Moonstone: A loss Consumers can ill afford – Part 2
We received an unusually high number of responses following Monday’s article on the dwindling number of FSPs in the industry.
These comments from a reader in Durban, perhaps sums up the general mood contained in the reactions from readers:
Dear Paul
An enlightening article to say the least!
If nothing else the article reinforces the need to ‘separate’ the two very different disciplines that make up our Industry in general. As an industry we need to understand the ‘offs’ and the “back ons” in far clearer terms if we are to successfully combat this serious loss to the skill base! Surely the FSB can provide a similar set of stats by license category? Such information is a vital tool!
There will be many ‘sound minds’ that will leave, never to return, sometime after June 2012. Many of them will be forced to leave due to ‘top down pressures’ rather than a lack of operational ability and this will seriously damage the pro-active initiative of “Treat the Customer Fairly”.
The Short Term Insurance Industry has offered a “30 day cancellation clause”, without penalty to the client for years. The majority of the players in the industry carry significant PI cover to protect Customers against errors and omissions and the industry has a dedicated Ombudsman with an impeccable record of success in resolving disputes. The ST industry has lead the way in the introduction of ‘plain language’ policy wordings and Consumer Protection Act involvement and compliance.
As an employer I have been greatly heartened by the efforts my staff have put in to attain the necessary accreditation and qualification – I am saddened, however, by the fact that they are required to assimilate so much ‘non related’ knowledge in order to satisfy the FSB Exam requirements. Consumers needs Specialists to serve their specific needs and yet the FSB requires the passing of “one size fits all” exams.
My employees have all signed up with UNISA to get formally qualified at the top NQF level. The examinations are product specific and require a well rounded knowledge to pass them. The Pass Mark is 50%, yet all of them have achieved well in excess of that; many received distinctions – and yet if they do not pass the RE exam with its pass mark of 66%, they face the danger of becoming unemployed after years of valiant service! Is this the outcome that the Consumer needs… has he been made aware of this?
The FAIS Act, The Consumer Protection Act, The FICA Act and The Financial Services Board were all created to protect the consumer. This raises the central issue that should inform the entire process - What would the Consumer prefer?
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A. |
An Intermediary skilled in the understanding/application of regulatory legislation? OR |
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B. |
An Intermediary skilled in product knowledge and the necessary expertise and experience to apply the product knowledge? |
Point A has a required examination pass mark of 65% and it carries the threat of disbarment for failure.
Point B has a required pass mark of 50% and carries with it the probability of improved service delivery.
I believe we have the cart pulling the horse!
The June ‘cut off’ will reveal that the FSB set the bar unattainably high and destroyed a decent skills base by doing so.
I comment below on some of the issues raised:
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1. |
As an industry we need to understand the ‘offs’ and the “back ons” in far clearer terms if we are to successfully combat this serious loss to the skill base! Surely the FSB can provide a similar set of stats by license category? Such information is a vital tool! It makes a lot of sense to try and determine where the losses occur, and whether certain sectors of the industry are haemorrhaging more heavily than others. The practical problem with this is that many FSPs have a number of categories on their licence, which could distort the reality. |
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2. |
Many of them will be forced to leave due to ‘top down pressures’ rather than a lack of operational ability and this will seriously damage the pro-active initiative of “Treat the Customer Fairly”. The loss of many years of advisor experience will be a disaster to the industry
and the consumer, all the more so if it is for the wrong reasons. Very few really incompetent or blatantly crooked advisors manage to last in the industry for long. This means that a lot of good men and women may be lost. |
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3. |
A lot of the steps mentioned in the response above are either voluntary (up-skilling of staff) or compulsory (PI cover). Whatever the reason, there is a willingness in the industry to change for the beter; to do what is required. What I hear is that people are saying: “We want to change, and we will comply with fair and reasonable requests. All we ask is to be given enough time, and equitable treatment, in order to bring about the required changes.” |
The survival of independent financial advisors is a non-negotiable component of the regulatory authorities’ drive towards a fair and unbiased service to consumers.
One can only pray that this realization will take place sooner, rather than too late.
