Consumer Protection must be at the heart of the financial services industry
Though the Consumer Protection Act and a number of other legislative changes in the South African insurance industry has allowed for great strides forward in better protecting the consumer, there is still much further to go.
This is according to Arnold van der Linde, Executive Chairman at IntegriSure who says South Africa is still in the first phase of professionalising the financial services industry. “This has been overdue for a long time. From now on, financial advisers will have to be qualified and adhere to every piece of legislation such as Treating Customers Fairly, the Consumer Protection Act and the FAIS Act.” Van der Linde is also the Vice President of the FIA (Financial Intermediaries Association of Southern Africa.
He says these developments are crucial in the current very competitive environment where we see opportunistic product offerings luring consumers in with a cheaper premium, by offering less. “It is important for consumers to remember when shopping around for insurance cover that the cheaper the insurance, the cheaper the cover is likely to be.”
Van der Linde says it is possible to obtain better rates for your insurance whilst maintaining comprehensive coverage by using an insurance company that rewards responsible lifestyles through better premiums. Some insurance companies focus on grouping their more responsible risk profile groups together and offering them a lower premium rather than using the funds of innocent policyholders to subsidise the careless behaviour of others.
“Consumers sometimes fall for all kinds of risk solutions and promises of more for less, faster. This is to be expected as they are inundated with advertisements and the choices are vast. Attempting to navigate one’s way through all of these promises in a complicated environment like financial services without professional advice is a gamble but consumers are beginning to realise that. Good professional advice will in the future be a sought after and scarce commodity.”
Van der Linde says there are continued efforts within the insurance industry itself and from regulators and industry bodies, to ensure that proper care and advice is provided to consumers. “Talks of a super regulator are heard every day. Our regulator has built up a shopping list from all over the world and a lot of work has to be done to ensure that we still have a free enterprise system, as a strong foundation for the continued evolvement of financial services in South Africa.”
“Of course, protecting the consumer is the main driving force behind all of this legislation – which is something we should all be striving for – but one also needs to keep in mind that one of the biggest challenges in the future will be to ensure that the new legislation is adhered to, whilst at the same time still being able to attract new talent to the industry in order to deliver the product.”
“The reality is that while all of this new insurance legislation is better protecting consumers, it is also important that they are aware of their rights by engaging with a trustworthy financial advisor, who can answer all of their questions. Hearing the bad news once you need to submit a claim is often too late, concludes van der Linde.
