A response to the ‘Tough in the Trenches’ newsletter
Last week we published excerpts from a television interview with FAIS Ombud Charles Pillai, broadcast on Summit TV. The interview elicited a number of responses from our readers – which can be viewed on our website directly after the original article.
For those of you who are not yet aware, FAnews Online has made a number of improvements to the websites, including the ability to comment directly to our newsletters and feature articles. In today’s newsletter we examine one of the responses received.
Why this obsession with financial service providers?
Back to the matter at hand, our reader’s response begins: “I wish to add my tuppence worth to what Mr Charles Pillai had to say. I quote “Our function is to resolve complaints by clients against financial services providers.” This is an extremely biased statement, which needs to be challenged by our representing bodies. Should it not be product/services providers? Incidentally what annual levies do product providers pay to the FSB? Is there a body we as intermediaries can turn to, to complain about the FSB?
“I recently paid my annual dues to the FSB and Ombud: what do intermediaries get for it? Should policyholders not pay a monthly levy of say 10 cents on their policies, since the FSB is there to predominantly serve them?
“One of the criteria to be licensed intermediaries is that we have a fixed office with all the modern forms of communication and IT equipment and appropriate software. Sometimes I wonder if the FSB does not operate from the boot of a car as the following tale could imply.”
As an aside, readers should look out for the November issue of FAnews magazine for a detailed look at the various broker and intermediary bodies at work in the industry today. If you don’t yet receive the magazine simply follow this link to subscribe.
More problems with S14 transfers
Our reader continues: “I have a specific case and a general complaint about the FSB. I have been busy with a section 14 transfer for over 6 months. The preliminary dealings have been going on since 2006. The” releasing” institution was eventually asked by the FSB to provide the “final figure”, which is several million rand, which was faxed through to them on 16 October 2007. One would understand that should such a request be made it is because over a six month period there would be further interest accrued. The FSB claims they cannot find the fax on their system because there is an apparent problem with their IT program.
The “receiving “institution has been in telephonic as well as email communication with the FSB to obtain the transfer approval. As I am writing this email, I have just received notification from the “receiving “institution that the FSB has eventually responded to their numerous emails and that they have finally found the “final figure” documentation on their system.
FAnews Online has received a number of worrying comments from readers attempting to complete section 14 transfers – so this case is not unique in the industry at present.
Interest piles up on further delays
Why should fund members carry the cost associated with further delays, asks our reader. He notes in this case that “because the approval will only be granted more than a month after having received the final figure, what happens to the loss of further interest during this period, which at money market rates would be in this case more than R24, 000 in a month? Secondly, despite the “releasing” institution having provided the final figure, are they obliged to only pay that amount out or do they pay over the further accrued interest as well? Once the final figure has been received there should be no reason why the FSB should take more than 24 hours to grant the release of the funds.
My general complaint is that there is no feasible reason why a section 14 transfer should take more than 3 months to conclude. It is as if the FSB believes that the client may change his mind, thus unofficially extending the cool off period. Perhaps the Ombud should set the example by making his institution more efficient and who knows compliant as well. The old biblical adage, “take the beam out of your own eye before you take the splinter out of someone else’s, should apply. I am sure we could solicit response from many intermediaries who have to live with similar frustrations.
As mentioned earlier there are a number of intermediaries with similar concerns. At present it seems the regulatory authorities are focussed on cracking the whip where they will get the greatest response. But we will hopefully reach a time where institutions are also expected to do their part. An intermediary should not be accountable to the client in events where institutions and regulators delay requests from clients.
Editor’s thoughts:
This reader response raises a number of questions which have been troubling brokers and financial intermediaries for some time. Why this obsession with disciplining the final purveyor of the good when often the product provider carries some responsibility for the problem. And why are relatively simple financial transactions (such as section 14 transfers) taking so long to complete? Follow the link in this newsletter to make your comment to this article online.
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