The buck stops where?

01 February 2008 FAnews

Following our article about the various broker organisations and who fits in where in the November edition, FAnews decided to find out if we could pinpoint who is ultimately responsible for protecting the image of intermediaries and fighting for their rights.

We asked various broker organisations whose role it is to fight for brokers and change negative perceptions spread by the mass media?

Masthead says that although they have received the broadest exposure across a wide range of media, in which they have emphasised the value of advice from independent brokers for consumers, they are not convinced that the negative perceptions stretch deeply into the consumer psyche.

"We believe that the advice industry is on a journey towards professionalism. Consumers, independent brokers, the regulators, the media, product companies and organisations like Masthead all have a role, as participants in financial services, to do whatever we can to improve the image of professional advice. It is in none of these stakeholders' interests to see the demise of the independent broker.

Diagonal adds that the FIA (the newly merged SAFSIA and IBC), their members and the traditional insurers should take up this role as a unified front, and not independently of each other. The FPI agrees saying, "it is the responsibility of the industry as a whole."

The FIA shares the responsibility with others. "The Intermediary plays such an important role in the financial services industry. If there is a negative perception about the intermediary, it reflects on the industry. Therefore it is the duty of all stakeholders, including FSB and government, to assist in this regard."

IFAnet agrees, saying that it is the role of the entire industry - product providers, industry media and intermediary included. "Everyone has a responsibility to negate and avoid the negative perceptions created by the mass media by our collective actions on a daily basis.

"The product providers must design products that are transparent and fair to the consumer and must equip the brokers with all the information to understand the products themselves, while the broker must apply the appropriate solution to satisfy the consumers needs. We, as an industry, must communicate regularly and in layman's terms with our consumers, and engage with the media and ensure there is a good understanding of the good things we as an industry achieve on a daily basis."

LUASA highlights the ethical approach. "It is everyone's role – firstly by not deriding each other in public. Secondly, by acting as caring and professional ambassadors in all interactions with the public and press; and finally, not condoning any wrong doing by peers who do not adhere to principled and responsible financial planning and advice."

Moonstone adds that "Currently, the various broker representative bodies do it, but with the merger between SAFSIA and the IBC into the FIA, and the clout displayed by the joint broker bodies forum at discussions with the regulators, the much needed cooperation will have a far bigger impact than ever in the past."

FAnews also asked the broker organisations who has the authority to fight for the rights of brokers at industry and regulatory levels – regardless of the issue at hand?

"In a perfect world this would be the role of the intermediary bodies and the various product provider bodies (LOA, ACI, IISA, etc) that represent the interests of the product providers and should logically defend the interests of the intermediaries who are essential to their ongoing success," says IFAnet.

"However, in reality we know that one's level of influence is directly linked to your transactional 'power'. Whilst the intermediary bodies have played an important role in the past, and will continue to do so in the future, there is a definite imbalance of influence weighted in favour of the product providers."

"Intermediary bodies in this country are all voluntary associations," says LUASA, "and hence each has a mandate from its members to 'ultimately fight for their rights'. Contrastingly, product providers are in the business to produce profits for their shareholders and will thus always slant their interests in that direction."

Moonstone comments that the nature of the service offered by networks and broker bodies will determine the extent to which they are responsible to look after the welfare of its members.

The FIA acknowledges its role, saying "it is the duty of the broker bodies," and adding "insurers who value their distribution channel will support it to the hilt."

So, clearly, there is no one organisation that emerges as the protector of the intermediaries image in the mind of the public, nor one that is the ultimate champion for the rights of intermediaries. Although this might be the case, everyone is unanimous about the fact that this is a collective effort. It is also obvious that everyone takes the industry's image in a very serious light.

The year of the broker

It seems that the focus for 2008 for the industry as a whole is all about the enhancement of the industry's image. One of the many efforts will be a conference hosted by the FIA (and attended by leaders of the South African insurance industry, international delegates, regulators and legislators) with the theme "The move towards professionalism".

Bodies, regulators, legislators and product providers should collectively focus on the image of the industry and the image of the intermediary... it's long overdue.

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