Relevant Issues (3 of 26)
- GHG Emissions
- Air Quality
- Energy Management
- Water & Wastewater Management
- Waste & Hazardous Materials Management
- Ecological Impacts
- Human Rights & Community Relations
- Customer Privacy The category addresses management of risks related to the use of personally identifiable information (PII) and other customer or user data for secondary purposes including but not limited to marketing through affiliates and non-affiliates. The scope of the category includes social issues that may arise from a company’s approach to collecting data, obtaining consent (e.g., opt-in policies), managing user and customer expectations regarding how their data is used, and managing evolving regulation. It excludes social issues arising from cybersecurity risks, which are covered in a separate category.
- Data Security The category addresses management of risks related to collection, retention, and use of sensitive, confidential, and/or proprietary customer or user data. It includes social issues that may arise from incidents such as data breaches in which personally identifiable information (PII) and other user or customer data may be exposed. It addresses a company’s strategy, policies, and practices related to IT infrastructure, staff training, record keeping, cooperation with law enforcement, and other mechanisms used to ensure security of customer or user data.
- Access & Affordability
- Product Quality & Safety
- Customer Welfare
- Selling Practices & Product Labeling The category addresses social issues that may arise from a failure to manage the transparency, accuracy, and comprehensibility of marketing statements, advertising, and labeling of products and services. It includes, but is not limited to, advertising standards and regulations, ethical and responsible marketing practices, misleading or deceptive labeling, as well as discriminatory or predatory selling and lending practices. This may include deceptive or aggressive selling practices in which incentive structures for employees could encourage the sale of products or services that are not in the best interest of customers or clients.
- Labor Practices
- Employee Health & Safety
- Employee Engagement, Diversity & Inclusion
Business Model & Innovation
- Product Design & Lifecycle Management
- Business Model Resilience
- Supply Chain Management
- Materials Sourcing & Efficiency
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics
- Competitive Behavior
- Management of the Legal & Regulatory Environment
- Critical Incident Risk Management
- Systemic Risk Management
Disclosure Topics (Industry specific) for:
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Consumer finance companies face risks and opportunities associated with their internal use of data supplied by customers for activities that are not the primary purpose for which the data were collected (for example, for use in targeted advertising and/or transfer to third parties). Ensuring the privacy of personally identifiable information (PII) and other data of account holders is an essential responsibility of companies in the Consumer Finance industry. To assess performance on this issue, investors would benefit from disclosure from companies on the number of account holders whose information is used for secondary purposes, and their policies and procedures around using such information, including the nature of their opt-in policies. Combined with information on legal or regulatory actions taken against the companies that are related to customer protection and privacy, such disclosure would be decision-useful to investors. Consumer finance companies that fail to manage performance in this area are susceptible to decreased revenues as a result of lost consumer confidence and churn, as well as to financial impacts stemming from legal exposures.
Companies in the Consumer Finance industry face risks and opportunities associated with how they manage the safety of data supplied to them by customers, in the context of external threats. Ensuring the security of customers’ PII is an essential responsibility of companies in the Consumer Finance industry. To assess performance on this issue, analysts would benefit from disclosure on efforts related to safeguarding data against emerging and continuously evolving cybersecurity threats and technologies, actual security breaches compromising customers’ personally identifiable information (PII), and credit and debit card fraud. Companies that fail to manage performance in this area are susceptible to decreased revenues as a result of decreased consumer confidence and churn. Furthermore, instances of data breaches may expose companies to costly and lengthy litigations and potential monetary losses.
Selling Practices & Product Labeling
There are three key elements within the Selling Practices topic, performance of which can materially impact company operations and financial condition. First, company policies related to the structure of compensation and/or other incentives may unintentionally create the risk of selling products and services that are not in the best interest of clients. Secondly, a failure to provide transparent information to customers about primary and add-on products can increase the risk of being charged with using deceptive practices. And finally, depending on the characteristics of the portfolio of products sold, poor performance on the first two elements could result in a high concentration of risky products held by customers. Consumer finance companies are likely to continue to face increased scrutiny in the wake of high-profile incidents as regulators attempt to ensure transparency and enhanced disclosure. The disclosure of key characteristics of a lending portfolio, including average fees from add-on products, average age of accounts, average APR, average number of trade lines, and average annual fees for pre-paid transaction products will allow shareholders to determine which consumer finance companies are better positioned to protect long-term value rather than relying on short-term revenue generation practices. Ability to provide consumer finance products that are in the best interest of customers can help companies in the industry not only minimize risk exposure in the existent portfolio of products, but also build trust with new and existent customers, and expand their market share ensuring sustainable revenue growth.
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