SECTION 172(1) STATEMENT AND STATEMENT OF ENGAGEMENT WITH OTHER STAKEHOLDERS
The directors provide the following statement pursuant to the Companies Act 2006 (as amended by Companies (Miscellaneous Reporting) Regulations 2018) (the “Act”) to describe how they have acted in accordance with their duty under Section 172 of the Act (“Section 172”) to promote the success of the company for the benefit of its member(s) as a whole, and in so doing, how they have had regard to those factors set out in Section 172, (1) (a) to (f) during the financial year.
Furthermore, in compliance with the Large and Medium-sized Companies and Group’s (Financial Statements and Reports) Regulations 2008 (as amended by the Companies (Miscellaneous Reporting) Regulations 2018), the directors provide the statement which follows to describe how they have engaged with employees, and how they have had regard to employee interests and the need to foster the company’s business relationships with suppliers, customers and others, and in each case, the effect of that regard, including on the principal decisions taken by the company during the financial year.
Section 172 requires a director to have regard to the following matters, among others, when discharging their duty:
- the likely consequences of any decision in the long-term;
- the interests of the company’s employees;
- the need to foster the company’s business relationships with suppliers, customers and others;
- the impact of the company’s operations on the community and the environment;
- the desirability of the company maintaining a reputation for high standards of business conduct; and
- the need to act fairly as between members of the company.
The board of the company is collectively responsible for managing the affairs of the company to achieve its long-term prosperity by making important decisions, monitoring the underlying performance of the company, as well as being a means for establishing ethical standards. Understanding the interests of key stakeholders is an important part of the Group’s strategy and helps inform the directors’ decision making throughout the year.
Board meetings are held as required where the directors will consider the Company’s principal activities and make decisions. Meetings are scheduled to provide adequate time for consideration and discussion by the directors of the interests of stakeholders, and for the directors to seek further information from management, as required. As a part of those meetings, the directors receive information in a range of different formats to assist them in discharging their responsibilities under Section 172 when making relevant decisions. This information may include, among other things, reports and presentations on financial and operational performance, business updates, budget planning and forecasts, HR matters, as well as specific areas of engagement, such as employee opinion surveys. When making decisions, the Board seeks to understand the impact on each of its stakeholders, including the likely consequences of a decision in the long term, whilst acknowledging that a decision will not necessarily be favourable for all stakeholders, as there may be competing interests between them.
The Company is part of the wider Close Brothers Group (the “Group”), and as such it follows a range of group-wide policies in place to protect employees and provide a safe working environment, to ensure compliance with all regulatory requirements and adherence to the highest professional and ethical standards in dealing with customers, suppliers and colleagues, as well as ensuring that it continues to be cognisant of its social and environmental responsibilities. In doing so, and by balancing the interests of the company’s stakeholders when making decisions, the Board seeks to maintain a reputation for high standards of business conduct. Further information on these group-wide policies can be found in the annual report and financial statements of the company’s ultimate holding company, Close Brothers Group plc.
The directors seek to engage directly with stakeholders wherever possible on certain issues, though the size of the Group means that stakeholder engagement often takes place at an operational or group level. This approach creates greater efficiency and facilitates a greater positive impact on environmental, social and other issues than may be possible at an individual company level, as well as ensuring consistency of approach across the Group. Where engagement has taken place at operational level, the outcome of that engagement has been brought to the Board for its consideration where relevant throughout the year. During the financial year, the Company continued to take advantage of greater flexibility brought about by the Covid-19 pandemic to engage with stakeholders both in-person and virtually, including holding ‘hybrid’ events to widen participation. Additional details on engagement at group level with stakeholders, including employees, suppliers, customers, the community and environment can be found in the Strategic Report section of the Annual Report and Financial Statements of Close Brothers Group plc.
The table below set out further examples of the ways in which the Board has engaged directly and indirectly with stakeholders during the financial year, as well as detailing how the directors have had regard to employee interests and the need to foster the Company’s business relationships with suppliers, customers and others, and the effect of that regard, including on principal decisions taken throughout the year, as well as matters set out in Section 172 (1)(a)-(f) when discharging their duties under Section 172.
|OUR STAKEHOLDERS||WHY WE FOCUS ON THEM AND THE IMPACT OF ENGAGEMENT||STAKEHOLDERS’ KEY PRIORITIES||HOW THE BOARD AND MANAGEMENT HAVE ENGAGED AND CONSIDERED STAKEHOLDER INTERESTS DURING THE YEAR|
|Colleagues||With over 20 employees based in London, we have a small, motivated workforce which delivers the highest levels of service to our customers, clients and partners. We are committed to the development of our colleagues, ensuring they are supported and engaged.|
Listening to our colleagues enables us to build an engaged workforce, allowing us to develop and retain high levels of expertise. We are able to ensure we are considering the views of all colleagues and making sure everyone feels included.
|· A safe working environment|
· A fair, supportive, diverse and inclusive culture where employee feedback is valued.
· Being appropriately rewarded for their contributions
· Opportunities for training and development
· Long-term successful performance of the group
We conducted our latest employee opinion survey, which closed in February 2023, to gather feedback from our colleagues anonymously.
The results of our employee opinion survey gave us insight into key topics including customers and clients, leadership, wellbeing, culture, a sense of belonging, and reward and recognition.
Follow-up focus groups were conducted with different teams to understand more around colleague sentiment.
During the year, the board in conjunction with the Close Brothers Property Finance business launched a range of initiatives designed to bring more cohesion and unity across the whole Property Division (the “division”). Initiatives include mentoring, front line exposure, wider access to division-wide events and encouraging staff across different locations to “switch” offices in order to learn more about their other colleagues.
|Customers, clients and partners||Our long-term success depends on the strength of our relationships with customers, clients and partners, our specialist expertise and the maintenance of high standards of service. Central to all decision-making is doing the right thing for customers, clients and partners, by helping them access financial solutions to meet their needs across all market conditions. We engage with our customers throughout their end-to-end journey and actively seek their feedback.||· Building and maintaining strong personal relationships based on trust, understanding and specialist expertise|
· Understanding, treating and valuing them as individuals
· Fair and equitable conduct of business
· Receiving consistent, responsive and supportive service delivered with simplicity, clarity and ease
· Meeting their needs throughout changing economic cycles
· Implementing customer-led propositions that meet their individual needs
Due to the relatively small size of the client base and the specialist nature of our service, we have the ability to closely support customers and partners throughout the heightened uncertainty we have experienced during the year and maintained close contact as they navigated rising inflation and cost of living pressures. We have discussed our customers’ needs regularly to ensure we were best supporting them and reviewed this position regularly.
We continue to receive positive feedback from customers and have maintained a high repeat business rate of over 70%.
|Suppliers||Our business is supported by a broad range of suppliers which are predominantly managed at group level, enabling us to provide high standards of service to our customers, clients and partners. We work closely with the group to ensure we have transparent and sustainable working relationships with our suppliers.||· Strong and sustainable relationships with Close Brothers|
· Fair and equitable conduct of business
· Appropriate and clear payment procedures
· An understanding of the Close Brothers Group purpose and strategy
· Robust risk management framework
Our local supplier relationships are owned by the executive directors of the Company while key group supplier relationships which impact the company are owned by relationship managers and are supported by our central third-party management function who provide specialist expertise and support. Engagement with suppliers includes regular meetings, with scope and pricing reviews taking place at least annually.
|Regulators and Government||We are committed to sustaining high standards of business conduct in line with regulatory, governmental and legal expectations and operate prudently within the laws and regulations that apply to us.|
We foster an open and transparent relationship with all our regulators, government authorities and trade associations in the jurisdictions in which we operate. Active engagement helps to ensure we are aware of and adapting to the evolving regulatory framework.
|· Customer outcomes|
· Operational and financial resilience
· Financial crime prevention
· Environmental and social governance
· Digitisation and analytics
Proactive dialogue with the PRA, the FCA and HMRC is managed at group level. We regularly interact with the trade bodies and business associations we are affiliated with to ensure we are engaged with issues impacting our industry.
We undertake reporting and analysis, where requested, such as responding to specific queries to enable these stakeholders to better understand our business activities and how we operate in a controlled and prudent manner in line with their expectations.
|Communities and Environment||Close Brothers is committed to contributing lasting value and making a positive impact on the communities in which we operate and the environment more broadly. This underpins the growing range of programmes and initiatives we support that benefit society and the environment.|
Engaging with local communities helps the board and our employees develop their understanding of our clients, customers and partners so that we can support them and help them to achieve their ambitions, whilst also building employee engagement. We firmly believe that environmental considerations should form an integral part of our business decisions, and employees across the group are actively engaged on responsible behaviours and environmental issues.
|· A suitable strategy for approaching sustainability issues|
· Support for community initiatives
· Job creation and social mobility
We encourage colleagues to take advantage of one paid volunteering day each year through our Employee Volunteering Policy.
Colleagues completed numerous volunteering activities to positively impact local communities.
All staff in Commercial Acceptances are allocated a charitable benefit allowance per person each financial year. Each colleague can utilise the allowance to donate to a UK charity of their choice.
The business also hosted one student for a six-week placement as part of the 10,000 Black Interns programme.