Intermediaries laud consumer protection
In a unique display of unity, the six major bodies that represent financial intermediaries have collaborated to address the consumer protection issues raised by the determinations of the Pension Funds Adjudicator and crystallised in the recent National Treasury Discussion Paper on Contractual Savings in the Life Insurance Industry.
The Association of Black Insurance Brokers (ABIB), Black Brokers Forum (BBF), Financial Planning Institute (FPI), Insurance Brokers Council (IBC), the Association of Financial Planners (LUASA), and the South African Financial Services Intermediaries Association (SAFSIA) have joined hands in a concerted drive to support the principle of a fair deal for the client.
A statement issued by the combined bodies has complimented the National Treasury on identifying a series of key issues that need to be addressed by the life assurance industry.
We as financial intermediaries can only survive if we have customers who are satisfied with the service we provide and with the products available to meet their needs. We have embraced the provisions of FAIS (the Financial Advisory and Intermediary Services Act) which defines the quality and nature of the financial advice process, and are equally supportive of the development of a client-centric philosophy surrounding the products of the industry.
We agree fully with the core issues that the National Treasury has called on the industry to address
Transparent products whose features are fully disclosed to prospective buyers together with documentation and language that can be easily understood by consumers
Consumer education
The full enforcement of FAIS
Acceptable product structures that will provide fair value on maturity and acceptable minimum values in the event of early termination.
It is clearly critically important the life assurance companies address these issues in the re-development of their product and service offerings; we will play our part from the intermediary perspective; whilst relying on the regulators to provide advice and guidance in reaching this aim.
Concerns surrounding the costs attached to life assurance products will also have to be resolved, and we are committed to engage with both the regulators and the life assurance companies in order to work towards an acceptable dispensation. We fully understand that this is likely to include adjustments in the remuneration structures for brokers and agents, but are concerned that such steps should not lead to a reduction in the number of intermediaries available to support consumers in the long term. To the contrary, we agree with National Treasurys view that new entrants to the industry should be encouraged in order to provide consumers, especially from previously disadvantaged communities, with sound advice and good products.
Consumers deserve to be availed of the best possible deal. The emergence of new product structures resulting from this process will undoubtedly lead to requests for the replacement of many older products. This welcome development will no doubt present a challenge to the life assurance companies that will need to factor for demands for fair-play for consumers.
