Would you follow an anonymous call to arms?
A couple of weeks ago, on 18 November 2009, a mysterious ‘petition’ landed in the FAnews Online inbox. The Petition to Halt New Life Commission Regulation was sent anonymously by a group calling itself The New Council for Brokers. What does this ‘movement’ hope to achieve? In short, they want to encourage as many independent brokers, agents and franchise agents to “form an actual Broker Council appointed by brokers for brokers!”
We live in a free-market economy and there’s nothing to stop anyone from campaigning to establish a new broker representative body. But we’re not so sure about the half-truths so liberally scattered through their correspondence. They appeal directly to brokers’ sentiment by dragging the hotly debated life commission topic into the open again. And they claim their efforts are “in response to secret meetings held between the Financial Service Board (FSB), Association of Savings and Investments SA (ASISA) and various Life Offices in the last month to shortly regulate our upfront life commissions….”
An indecent proposal
What does the group propose? Their viral email campaign – in which they request each recipient to forward the email on to as many other intermediaries as possible – is the backbone of a petition. They claim any response to their email will be added to this petition and forwarded to government… They will then form a body to represent brokers regardless of provider affiliation... And they promise “real representation at government level” too. How serious are they? The New Council for Brokers claims they “have retained the services of a top-5 legal firm to represent [them] in all matters regarding [your] future as brokers.”
Their major gripe is around the claimed lack of broker representation in various regulatory processes. “How are we represented in these discussions as the major stakeholder and those most affected? Our ‘representatives’ in this regard, the FIA, ASISA, etc are not brokers and have no vested interest in our well being. They are not run by Brokers for Brokers, nor do they represent the majority of us in the market - so why do we leave it up to them to represent our best interests given the 'excellent' work they did for us during the investment commission debacle? Were any of you consulted during the previous changes to investment commissions?”
And the anonymous outfit ends the email with this ultimatum: “WE WILL NO LONGER BE TOLD WHAT OUR FUTURE IS. IT IS TIME THAT WE HAD A SAY IN WHERE OUR INDUSTRY IS GOING!”
What secret meetings?
Should we take their gripes seriously? Associations like the FIA and Masthead certainly go to work for their members whenever required. Although we appreciate the average ‘layman’ wouldn’t know about ‘secret’ meetings on life commissions, we believe the representative bodies and regulators mentioned in the correspondence have a mandate to conduct industry discussions transparently and in the open. Ian Middleton, managing director of Masthead, has already asked the tough questions. After checking with the FSB, the Financial Intermediaries Association (FIA) and ASISA he concludes: “No-one knows anything about [these secret meetings]!”
In an open letter to all Masthead members he warns this is not the first time the rumour has circulated. Middleton first became aware of the ‘secret meetings’ rumour after reading a press article a few months ago. “At that stage we received confirmation from Jonathan Dixon (FSB) and Peter Dempsey (ASISA) that there was no such working group,” said Middleton. Masthead is in regular contact with the FSB and we have again confirmed that there has been no task team set up either from National Treasury or the FSB to look at changes in the commission structure of risk products,” he continued. “We are concerned that the email being sent to brokers is factually incorrect and therefore irresponsible. The language is inciting and ignores the reality that worldwide, change is happening in the regulatory space. Lastly, it is anonymous with no name or contact details of the sender.”
Middleton also reminded brokers that Masthead is committed to “providing input on issues that are important to the success of independent brokers.” The organisation makes frequent submissions and comments in responses to the discussion documents circulated by the FSB and National Treasury. Masthead has provided valuable comment on FAIS Fit and Proper Requirements, proposals relating to Medical Schemes commission and proposals relating to Conflicts of Interest in 2008 and 2009 among others.
Editor’s thoughts: We’ve been on the receiving end of a number of ‘anonymous’ viral emails in recent weeks. Aside from this ‘call to arms’ for disgruntled brokers we’ve had a couple of warnings about organisations that are about to be placed in the hands of curators… The problem with anonymous tip-offs that are spammed to multiple recipients is they tend to be self-serving. We cannot proceed on the information without independent confirmation. Do you respond to anonymous requests such as those contained in this ‘broker’ letter? Add your comments below, or send them to gareth@fanews.co.za
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