FAIS compliant media - responses

We received many responses on a recently sent newsletter.   

*  Dear Editor

I thoroughly enjoy your comments in general, keep it up.

Regarding the above, I don't believe FAIS should be brought into this, but rather that responsible common sense must prevail for both parties.

Financial journalists must accept their responsibility in that the public is exposed to their opinions and might act on it, regardless of disclaimers. How many new income earners are not put off the savings benefits of the financial services industry by all the scandal exposed by the media? Scandal must be exposed and bad industry practises must be rooted out (but that is another topic); the issue here is that I have never seen the (crucial) other side exposed to the same extent, of the misery that poverty brings in old age when you've wasted away your years listening to how bad (some of) the financial industry is, instead of using those same years to save enough.

Financial journalism should not only take on the consumerism approach to the industry, but also embrace the huge role they could play in education and prompting people into taking positive action. Imagine the pride of the journalism industry if they could make a significant positive difference in the numbers of people that are able to retire financially independent.

The same common sense responsibility must apply to consumers. Surely you look before you cross the street and then accept the consequences of whatever action you choose to take. Why do we now think we have the right to sue when we took action of our own accord, but something didn't exactly worked out as hoped? All the failed businesses in the world are proof that, amongst other things, human beings tend to be just a little more (irrationally) optimistic than pessimistic. Thank goodness for that, otherwise no risks would ever be taken, but the same skewed judgement applies in investment decisions, hence if we accept responsibility for our own actions we will accept that plans won't always work out exactly as planned and, realistically, nobody is to blame.

*  Hi Angelo,
 
I must compliment you on this article.
 
Lately I seldom find the time in my hectic practice to argue, because I'm too busy fighting my battle to stay in business, but earlier this year I've taken a journalist from Rapport on after numerous "technical irragularities".  I'm a strong supporter for the cliche: ['n Halwe waarheid is erger as 'n infame leun] and therefore we cannot accept these things.
 
I also came accross a chartered accountant who punted a particular asset management company without being registered under FAIS!
 
Another thing that bugs me is that I sent an e-mail to a particular person at the FSB about 4 weeks ago in order to clarify matters in the industry and received nothing else than a "read receipt".  Someone in BFN working as compliance officer even visited the FSB with a few brokers, but received no straight answers.  It seems like the FSB prever not to reveal anything that could limit their prosecuting powers.  Are IFA's really committing the worst crime in the country?
 
Is it not time that IFA's begin to "Toi-Toi" about all these?
 

*  This was a very good observation.

Legislation for journalists is not the answer as it will be very impractical.

However, when the content of their articles provides generic recommendations, guidance or proposals regarding financial issues or financial products to consumers, they should end each article with more or less the following:

The opinions expressed in this article should not be seen as advice. Please take note that the opinion(s) or suggestions expressed in this article is/are of a generic nature and may therefore not apply to your individual circumstances. If you wish to act based on this information, please consult with your financial adviser first as the author and/or the paper / magazine do not accept any responsibility for any decision that you may make in this regard.

or something like that.

*  Yes YES  YES  YES  time  that  they  take responsibility a certain  gentleman (in English newspaper ) have  destroyed  100000th of R/A he MUST take responsibility...................... why  not.  If  we are liable for advice  so  must  they,

*  Dear Editor

You make a very valid point. All too often I read in the Star or Financial journals advice given by journalists who have no experience in the field whatsoever to do this and not to do that! By telling people not to do that is also advice.

There is no doubt in my mind that any person who deems himself wise enough to write any article on financial matters in any newspaper, magazine or any other form of media should not only have the qualifications to do so but should also be bound by the FAIS Act and should be prosecuted to the full extent of the law for bad advice, if this is the case.
 
It is far too easy for a journalist with no experience or qualification to make sweeping statements in the media and then to hide behind the faade of journalistic licence, freedom of speech and it is in the interest of the public.

*  Interesting article on advice given by journalists...

I was watching television last night and I was amazed that Naas Botha (ex springbok) is endorsing a medical product.  Now surely this is tantamount to advise when he is advising people to use Pro Sano (I think was the name) surely he is being paid to endorse this product?

What do you think cause if I gave that kind of advise I would surely be held responsible

*  Dear Angelo,

Your latest article hits the nail on the head so to speak.

It has always amazed me how the articles in special supplements of newspapers and periodicals are always written by industry experts. Obviously these people are the experts in their field, or should be I hope, but they lack one clear understanding. In their mind it is only the product they sell that is the best or the most relevant no matter what other may think. If I work in the tank container industry I punt tank containers. If I am an estate agent then the obvious asset class will be property related. The same applies for virtually every asset class one can think of and the way the information is relayed always ends with a referral to the person who wrote the article why? So he can sell his product

The point I would like to make is that the public read these viewpoints and act on the information supplied, without asking proper financial advice and applying their circumstances to the facts. Hence the problem of bad advice instead of appropriate advice!!

*  Angelo

100% for this article

We as advisors need to do from A to Z before we are allowed to give advice on Money matters. This is fine. Exams, compliance, FSB watch dog, FAIS regulations even became FICA watchdogs on on behalf of the Treasury (without pay). FPI exams are surely regarded as up there with the best.

I can and will land on the red carpet for advice not deemed fit by the public and or authorities.

But now, as you stated the Financial and even non Financial reporters make statements in the Media which is scary and as mention Joe Soap reacts to this kind of articles as if this is religion these people are spreading. They cant be wrong!!

About two weeks ago a client was very upset about my response about an article in a Sunday newspaper by a person (that was asked to leave a Company he was working for) for the absolute rubbish that was published. (It turned out that I was right with my response to the call by the client)

The clients response was that the editor would not allow such incorrect information to be published.

Time has come to call the reporters to the table and slap them with exactly the same criteria we as advisors must adhere to, because, THEY ARE GIVING ADVICE without any or very, very little knowledge of the industry.

*  Mr Coppola

Your comments re the Huisgenoot etc article refer.

There was the case some time ago when Finweek on its front page published the recommendation from Deon Basson to "cancel your policies".  Investors acted on this ad and lost millions in penalties. Apparentely some investors cancelled policies a few months from maturity date based on this. 

I have to register as a FSP with the FSB to give advice.  Is the Huisgenoot, You etc registered as FSP's?  Is the Finweek registered?  If not then the FSB should sue them and or close them down.  We get threatened with fines in excess of R1 mil for non- compliance, why should these magazines get of scottfree?

Regards

*  Thanks for your articles, I do enjoy your daily take on things.

Regarding the responsibility of the media The media in my mind has often been a source of entirely misleading information. Many editorials have become advertorials over time. Advertisements on face creams with Q10plus, Boswelox, Boto-firm etc face no liability for lack of results, and we have never seen a court case based on My skin did not look 10 years younger after 2 weeks.

There is a fine line between reporting and advising. The critical thing is to look at whether any relationship existed between the journalist and the reader. To blame a journalist for losses based on published opinion would be like suing Encyclopaedia Britannica for describing Pluto as a planet (When this is clearly so blatantly false).

A Journalist will always publish his take on things, and the investor must still take some responsibility for his own actions. The famous American case with the hot coffee where the driver was paid millions in compensation for pouring his own coffee in his own lap stands as a testament to the stupidity of modern times. A human being cannot entirely avoid the responsibility associated with being a human being.

A Journalist, by writing an article, has not signed up to advise any specific client. As long as no specific product is being marketed/described, I do not believe there is any need for FAIS to be taken into account.

A Journalist should be responsible in reporting, but I honestly do not believe that he can be legally compelled to in this regard.

*  Last year the FSB had articles in Personal Finance basically telling clients not to replace policies which was read by a client of mine (amongst many others I suppose). The following week, having looked at his portfolio, I advised him to replace 3 of his life policies. The surrender value was R200 000 and the same cover could be bought for R800 pm less. In short, these were textbook examples of policies that should be replaced, if no suicide notions were detected. Alas, this was not to be, to my frustration. He refused to budge, saying he read the article of the FSB andI just wanted to make money.

Being the executor, Im keeping the article and the family will sue the FSB for the R200 000 plus the premiums lost when he dies.

Keep it up.

*  Very interesting article and thoughts. To add to the debate.

I have been a financial advisor for the last 10 years and have been a big supporter of RAs as I have dealt in the small business market and seeing many clients being liquidated. This is not a pretty experience for anyone. Most of the people I have known have asked me why I did not force them to take bigger Ras.

Just last night a client did not want to invest in an RA because of the media coverage they have got, and I know of at least 50 people who have stopped their RAs because of the media coverage.

Now we know costs were high, but people have acted on the medias advice and incurred the costs they were warned against. Carte Blanche and Bruce Cameron (to sell stories) have to sensationalise everything. For that to happen you have to point out the negatives only.

They were telling people how bad RAs were and how high the cost. The problem was, the costs came in when the policy was stopped, and this is exactly what they encouraged people to do.

I wonder who is going to feed these people when they retire, Carte Blanche or Bruce Cameron. They have probably done more harm to thousands of people than any bad financial advisor/product ever has, all to sell there air time or publications.

*  I fully aggree with the person who wrote this article.

How can a Journalist give comments on financial matters when he is not qualified to do so, like being FAIS compliant as financial advisers?

We are not allowed to give any views on financial matters on which we are not accredited for. How can the media get away with this?

Journalists are using the excuse that they had to report about financial matters.

I don't have a problem with the report giving but how they can give their views as it is the best and most appropiate advice. By doing this in the media in that way is defeating the objecting of FAIS. Rather report on irregularities or on what propper advise is. Journalists must also provide their accreditations info with each report of advice they give as which the financial adviser must do.

I appreciate fair critisism about non compliance to FAIS,etc. That just help my work as a financial adviser to be proud on it and to get rid of unwanted elements in our industry who is misleading our clients and the general public.

I hope that something will be done about this.

*  Dear Angelo
 
I think your article is extremely pertinent in this regard and in fact when the FAIS Act was promulgated we were quite perturbed to read the following under the definition of 'client' - (which excludes the 'facts/advice' provided to the general public)
 
which means a specific person or group of persons, excluding the general public who is or may become the subject to whom a financial service is rendered intentionally or is the successor in title of such person or the beneficiary of such service. 
 
This in effect provides 'any' journalist' in any publication the ability to 'provide advice'  to all and sundry without any liability on their behalf in respect of FAIS . 
 
Whilst I am sure in most cases the facts and figures are accurate however a persons circumstances are not reviewed and the 'general' public may not be aware of the risks they may encounter or if any errors have been made. 
 
In response to your question - I do believe that everyone should be aware of FAIS (and the implications) and the investors must also be accountable for their own decisions and choices.
 
Thank you for the service you provide - some very interesting comments and issues are being highlighted.
 

*  Hi Angelo,
 
In response to your question in Editor's thoughts:

If you have any thoughts on this subject please feel free to email me.  Should the media go through a FAIS course - a light version - or is it really a case of let the investor beware?

Although it is politically incorrect to say so, there is no other option. No legislation can protect people completely, and definitely not against their own stupidity! Unfortunately most protective legislation often ends up being no more than a tool for lawyers to extract unearned cash from unfortunate third parties.
 
As to whether the media needs to go through a FAIS course - there is no such thing as a 'light version' - you are either fully compliant or not!
 
If you choose to publish this, kindly withhold my name for obvious reasons. Thanks.

*  Hi Angelo,

I loved this article.  The truth is that justice, these days, only seems to be meted against the weak and helpless while everyone else seems to run around wreaking their own kind of personal havoc with no consequences, at least none that are severe enough to prevent future transgressions.

What you have done, however, will cost Oakley a lot more than if the duped consumers had exercised their rights in terms of section 65 of the Competition Act.  You have played the classic Name and Shame game and if enough people read your article, then a certain amount of justice will prevail.  Companies who take advantage of consumers ought to be exposed, hit them where it will hurt the most the BOTTOM LINE.

Well done for speaking up.

*  Congratulations on asking the questions that are NEVER asked in the media.
 
Although it is possible that more damage is done in South Africa by uninformed journalists than by all the 'bad' advisers combined, a FAIS LITE for the media is not the answer.
 
FAIS was introduced 'because all the other countries do it' and it has created jobs but will achieve nothing whatsoever. The advisers who leave the industry are the good guys: independent advisers who have built businesses that are not very profitable because they work very hard to give solid and comprehensive advice and do not focus on selling policies.
 
For many of these the additional cost of compliance (the subject of a story on it's own) has tipped the scale and they have left or shall.
 
But they were never the problem: the damage was and is caused by the representatives of Life Assurers and those who work for the Banks and it is not because they are bad people- well certainly not all of them. It is because huge pressure is put on them to perform. Performing means to sell policies so they do. They are personally not accountable to the FSB, their employers are, and for them it is a numbers game:  they always have, and will in future, refund the small percentage of customers who do complain but the vast percentage just do nothing more than complain to their mates.
 
So what Government has done is to put up a big show of power play that hurts those that consumers desperately need- independent advisers who can and do give good and independent advice. The villains in this tragedy are left to carry on with their mischief.
 
Quite comical if it were not as damaging as it is: the rate of saving in ZA has steadily declined and will decline further- inappropriate policies do not last too long.
 
The quality of financial journalism is, with a handful of notable exceptions, so poor that it does not bode well for the future. People still believe 'what's in the paper' and the answer in my opinion is not control but exposure. The media should agree to hire only qualified people and should agree to expose each other- tell the consumer about the rubbish that is written every single day. That means that you yourself must be prepared to be exposed. That can become a nice and interesting little game- for a while, until there is very little to expose.
 
Can that be done? As Judge Dennis says: you be the judge.