Moonstone Monitor 17 April 2008 : New Ombud Findings

Three New Ombud Rulings

Determinations by the office of the FAIS Ombud contain significant pointers as to how this relatively new law affects us in practice. The latest three are no exceptions. What is heartening is that in two instances the regulator found in favour of the broker.

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In the first case the Ombud found in favour of the complainant. He determined that the broker had not kept proper records of discussions with the client. These related particularly to an incomplete application form faxed to the brokerage by a client. Whilst the broker claims to have obtained information, they had no proof of this, and the Ombud found for the complainant.

An interesting development was that the Ombud only awarded 70 percent of the claim to the complainant as he felt that she had known about the importance of disclosing previous claims, yet had omitted this from the application form faxed to the brokerage.

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The second complaint centered around a contract that was concluded with a certain M.J. Louw, at the time MD of the company, but who was later replaced in this capacity by his son Dolf Louw, who laid a complaint that the broker had given them the wrong advice.
MJ Louw sought advice from Respondent on how to reduce the company’s administrative expenses and the other problems listed above. “All these objects were achieved. The administrative expenses borne by the company were effectively eliminated while any loan taken by an employee was secured against the life policy and could be deducted from the proceeds of the policy.

The Deputy Ombud found that the Respondent had not misrepresented the nature of the new product. “Noteworthy is the fact that when the product replacement took place, MJ Louw dealt with the Respondent and signed the necessary forms on behalf of Complainant. “Dolf was not involved in the discussions leading to the replacement of the product.

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An interesting point to come out of the third determination was the legal obligation of the broker in terms of premium payments, a problem first faced by Wolraad Woltemade as he did his level best for his clients against unfair odds.

The Ombud dismissed a complaint by Elize Roseline Wall against One Call Insurance Brokers of Johannesburg when her claim for accident damage to her motor vehicle was rejected on the grounds that the policy had been cancelled after two unsuccessful debit orders. The Complainant asserted that after the two debit orders were not met, she furnished One Call Insurance Brokers with new bank details. She said it was the Respondent’s responsibility to give those details to the Insurer, ABSA Insurance, to debit the premium. She maintained that her vehicle was insured through the respondent and therefore the Respondent should indemnify her for her loss.

The Ombud found that the obligation to pay premiums is an obligation of the insured. This is an obligation that stems from the nature of insurance as a bilateral, reciprocal contract.

This is just one more example of how a favour can become an obligation in the eyes of the client. There is nothing new about this; we have always tried from our side to make sure premiums were paid; unpaid premiums invariably led to commission losses.

What is of concern is how, in the last two examples above, clients appear to attempt to use the financial service provider as the scapegoat for their problems. There is little doubt in my mind that this stems from the picture (caricature?) of the financial advisor that had become entrenched in the minds of the public via the press.

How this can be countered will remain a challenge for as long as any of us are around.

Building Your Leadership Brand: How Do You Treat Others?
In his book,Blink, Malcolm Gladwell suggests that analyses of malpractice lawsuits show that there are highly skilled doctors who get sued often and doctors who make many mistakes but rarely get sued. Curiously, the vast number of people who suffer an injury due to a doctor's negligence never file a malpractice suit at all. In short, patients do not file lawsuits because they've been harmed by poor medical care. Patients file lawsuits because they've been harmed - and something else happens.

What is this something else? According to the research Gladwell reviewed, it is how they were treated, on a personal level, by their doctor. The key message: people don't sue doctors they like. In the end, Gladwell states that it comes down to a matter of respect and the way that respect is communicated is through tone of voice (the most corrosive tone of voice that a doctor can assume is a dominant tone). This applies to those in the medical profession as well as those in every other profession.

In over twenty years of research there is one measure that is consistently ranked as a key leadership behaviour. What is this behaviour? Treats others with dignity and respect. If we are not seen to be doing this in the eyes of those we work with and through, it almost does not matter what else we do. People will not attribute the qualities of leadership to us. They may follow us because they have to, but we will never gain their respect or discretionary effort. We will never capture their hearts and souls. There will be no loyalty and no trust.

A great deal has been written on the value of building relationships (Questions of Character, On Becoming A Person, A Way of Being, The Likeability Factor, How to Win Friends and Influence People, Love is the Killer App, The Luck Factor, The Experience Economy, Trust-Based Selling, The Trusted Advisor, Extraordinary Relationships, Book Yourself Solid), the importance of creating strong networks and interpersonal skills in today's global world (Re-imagine, The World is Flat, Competing for the Future, Cultural Intelligence), to developing our emotional and social intelligence (Working with Emotional Intelligence, Primal Leadership, Social Intelligence, Put Your Best Foot Forward, First Impressions) to most effectively work with and through others. Sadly, however, I find little evidence that these principles are being lived and often by those busy reading all the above. It is as if we struggle to translate all that we know to our day-to-day actions. Or, perhaps it is that we fail to recognize the leadership or relationship building opportunity when it arrives because it rarely feels as glamorous as we hope it would.

What I have learned is that leadership (i.e. the application of all we are busy reading about or taking courses in) can only ever be lived in this moment. Reading more articles, books, and taking more leadership courses will not provide significant value if we cannot apply all that we already know now - in our next interaction - our next brand impression. What you do today matters. How you handle things now is your leadership brand. You are your organization to the marketplace. Does every interaction communicate its promise?

"...the future is not what will happen; the future is what is happening ... Every company is in the process of becoming ... every company is building or forfeiting by its myriad of daily decisions." - Hamel and Prahalad, Competing for the Future

The most common complaint we receive from readers hinge around bad service from product houses. How does one convey to clients where the fault lies without losing your own dignity or respect for the product house which you recommended to the client?

Like in the study on doctors above, clients who perceive you in a negative light are more likely to lay a complaint than those who regard you as their sunshine superman.

We would love to hear your positive views and share it with our other readers.