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The Executive Remuneration Reporter

I agree with guidelines 1.1-1.9 on design. Earlier comments on design in the consultation paper on page 9 suggests payment in tranches over an appropriate time period. In light of the stated aim of managing the risk of mis-selling, the design guidelines should incorporate this as a design principle. This mitigates the risk reward horizon problem whereby reward is paid before the risk arising from mis-selling has abated.
I agree with guidelines 2.1-2.4. What is missing is disclosure to the consumer of information on remuneration of the people directly interacting with the consumer. Advising the consumer that a part of the relevant person's salary is linked to what they sell at the very least makes the consumer aware of the potential for the seller to want to make a sale,any sale, rather than selling tonly appropriate products to the consumer. It need not be a long disclosure : one clear sentence is aĺ that is needed. There could be a link to a website with further information.
I agree with guidelines 3.1-3.7 on approval and monitoring, although there may be scope to include some additional form of independent audit every second or third year that is truly independent.
One metric used to measure customer satisfaction is net promoter score. Alternatively ranking against competitors in terms of customer satisfaction might be used to determine pay for relevant persons, and also for senior executives not caught by these particular guidelines. Use of these measures needs to be balanced with consideration of the complaints by consumers, particularly if there is a pattern of complaints. This might form part of guideline 1.4 or else it is just left in the commentary or via FAQs to accompany the guidelines.
The consultation paper included a rationale and aspects of this could be included as an overarching statement of principle. The principle should not be diluted for less comlex and smaller institutions but how the outcome might be achieved will likely differ for more complex organisations.
The Executive Remuneration Reporter