526 2019 Universal registration document and annual financial report - BNP PARIBAS

7 a Committed Bank: information ConCerninG the eConomiC, soCial, CiviC and environmental resPonsiBility of BnP PariBas

7

Our economic responsibility: financing the economy in an ethical manner

PROTECTING CLIENTS INTERESTS Protecting clients interests is a major concern for BNP Paribas. Therefore, the Group has chosen to place this issue at the heart of its Code of conduct and has set up a dedicated expert group within the Group Compliance teams. Protecting clients interests is based in particular on the Code of conduct and the Clients Interests Protection (CIP) policy which now also includes the management of client complaints.

A general Group-wide policy

The CIP policy covers the whole life cycle of products and services (from their design to sale) and the customer relationship. Employees (in particular in Front Office and Management) are continuously made aware in this area. The correct application of the policy is constantly checked by all internal control players, including permanent control, the control functions (Compliance and Legal) and the General Inspection.

The Group s CIP policy was updated in 2019 to improve its consistency and structure. It sets out organisation and conduct rules to be adhered to in order to identify and reduce risks of non- compliance with obligations to protect clients. These obligations are now based on five main areas:

■ organisation: risk of non-compliance with rules of conduct due to an inappropriate management system;

■ product and service suitability: risk of selling a product or service that does not meet clients needs or situation;

■ information provided: risk of misleading and/or unclear information being provided to clients, which prevents them from making an informed decision;

■ CIP-related conflicts of interests: risk of not acting in the client s best interests by prioritising the interests of the Group, its employees, its partners or other clients;

■ managing client complaints: preventing them from risk of complaints being processed incorrectly.

The commitments are translated into concrete practices deployed in all Group entities, depending on their specific characteristics:

■ dialogue with consumer associations and other stakeholders is encouraged to gather their opinions on new ways to improve clients interests protection;

■ the procedures for approving new products and services incorporate all the issues relating to the protection of clients interests, and ensure the compliance and added value of the product or service for target customers;

■ the structure of the commercial teams remuneration is also subject to qualitative criteria aimed at discouraging transactions that are contrary to the customer s interests. For French Retail Banking, for example, the teams variable remuneration system is structured around four topics that express the employees expected performance: quality of customer relationship, business development, management of risks and compliance management, and management (for the relevant employees). BNP Paribas Fortis in Belgium took five strategic decisions

( High 5 for Positive Banking ) to be implemented by 2025. A share of the variable compensation is linked to several of this strategy's targets, one of which relates to customer satisfaction;

■ supporting vulnerable customers and more generally combating exclusion play a key role in the values that BNP Paribas upholds through its day-to-day activities and responsible banking policies. In 2019, the CIP team (under the Compliance Function) launched a project to incorporate best practices into this particularly sensitive area. Retail Banking - France also implemented a specific offering and dedicated support for customers in financial difficulty (see Products and services that are widely accessible, Commitment 7);

■ the Group is committed to being exemplary in the protection of customers personal data (see Combat social exclusion and support human rights, Commitment 8);

■ in 2019, the Compliance Functions CIP team primarily focused on protecting clients interests the consequences of algorithms use on the protection clients' interest. (through data automation). A working group was set up with the aim of improving identification and management of risks, both for managing complaints and conflicts of interests, and for information quality;

■ employees are made aware and trained on a large scale about clients interests. At the Group level, expert seminars for Compliance employees and others concerned by CIP are offered in all entities. At the same time, 88% of eligible trainees followed the MiFID II Awareness e-learning programme.

Complaints management and mediation

Complaints handling reveals areas for improvement and is a way to convert dissatisfied customers into ambassadors. As such, it is of prime importance to the Bank. It has been part of the Group s CIP policy since 2017.

Customer complaints statistics are reported to the CIP team on a quarterly basis (new complaints received during the period) and annually (new complaints received for which the subject described by the customer may lead us to consider a risk of non-compliance with the standards applicable to the entity). The management of complaints by the entities is also subject to specific monitoring with a dedicated control point.

Most of the Group s business lines have one or more services (online, phone, email, etc.) enabling customers to give feedback or make a complaint 24/7. These reactions are taken into account in the development of new products and to improve customer relations.

■ in Italy, thanks to a process of continuous improvement, the percentage of customer complaints processed within the specified time limit reached 99% in 2019 (98% in 2018 and 81% in 2017). BNL banca commerciale (bc) also pursued its goal of reducing the amount of complaints received through cause analysis and corrective action plans set up. In this context, a dozen or so projects were launched in this area in 2019.

■ in Belgium, complaints were down by 35% in 2019 in comparison with 2018, while the number of new files processed on time increased by 6%. This progress was the result of the implementation of best practices, in particular through more direct contact with customers (increase in phone contacts) when processing files.