"Basic Policy on Customer-Oriented Business Management" in the Aozora Bank Group

November 30, 2023

The Aozora Bank Group will strive to work on issue areas that need to be focused on to maximize economic and social value, and with the management philosophy of "contributing to the development of society through the creation of new value-added financial services", we will appropriately provide advanced financial/non-financial services and know-how tailored to the characteristics and needs of our customers through collaboration within the Group as well as with external partners.
The Bank Group and its staff are committed to contributing to the sustainable growth and development of society and economy by carrying out our business in a fair and sincere manner, while maintaining the customer-oriented business management recognizing the importance of "helping our customers through specialized services in pursuit of the best interests of the customers".

1. Formulation and disclosure of basic policy regarding customer-oriented business management

Recognizing the importance of instilling and establishing our customer-oriented business management further in the Bank Group, while the Management Committee, where we decide important matters in daily business execution, will report and hold discussions on the status of activities according to the basic policy, the Bank will strengthen its efforts to practice the policy, and will disclose the status of those efforts every six months.
In addition, the Bank will review the basic policy on a regular basis for better business management.

2. For the pursuit of the best interests of customers

In the Bank, to pursue the best interests of our customers, all officers and employees are obliged to submit an "Annual Written Confirmation of Compliance on the Aozora Bank Group Code of Ethics and Conduct", and we strive to instill the "corporate culture" that aims for the best interests of the customers.
The Bank believes it will lead to our growth that having many customers deal with us and satisfying the customers by increasing the balance of assets entrusted by them. By practicing Aozora's Platform Business, we will meet the diverse needs of our customers.
When providing consultations for customers on asset management, the Bank will make diversified investment proposals after accurately recognizing the customers' needs and fully understanding the customers' financial knowledge, investment experience, transaction purpose, asset status, risk tolerance, life plan, etc. We support our customers' mid- to long-term and stable asset building. And, We will not make proposals that do not match the customers' wishes, or propose a review of products in a short period of time that will not suit the interests of the customers. The positioning of the main products is as follows.
<Investment Trusts>
The Bank will propose investment trusts as the core product of diversified investment, based on fund diversification and time diversification. For instance, for customers who are just starting their asset building, we offer products that allow "investment trust accumulation" at a fixed amount on a fixed date each month, and for customers who wish to invest a large amount of funds, we offer those that include a time diversification mechanism.
In addition, we will increase the number of products corresponding to the new NISA system so that many customers can take advantage of the new NISA system that will begin in January 2024.
<Complex Structured Bonds (Stock Index-Linked Bond, Exchangeable Bond, etc.)>
Since complex structured bonds are complicated products that incorporate options, etc., into bonds, the Bank has stopped handling them and will not resume handling at this time.
In addition to asset management consultation, for customers who want to "leave a legacy" or "prepare for the future", the Bank also provides a wide range of consulting services that meet the needs of its customers, such as proposals of insurance products, support on wealth transfer and business succession, etc., in order to help protect and pass on their accumulated assets to the next generation.
The Bank will constantly verify and evaluate the results and progress of the above activities, and will announce some of the results in the "Aozora Bank's Initiatives".

3. Appropriate management system for conflict of interest

The Bank strives to accurately understand the possibility of conflict of interest with customers in transactions and the possibility of conflict of interest when developing and introducing products, and determine and identify whether interests of customers are unreasonably harmed by transactions that may cause conflict of interest, in a bid to pursue appropriate management to prevent conflict of interest.
When proposing financial products and services, the Bank will not select products by considering fees paid by the company that provides the product or will not prioritize products of our Group companies, but always will make proposals from the customer's point of view.
An overview of the Bank's conflict of interest management system is published in the "Conflict of Interest Management Policy".

4. Fees to be borne by customers

The Bank will consider fees to be borne by customers as one of the important information to make their decision on transactions. We will thus strive to ensure transparency as well as provide easy-to-understand explanations, including presenting comparisons with similar products and alternative products. In addition, we will also post the information on the Bank's website and BANK app for easy confirmation.
Regarding the details of fees and other costs, when proposing products and services, the Bank will ask customers to check with the Important Information Sheet, the documents delivered prior to the conclusion of the contract, or the prospectus, and after the transaction, we will ask them to check with the reports and others.

5. Providing important information in an easy-to-understand manner

The Bank will explain important information in an easy-to-understand manner using the Important Information Sheet, sales materials, legal documents, and materials presenting easy comparison for each product, in order to propose products and services suitable for customers. In addition, we will also post the information on the Bank's website and BANK app for easy confirmation. The major "important information" is as follows.
・ Risks, returns, and transaction conditions of the products and services
・ Attributes of potential customers for sale of the products
・ Reasons for selecting the products and services
・ Fees received as compensation for services to customers as well as fees received from third parties (Even in the same products, if the fee varies depending on the quantity, currency, course, etc., such information will be included.)
・ Packaged or not
"Important Information Sheet (Financial Business Operator)"

6. Providing services suitable for customers

<Maintenance of branches and infrastructure>

The Bank will provide "BANKTM" services for customers who do not have a branch nearby. We offer "Bank The Debit" and "Bank The Savings" as services for "Spending" and "Saving", and "BANK The Teiki (time deposit)" as a service for "Increasing", as well as financial products such as investment trusts.

<Providing financial products>

After accurately recognizing the customers' needs and fully understanding the customers' financial knowledge, investment experience, transaction purpose, asset status, risk tolerance, life plan, etc., the Bank will carefully consider the target asset amount, study appropriate asset ratio using "Aozora Model Portfolios", and select and propose the product suitable for each and every customer from the diverse product line-up, taking into consideration whether the product is provided as a package or not. In addition, we will also post the information including product line-up on the Bank's website and BANK app for easy confirmation.
The Bank will coordinate with a wide range of domestic and international asset management companies and insurance companies, and based on the attributes of the target potential customers, we will improve our product line-up that will contribute to our customers' mid-to long-term asset management needs by introducing financial products and services and reviewing their handling. In addition, in order to understand customers' diverse needs, we will conduct regular surveys to customers, and make good use of the results to improve our product line-up.
When introducing new financial products and services, the Business Divisions validate whether they are suitable for the target potential customers, and the related business group investigates, analyzes and examines various issues and problems such as product risks and provision systems for customers. Then, management has discussions in the Integrated Risk Committee, the Customer Protection Committee, etc. have discussions as necessary and finally the Group Head of the Responsible Division decides the introduction.
In preparation for introducing complicated or high-risk financial products to customers or providing information for those with limited investment experience, the Bank will create solicitation rules such as suitability judgment and solicitation start criteria, and we will thus provide services more carefully. In addition, we will monitor whether confirmation of the customer's intension and explanation to the customer were properly performed, and will provide instructions and training to sales personnel in order to improve and enhance the explanation to customers.

※Regarding Principle 6 (Note 3) of the "Principles for Customer-Oriented Business Conduct" published by the FSA (Financial Services Agency), it is not applicable to the Bank as we are not a financial business operator involved in the establishment of financial products.

Principles for Customer-Oriented Business Conduct (FSA's website)

<Detailed follow-up services>

The Bank will make proposals while giving due consideration to the customer's life plan, and after the sale of financial products and services as well, we will regularly provide information such as the status of customer's owned products and market trends, and in addition, we will provide information from a long-term perspective in response to changes in the customer's life stage. Through those efforts, we will contribute to the asset formation of our customers for a long time.
The Bank will constantly verify and evaluate the results and progress of the above activities, and will announce the results in the "Aozora Bank's Initiatives".

<Responding to Customers' Voice>

The Bank will take the "Customer's Voice" received in the branches and call center seriously and make good use of their feedback for service improvement and product design.

7. Consultant training policy and appropriate motivational framework

To appropriately evaluate the customer-oriented business management with highly specialized and courteous consulting services, the Bank abolished personnel evaluation based on the amount of revenue, and instead, with plans prepared by each business office based on assets under custody and provision of non-financial services, we conduct business management while focusing primarily on customer attributes and needs.
To instill the customer-oriented business management, the Bank developed the "Specialized Retail Training Program" that fully considers enhancement of consulting skills and improvement of compliance awareness, and for realizing highly specialized consulting services, we encourage all sales personnel to obtain financial planner qualifications.
Regarding the framework for consultant training and appropriate motivation, such as training implementation and its understanding level, performance evaluation system, the Bank will regularly check, verify and evaluate the results and progress status.