Welcome back to C&F Talks. Today, I have the pleasure of talking to Natalie Waller, who's a Non-Executive Director and Remco Chair for Aspen Managing Agency Limited and Aspen Insurance UK. Natalie is going to be speaking at our upcoming City Remuneration Summit, which is being held in London on the 1st of May.

So, Natalie, the purpose of this interview is really for you to talk to us a little bit about current management information and whether it's sufficient to evaluate the efficacy of implementing remuneration policy based on your wide-ranging experience.

Thank you, thank you for having me.

Well, current management information often does a very good job at capturing financial outcomes and bonus decisions, and it may not be giving us the full picture when it comes to how effectively remuneration policies are being implemented, especially in light of evolving UK regulation. With enhanced expectations on governance, conduct, standards and accountability, there is a real shift towards understanding not just what was achieved, but how it was achieved, and the outcomes it delivered for all stakeholders.

I mean, the key matter to me is not just what is sufficient measure to align with regulatory expectation, but rather what is an effective MI that goes beyond just the pure numbers and that is risk and conduct adjusted. We need a metric that is useful, effective, that is rich and insightful. I mean, such measure could, for instance, incorporate things like qualitative metrics, like cultural indicators, behavioural assessments, 360 feedback. So, in other words, how decisions are made by the individual, not just what was achieved.

Depending on the firms, you could link it to risk and conduct, and in other words, I mean, you could connect it to the long-term risk-adjusted performance and the conduct standards. You could include evidence of progress on outcomes linked to inclusivity or metrics linked to consumer duty, like complaint trends or fair value assessments.

I mean, as I say, it depends on the firms you are talking about or, I mean, and certainly you should try to evidence, you know, what sort of put some audit trails or rank or challenges that you have experienced, like, for instance, any adjustments you've had to make on variable compensations. I mean, in general, you could say that many firms do experience, or they rely too heavily on backward-looking financial performance, or they often lack integration in between risk, compliance function and the remuneration decisions. They often say that they struggle to tie in the management information to the actual customer and the stakeholder outcomes.

There's a general complaint in the industry that there is a lack of clear audit trails on discretionary adjustments. So, for those firms, it's clear that their MI needs to evolve and because it's not just about the numbers. The MI needs to reflect, you know, or the compensation needs to reflect the behaviour, the culture and the customer impact.

We need to make sure that, you know, we need to get insights when we're doing the compound from across the business. We need to include HR, risk, compliance and, ideally, we need to have a narrative that explains our decisions on pay, support the long-term strategy, the values and the outcomes. Retailers have really an opportunity to build richer and forward-looking dashboards and ask very joined-up questions.

This is not just about meeting regulatory expectations. It's more about making sure that the remuneration is genuinely supporting the kind of culture and performance that we want to see for the future for the individual, the team and the entity.

Well, very interesting, Natalie. Obviously, this conversation will continue. We'll be looking at this issue and many other related issues in depth at the forthcoming conference, the City Remuneration Summit on the 1st of May.

For our viewers, very much hope that you'll be able to join us at that event. Further information is available on our website, www.cityandfinancial.com. Natalie, I very much look forward to seeing you at the event and thank you for joining us today.

Likewise.