Our strategy

Stakeholder engagement is an important part of our approach to sustainability. It helps us to understand the impact of our business on society, better manage risk and identify opportunities for growth.

In 2011 we held stakeholder workshops in all our markets and a roundtable in Brussels. These events give our stakeholders the opportunity to engage directly with IPF. In most of our markets we are the only financial services business engaging in such open dialogue. Issues raised included mobile payment technology, the social impact of our products and services, financial education, product diversification and how we work potentially with social service providers and public authorities to better address poverty.

We report on stakeholder feedback each year and our response can be found at www.ipfin.co.uk/sustainability.

Repeat business tells us our customers like our service and it allows us to take a responsible, long-term approach to lending, ensuring we increase loan size gradually and do not overstretch our customers.

Credit risk management is based primarily around the relationship between agents and their customers. As the face of our business, agents are key to assessing a customer’s capacity to repay, and are supported by sophisticated credit risk management systems.

Delivering a credit product that our customers want together with excellent customer service is vital to achieving our strategic objectives.

We realise customer expectations are rising and need to respond by listening and continually improving the service that our people provide. That’s why we interview 30,000 customers each month, asking them to score us on service levels.

A major change supporting the sustainable growth of our business has been the move from a countrywide blanket credit policy to a localised branch-based approach over the past three years. This has enabled us to be more precise in our credit management, respond to local conditions and identify opportunities and risks which are not apparent at a country level.

Branch performance is monitored monthly and we use this data to adjust credit rules, marketing spend and incentives at branch level. For example, in a branch where credit performance is very good, we can relax credit settings and implement local marketing spend for growth and incentives focused primarily on sales. If a branch has poorer credit performance then we can tighten credit settings, limit marketing activity and the operational and incentive focus will be on collecting arrears.

These controls are highly flexible, allowing management to adapt to the changing business environment. This approach has been key in successfully controlling credit quality during the global economic downturn.

To ensure we have a clear link between our strategy and roles, and to drive performance through team alignment, we are implementing a balanced scorecard approach. Our aim is to assess and reward performance across a core set of measures. These new measures will target the core performance drivers that lead to business success. The six key areas are:

• people – recruit and retain the right people who are fully engaged;
• safety and operational excellence – operate in a safe way in compliance with operational framework;
• customer service – leads to satisfied customers who stay with us and recommend us to others;
• building future value – generating more selling opportunities and increased sales through more quality customers;
• collections and arrears – improving collections and reducing bad debt which, in turn, provides more sales opportunities; and
• financial – all leading to the financial success of our business, shared by all our stakeholders.

Everything we do is built on the foundations of our sustainability principles. In 2011 we carried out work to formalise these principles and build a stronger management framework to support their use in everyday business decisions. These define how we treat each stakeholder group and underpin our vision of being a sustainable business, our corporate behaviour and our business practices.

We have implemented community investment programmes in all our markets. These programmes focus on benefiting the communities in which we operate.

In 2011, our overall Group contribution to charities and community organisations was £1.2 million (excluding £100,000 of fundraising), representing 1.2% of pre-tax profit.

We invest in our communities through social inclusion and financial education programmes. This includes giving grants to projects that offer training and skills development to disadvantaged people looking for work; financial advice initiatives; and projects that help to regenerate our communities through enterprise.

Our employee volunteering programme is another important way for us to contribute to our communities. The programme engages our people by giving them the chance to enhance their job-related skills while gaining the satisfaction of helping in their local area. We support projects that have been initiated by employees while seeking to invest in the same type of projects that we do through our grant giving. In 2011, 2,800 employees volunteered 11,500 working hours to help local communities.

It is important to us that consumers are well informed; we want our customers to make the right choices, manage their household finances and understand the terms and conditions of their loans.

We work with charities, non-governmental and/or consumer protection organisations across all our markets. Our financial education work is also promoted to our customers, agents and employees. In 2011 we trained 200 professionals who have in turn disseminated financial skills to over 20,000 people.

Activities involve promoting financial education in areas where research has shown low levels of awareness and gaps in the provision of financial education. We do this through collaborative working groups, communication and media campaigns, and running money management workshops with partners.

Our Family Budget Programme in Romania is fuelling the financial capability debate through media engagement and, as a founding member of the Romania Association for Financial Education, we initiated a public consultation on the issue with the aim of developing a national strategy. We have also instigated a financial education media campaign in Poland reaching six million people and through our Academy of Family Finance, we have run 82 education workshops since its launch in 2007 reaching 3,000 individuals.

In 2011 we were included in the FTSE4Good index for the fourth consecutive year. Each year we report against the Global Reporting Initiative Sustainability Guidelines and for the third consecutive year our level of disclosure and quality of content has been rated as A+. We also report annually against the UN Global Compact Principles and take part in the Carbon Disclosure Project which is an investor initiative seeking corporate disclosure on carbon emissions, risks and management.

Our operations across the Group also received external recognition and a number of awards throughout the year:

• our business in the Czech Republic was included in the Index of Ethical Lenders and named as the non-banking lender with the most ethical approach to customers recognising our commitment to transparency;
• we came third in an award for responsible financial companies from Poland’s leading economic daily newspaper, Dziennik Gazeta Prawna;
• in Hungary we won two Client First ‘Excellence in Customer Service’ awards for outstanding personal customer service and our call centre service; and
• in Mexico we were recognised for the sixth consecutive year as a socially responsible company by the Mexican Centre of Philanthropy. Our Mexican call centre also received four awards in the ‘National Award in Customer Relations’ from the Mexican Institute of Teleservices.

Our business complies with the local regulations in each market. We work closely with policy makers and legislators in each country and at EU level to ensure the impact of proposed or new legislation on consumers or our business is understood.

We welcome policy initiatives that contribute to a well-functioning market in consumer credit and work positively with our regulators across the Group. We believe that good regulation has to be fit for purpose and that a ‘one size fits all’ approach is not effective.

We have a unique relationship with our customers. The face to face, personal nature of our service differs to that of banks, giving us an important perspective on our customers’ aspirations and needs. This gives us an insight into the likely impact of government policy proposals that could affect our customer base. We take a leadership role in regulatory debate and discussion, and proactively reflect these realities to policy makers, to help them understand our business and develop policies that work for consumers.