qualifications. We know that training – in isolation – doesn’t work. It needs to be part of a much wider piece of CPD.  Not only does this require buy-in from management, but the sales person needs to be proactive, read great sales literature, attend meetings and be mentored (or act as a mentee if they are at higher levels). Without that, the lessons of training fade after only a few months.

There is a second benefit to this and that is that its customers and buyers know they are in safe and reliable hands. Investment in staff can only build trust and reputation, so that you not only have the best people, but they are performing to the highest possible standards. This applies not only to companies who have had their image tarnished by misselling in recent years, but all banks and financial institutions.

Sadly, sales staff is often not given the necessary training or development. Instead, they are given unreasonable targets by management and told to “hit these numbers, make X numbers of calls and don’t worry about anything otherwise you’ll be fired”. It is small wonder that, in such environment, employees will end up doing things they really shouldn’t.

The consequences of this can be enormous.  In December last year Deutsche Bank and Credit Suisse agreed a combined £9.8bn deal with the US Department of Justice over residential mortgage backed securities (RMBS) misselling. RBS is braced for multi-billion-pound settlement over similar accusations. And that’s just in the past few weeks, before that we had PPI, Libor, securities; the list goes on and on. And all this was avoidable, had staff been given the right training.

As Sir Winfried Bischoff, Chairman of the Financial Reporting Council accurately said last year, “Rules and sanctions clearly have their place, but will not, on their own, deliver productive behaviours over the long-term.

Done properly, employees should still be able to do their job effectively without the CPD taking them off the radar for any great lengths of time. Training should be offered via a learning platform so that, apart from external meetings, everything is available at their place of work. There is also a code of conducts staff should adhere to that provides a broad set of principles for the conduct of professional activity.

The ISM established its own code (which you can find here) to infuse into our members a foundation of ethical and professional conduct that they can build on, so that they achieve a high standard of professional practice and to protect both the interests of their clients and the interests of the Institute.

Companies need to not just look at targets, but what the next target (and the one after that) will be. By investing in their staff, and thinking over the long term, then great things can be achieved. If companies are genuinely serious about increasing performance, then allowing staff a few hours a month of CPD is something that will give a return many times over.

Not only will this reinforce professionalism within the sector which, by its very nature, will massively reduce miselling and malpractice, but it will make staff feel valued. Sales staff are the keystone to almost every business, so if you’re getting the best out of your team, the entire company benefits. That’s a good return on investment in anyone’s book.

Business

Euro zone business activity shrank in January as lockdowns hit services

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Euro zone business activity shrank in January as lockdowns hit services 1

By Jonathan Cable

LONDON (Reuters) – Economic activity in the euro zone shrank markedly in January as lockdown restrictions to contain the coronavirus pandemic hit the bloc’s dominant service industry hard, a survey showed.

With hospitality and entertainment venues forced to remain closed across much of the continent the survey highlighted a sharp contraction in the services industry but also showed manufacturing remained strong as factories largely remained open.

IHS Markit’s flash composite PMI, seen as a good guide to economic health, fell further below the 50 mark separating growth from contraction to 47.5 in January from December’s 49.1. A Reuters poll had predicted a fall to 47.6.

“A double-dip recession for the euro zone economy is looking increasingly inevitable as tighter COVID-19 restrictions took a further toll on businesses in January,” said Chris Williamson, chief business economist at IHS Markit.

“Some encouragement comes from the downturn being less severe than in the spring of last year, reflecting the ongoing relative resilience of manufacturing, rising demand for exported goods and the lockdown measures having been less stringent on average than last year.”

The bloc’s economy was expected to grow 0.6% this quarter, a Reuters poll showed earlier this week, and will return to its pre-COVID-19 level within two years on hopes the rollout of vaccines will allow a return to some form of normality. [ECILT/EU]

A PMI covering the bloc’s dominant service industry dropped to 45.0 from 46.4, exceeding expectations in a Reuters poll that had predicted a steeper fall to 44.5 and still a long way from historic lows at the start of the pandemic.

With activity still in decline and restrictions likely to be in place for some time yet, services firms were forced to chop their charges. The output price index fell to 46.9 from 48.4, its lowest reading since June.

That will be disappointing for policymakers at the European Central Bank – who on Thursday left policy unchanged – as uncomfortably low inflation has been a thorn in the ECB’s side for years.

Factory activity remained strong and the manufacturing PMI held well above breakeven at 54.7, albeit weaker than December’s 55.2. The Reuters poll had predicted a drop to 54.5.

An index measuring output which feeds into the composite PMI fell to 54.5 from 56.3.

But despite strong demand factories again cut headcount, as they have every month since May 2019. The employment index fell to 48.9 from 49.2.

As immunisation programmes are being ramped up after a slow start in Europe optimism about the coming year remained strong. The composite future output index dipped to 63.6 from December’s near three-year high of 64.5.

“The roll out of vaccines has meanwhile helped sustain a strong degree of confidence about prospects for the year ahead, though the recent rise in virus case numbers has caused some pull-back in optimism,” Williamson said.

(Reporting by Jonathan Cable; Editing by Toby Chopra)

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Volkswagen’s profit halves, but deliveries recovering

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Volkswagen's profit halves, but deliveries recovering 2

BERLIN (Reuters) – Volkswagen reported a nearly 50% drop in its 2020 adjusted operating profit on Friday but said car deliveries had recovered strongly in the fourth quarter, lifting its shares.

The world’s largest carmaker said full-year operating profit, excluding costs related to its diesel emissions scandal, came in at 10 billion euros ($12.2 billion), compared with 19.3 billion in 2019.

Net cash flow at its automotive division was around 6 billion euros and car deliveries picked up towards the end of the year, the German group said in a statement.

“The deliveries to customers of the Volkswagen Group continued to recover strongly in the fourth quarter and even exceeded the deliveries of the third quarter 2020,” it said.

Volkswagen’s shares, which had been down as much as 2%, turned positive and were up 1.5% at 164.32 euros by 1158 GMT.

Sales at the automaker rose 1.7% in December, at a time when new car registrations in Europe dropped nearly 4%, data from the European Automobile Manufacturers’ Association showed.

Like its rivals, Volkswagen is facing several challenges due to the coronavirus pandemic as well as a global shortage of chips needed for production.

It also sees tough competition in developing electrified and self-driving cars. The merger of Fiat Chrysler and Peugeot-owner PSA to create the world’s fourth-biggest automaker Stellantis adds to the pressure.

Volkswagen said on Thursday it missed EU targets on carbon dioxide (CO2) emissions from its passenger car fleet last year and faces a fine of more than 100 million euros.

The group is expected to release detailed 2020 figures on March 16.

($1 = 0.8215 euros)

(Reporting by Kirsti Knolle; Editing by Maria Sheahan and Mark Potter)

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Global chip shortage hits China’s bitcoin mining sector

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Global chip shortage hits China's bitcoin mining sector 3

By Samuel Shen and Alun John

SHANGHAI/HONG KONG (Reuters) – A global chip shortage is choking the production of machines used to “mine” bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency drives demand.

The scramble is pricing out smaller miners and accelerating an industry consolidation that could see deep-pocketed players, many outside China, profit from the bitcoin bull run.

Bitcoin mining is closely watched by traders and users of the world’s largest cryptocurrency, as the amount of bitcoin they make and sell into the market affects its supply and price.

Trading around $32,000 on Friday, bitcoin is down 20% from the record highs it struck two weeks ago but still up some 700% from its March low of $3,850.

“There are not enough chips to support the production of mining rigs,” said Alex Ao, vice president of Innosilicon, a chip designer and major provider of mining equipment.

Bitcoin miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify bitcoin transactions in a process which produces newly minted bitcoins.

Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, the main producers of specially designed chips used in mining rigs, would also prioritise supplies to sectors such as consumer electronics, whose chip demand is seen as more stable, Ao said.

The global chip shortage is disrupting production across a global array of products, including automobiles, laptops and mobile phones. [L1N2JP2MY]

Mining’s profitability depends on bitcoin’s price, the cost of the electricity used to power the rig, the rig’s efficiency, and how much computing power is needed to mine a bitcoin.

Demand for rigs has boomed as bitcoin prices soared, said Gordon Chen, co-founder of cryptocurrency asset manager and miner GMR.

“When gold prices jump, you need more shovels. When milk prices rise, you want more cows.”

CONSOLIDATION

Lei Tong, managing director of financial services at Babel Finance, which lends to miners, said that “almost all major miners are scouring the market for rigs, and they are willing to pay high prices for second-hand machines.”

“Purchase volumes from North America have been huge, squeezing supply in China,” he said, adding that many miners are placing orders for products that can only be delivered in August and September.

Most of the products of Bitmain, one of the biggest rig makers in China, are sold out, according the company’s website.

A sales manager at Jiangsu Haifanxin Technology, a rig merchant, said prices on the second-hand market have jumped 50% to 60% over the past year, while prices of new equipment more than doubled. High-end, second-hand mining machines were quoted around $5,000.

“It’s natural if you look at how much bitcoin has risen,” said the manager, who identified himself on by his surname Li.

The cryptocurrency surge is affecting who is able to mine.

The increasing cost of investment is eliminating smaller players, said Raymond Yuan, founder of Atlas Mining, which owns one of China’s biggest mining business.

“Institutional investors benefit from both large scale and proficiency in management whereas retail investors who couldn’t keep up will be weeded out,” said Yuan, whose company has invested over $500 million in cryptocurrency mining and plans to keep investing heavily.

Many of the larger players growing their mining operations are based outside of China, often in North America and the Middle East, said Wayne Zhao, chief operating officer of crypto research company TokenInsight.

“China used to have low electricity costs as one core advantage, but as the bitcoin price rises now, that has gone,” he said.

Zhao said that while previously bitcoin mining in China used to account for as much as 80% of the world’s total, it now accounted for around 50%.

(Reporting by Samuel Shen and Alun John; Editing by Vidya Ranganathan and William Mallard)

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