Société Générale / Risk report 2021 - Pillar 3 2020

13 COMPLIANCE RISK, LITIGATION COMPLIANCE | SOCIETE GENERALE GROUP | PILLAR 3 - 2021 217 Regulatory risk CUSTOMER PROTECTION Customer protection is a major challenge for the Societe Generale Group, which is committed to respecting and protecting the interests of its customers. The system addressing the obligations introduced by European customer protection regulations (MIF2 and the Insurance Distribution Directive or DDA) has now been established both in terms of product governance and consulting, and with respect to compliance with information requirements. As part of the COVID crisis, the networks have temporarily adapted the marketing terms (information and remote sales) by developing telephonic consulting procedures. In an environment marked by the health and social crisis, bank fee capping systems have been operational since February 2019 and continue to be strengthened. In this context, significant measures are being taken to improve the Group’s system by: strengthening internal rules relating to key aspects of customer p protection (marketing rules, customer claims, conflict of interest, product governance, protection of customer assets, remuneration and qualification of employees); specific training and increased staff awareness; the importance the p Group places on this issue is largely addressed in the Group’s Code of Conduct; adapting as a matter of necessity existing tools to new regulatory p requirements. Claims andmediation The processing of a claim is a commercial act that impacts customer satisfaction. Accordingly, it has received much coverage in the Code of Conduct. The “Customer claim processing” Group instruction incorporates the recommendations of the national supervisor (the French Prudential Supervisory and Resolution Authority) and the regulatory requirements (MIF2, DDA and DSP - Payment Services Directive) relative to the strengthening at European level of customer protection measures. The bank’s businesses have an ad hoc governance, an organisation, human resources and applications, formalised procedures, and quantitative and qualitative monitoring indicators. Mediation services also form part of the internal procedure. Conflicts of interest The Group has a clear normative framework in place to prevent and manage conflicts of interest. This framework specifies the principles and mechanisms that have been implemented. The risk mappings, registers and declarations of the most exposed employees were strengthened in 2020 and are now more thorough to comply with obligations to identify situations of potential conflicts of interest. The system now covers three categories of potential conflicts of interest: those that may arise between the Group and its customers, or between the Group’s customers; those occurring between the Group and its employees (particularly in relation to activities involving an employee’s personal interest and their professional obligations); and those occurring between the Group and its suppliers. Product governance Product governance obligations have been broadened to include compliance with marketing and customer information regulations. As it is obliged to identify the target market from the product design stage and to verify that the criteria match customer situations, the Societe Generale Group performs both systematic product reviews upstream of the marketing stage and communication between product originators and distributors to track the products during their life cycle. Vulnerable customers Societe Generale has established practices and usages to comply with legislation vis-à-vis vulnerable customers, in particular customers benefiting from the specific offer for financially vulnerable customers. To contribute to the national effort to boost the purchasing power of French citizens in challenging financial circumstances, the Group has added to its practices by introducing additional measures in February 2019, notably: i) freezing bank fees; ii) capping bank intervention fees at EUR 25 for vulnerable clients; iii) organizing follow-up and support suited to the situation of customers experiencing difficulties in the wake of recent events. These measures are closely monitored. MARKET INTEGRITY The main regulatory risks concerning market integrity involve the following: benchmarks (regulation on Benchmarks/BMR); p market abuse and ethical employee behaviour (MAR); p derivatives activities (Dodd-Frank and EMIR regulations); p separation of proprietary trading activities (US Volcker Rule and p SRAB Act in France). The challenges are threefold: constantly adapting compliance systems to address regulatory p changes in the various global markets where the Group operates and, to this end, having expert resources who are also trained in project management; managing a robust compliance risk assessment process, taking into p account the specific characteristics of each business and each region; having a solid governance at Group level to be able to monitor the p progress made in projects and remedial programmes, ensure the normative framework is kept up-to-date, and monitor compliance incidents and the effective reporting of information to General Management, the Board and regulators. Market abuse The Compliance Division continued to improve the compliance of its system. Specific focus is placed on the modernisation of automated detection and analysis tools, in addition to the training of Compliance staff in charge of these controls. “Market abuse” instructions were revised in 2020. These instructions set out the measures to be implemented to prevent or detect market abuse practices that may threaten the integrity of financial markets, namely i) insider trading (transmission and use of privileged information); ii) market manipulation (price manipulation and the spreading of false information).