Transcript Slide 1

The role of the organization
“QUO VADIS TUSSENGANGER?” / “QUO VADIS INTERMEDIARY?”
Presented by: Justus van Pletzen
REALITIES
 Regulation
 Commoditisation – Consumerism
 Value of the intermediary (lack – perception)
 Image and Reputation
o Wfii
o IAIS
- Core principles 18/24
The three strategic pillars
COMMUNICATION (HOW)
 Technology
 New Connect
o Daily
o Weekly – Indaba
o Monthly – Inform
 Selective – What is relevant for me
 One consistent message through structures
 Regional Coordinators
 Branches
 Regional Conferences
REPRESENTATION (WHAT)
Threats (Reality or Perception)
 October 2004 (FAIS)
 14700 FSPs
 July 2012
 10750 FSPs
 3206 Cancelled
o Consolidation
o Retire/ Leave the industry
o Fraud (minority)
REPRESENTATION (WHAT)
 New entrants (Human Capital Initiative
 Level playing fields
 Direct
 Aggregators
 Economy (Section 8)
 Banks (One fits all)
 FAIS Ombud determinations (Due diligence)
 COSTS……………
 Image and Reputation
 Remuneration
 Education – (In general)
 Transformation
TWIN PEAKS
 National Treasury - Prudential
 FSB – Conduct
 CMS
 Inseta
 SAM
 TCF
 FSGLAB
 Binder Regulations
RECENT SUCCESSES














Binder agreements
RE Level 1 exams
RE Level 2 exams
Health Care fees
Human Capital Project
Code of Conduct
FIA Members are informed
Broker mandates – direct
FSGLAB
Value of the intermediary (FIA)
President of Wfii
Exco member of Wfii
FIA Awards
Pro-intermediary Campaign
CHALLENGES
 Capacity to represent all disciplines in the industry
 Our own worst enemy
 Trust the leaders you elect and believe in them
Member priorities
PRODUCT LIFE STAGES APPROACH TO
TREATING CUSTOMERS FAIRLY (TCF)
New
Product
design
Promotion
of service
or product
Advice
Point of
Sale
Information
after point
of sale
Complaints
and claims
handling
FSA (UK)
The FSA began studying the TFC programme in 2000,
published its first paper in 2001, and the programme
was officially launched in 2005.
Realties in the UK:
1. A change of mindset of the industry
2. Clarity of regulatory expectations
3. Education to encourage consumer responsibility
4. A supervisory approach that is pre-emptive and
intensive
5. Enforcement and compliance
Product life cycle
Cultural Framework
New
Product
design
Promotion
of service
or product
Advice
Point
of
Sale
Information
after point of
sale
Complaints
and claims
handling
Desired Outcomes
New
Product
design
Promotion
of service
or product
Advice
Point
of
Sale
Information
after point of
sale
Complaints
and claims
handling
Developing products for specific target markets, based on a clear
understanding of the likely needs and financial capability of each group of
customers
Desired Outcomes
New
Produ
ct
design
Promotion
of service
or product
Advice
Point
of
Sale
Information
after point
of sale
Complaints
and claims
handling
Marketing products for specific target markets, based on a clear
understanding of the likely needs and financial capability of each group of
customers
Communicating clearly and fairly the nature of the product before the
consumer is “locked in”.
Desired Outcomes
New
Product
design
Promotion
of service or
product
Advice
Point of
Sale
Information
after point
of sale
Complaints
and claims
handling
Balancing the commercial objective of increasing sales with the objectives of
Treating customers fairly.
With assessment, offering suitable alternatives to consumers.
Desired Outcomes
New
Product
design
Promotion
of service
or product
Advice
Point of
Sale
Informatio
n after
point of
sale
Complaints
and claims
handling
Providing clear and appropriate information, making charges transparent.
Being clear to customers about what the firm, its products and services offer.
Desired Outcomes
New
Product
design
Promotio
n of
service
or
product
Advice
Point
of Sale
Information
after point
of sale
Complaints
and claims
handling
Monitoring and responding appropriately to changes in the wider environment
that may affect products and impact on particular classes of new or existing
customers.
Desired Outcomes
New
Product
design
Promotion
of service
or product
Advice
Point of
Sale
Information
after point
of sale
Complaints
& claims
handling
Honouring representations, assurances and promises that lead to legitimate
customer expectations.
Identifying common underlying causes of complaints and taking action to
eliminate the root cause.
Culture Change: Six Key Drivers
 Leadership
 Strategy
 Decision making
 Controls
 Recruitment, training and competence
 Reward
FSB’s TCF initiative
 FSB published a TCF discussion paper at the end of April 2010 which
introduces TCF concept and contextualises it by dealing with specific
examples
 Stakeholder workshops to debate TCF
 Cross-sectoral task team
 External consultant
 FSA Stakeholder Workshop
 Considering comments received
Key elements
 Culture Change
• Fair treatment at the heart of company’s business
• NOT a compliance function
• Ownership of TCF should rest at Board and Senior
Management level
• Board/Senior Management must embed culture of TCF at all
levels of organisation
• Further guidance on TCF culture framework and a selfassessment tool will be published
Key elements
 Revisiting the regulatory framework
• Challenges of rules based approach vs outcomes based
approach to regulation
• Combination of rules/principles in regulation so that the ‘spirit’ of
what the regulator wants to achieve is made clear
• Gap analysis of legislation of FSB to determine if all elements of
TCF are adequately covered and to ensure alignment across
sectors.
• Guidance notes on TCF best practice will be published
Key elements
 Revisiting the supervisory approach to market conduct
 Reactive approach vs proactive approach
 Increased focus on thematic on-site visits / testing of outcomes
on the ground (for instance by way of mystery shopping)
 Creating the right incentives
 Relying on financial institution to do the right thing : TCF not
likely to succeed
 Visible enforcement of TCF principles, increased probability of
detection, higher cost of non-compliance (steep penalties)
 Enforcement Committee
 Other forms of redress
Key elements
 Consumer Education and Co-ordination with Ombuds
 Consumers also have a responsibility to understand
rights/obligations
 TCF and Consumer Education must go hand in hand –
- Asymmetry of information
- Generally complex nature of financial products
- Consumer Education Department
Next Steps
 Roadmap document
 Evaluation of comments and setting out what FSB will do next and how
 Published by year-end
 Self-assessment pack




Briefing document
Self-assessment tool
Initial focus on product providers
Piloted process, published for industry to use
 Benchmark study
 Survey of firms based on self-assessment tool
 Interviews with firms
 Publication of assessment and report
 Supervisory Gap Sub Committee
 Regulatory Gap Sub Committee
Conclusion
 TCF aims to elevate fair treatment of consumers on
agendas of financial institutions.
 Behavioural change will be a multiyear project
 After consideration of comments on discussion paper Issuance of more detailed guidance on what the FSB
expects of firms in applying TCF.
 Obligation will be on Board/Senior Management to
undertake a TCF self-assessment
Thank you