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The devil was in the detail

17 June 2004 Angelo Coppola

We speak to Gerry Anderson, deputy executive officer responsible for market conduct and consumer education, about the Masthead offering, and get some clarity from Rose Keanly, MD of Masthead.

“The new broker network doesn’t fall under the jurisdiction of the FSB and is therefore not regulated by the FSB,” explains Anderson.

Just as an aside though, Anderson clarifies the situation in terms of compliance officers:

“The network can only act as a compliance officer if it registers and isapproved by the FSB as a compliance officer and is found acceptable for this purpose. To date no such application has been received.”

“It is also my understanding that it is not the intention of Masthead to apply for an approval to act as a compliance practice,” says Anderson.

“Although If all the requirementsare met by all the individuals concerned the approval of a compliance officer/compliance practice only takes a couple of days.”

Interestingly enough the now famous presentation from Masthead carries a slide that claims that it will offer this service.

Rose Keanly, MD of the new offering explains: “We are offering a compliance officer service - it will be done via Celestis. We have already submitted applications to register a number of additional compliance officers.

It also emerged this week that only vague, in principlediscussions had been held with the FSB, prior to the launch of the offering.Keanly confirmed that a meeting has since been set up with the FSB to takethe regulator through their (Masthead) detailed plans.

Turning back to the network offering: Anderson says:“The FSB has no concerns about networks in general but will watch the developments in order to ensure that regulatory policies, practices and procedures are not contravened.”

"Masthead itself is a private sector initiative launched by Old Mutual.

"As it is not the intention to interact with clientswith regard to the rendering of financial services (provision of financial advice or marketing of financial products covered by the FAIS Act) Masthead itself as a broker network entity is not required to be regulated," says Anderson.

Late breaking update:

In news just to hand, it has emerged that there is no agreement between Masthead and Spotlight as intimated by the Spotlight MD Phillipe Moretones, in today's newsletter.

FA News has also just confirmed thatdiscussions are scheduled for next week between the two organisations to discuss the road ahead.

Editor’s thoughts:

* Why not sort out all the details first, before going to market I wonder?

* Why not speak to the regulator upfront?

* This is an interesting market sector, with many players vying for position and a share of the market. It's a pity though that the facts sometimes take second place to a good marketing story.

* This current skirmish in the IFA sector should serve as a reminder to product providers, associations and other interested parties that its important to avoid the smoke and mirrors and simply offer the service with its warts and all.

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