Policyholders’ best interests at heart
“The importance of equipping staff with the knowledge necessary to deliver outstanding customer service cannot be emphasised enough.”
– SAIA Code of Conduct.
Modern codes of conduct spell out ‘ best practice in sales’
Modern codes of conduct spell out ‘ best practice in sales’ – what may be considered professional behaviour and leaving very little room for misunderstanding. Having the policyholders’ best interests at heart means rendering advice within the parameters of the law, based on trust, confidentiality, fair dealing and no personal gain or self- interest.
Representatives must be properly qualified to offer advice
Understanding the rights and recourse of policyholders is a crucial component in representative training. Occasionally, disputes arise around specific issues where the insurer’s representative should be in a position to offer advice and resolve the dispute quickly and efficiently.
With an onerous level of regulation, it is important to balance the safeguarding of consumers with business objectives
The extent to which financial institutions and persons in the financial services industry must contend today with governing legislation is enormous and growing. There is a considerable amount of legislation, including much that is new or recently amended, and it is difficult to grasp the impact of it all. This can be arduous, but when it comes to implementation, it is important to sustain a healthy balance that both safeguards consumer protection and meets business objectives.
TCF is an example of such regulation
The Treating Customers Fairly ( TCF) regulatory regime is now going full steam ahead under the supervision of the FSB. One of the goals of TCF is to ensure that consumers understand the benefits and risks of financial products. This requires giving clients clear information about the products. The clients must fully understand what they are purchasing.
Plain language is an important element of TCF
TCF will have to go hand in hand with the plain language requirement. Section 22 of the Consumer Protection Act is very clear in this
regard. The Code of Conduct also stipulates that policies, disclosures and requirements should be presented in plain language in order for the client to be able to make an informed decision. Terminology and language should be clear and not ambiguous. The Protection of Personal Information Bill is another relevant piece of legislation One of the most significant effects of Protection of Personal Information Bill ( POPI) will be the introduction of comprehensive and dedicated data protection legislation. This is likely to impose heavy compliance burdens on South African companies and public bodies. Data protection has been an issue for some time in the developed world, but it’s a relatively new concept for South Africa, even though the right to privacy is enshrined in the Constitution.
One of the prime objectives of The Financial Services Laws General Amendment Bill ( Omnibus Bill) is to ensure and address South Africa’s compliance with international standards of financial legislation. POPI was enacted 26 November 2013 and will be promulgated on a date yet to be determined by the president. Once the act commences, we will have a year to conform to its requirements. POPI protects personal information by restricting how the information may be collected, used and stored.
This means that we will have to ensure that adequate information security protocols are in place in every area of our business where there is gathering, securing and use of personal information. Client information can be shared only as stipulated by law, as approved by the client, in the public interest or for crime combating purposes. In all other instances, client information will remain entirely confidential.
The advice- giving procedure incorporates the needs analysis, identification of products, offering of products and providing the client with the opportunity to decline a product. The party obtaining the information must implement procedures to ensure that the personal information is updated where necessary, accurate, complete and not misleading as this is the information on which the issue of the advice will be based.
It is essential for organisations to have staff awareness and management training programmes in place to ensure that all staff have a good understanding of their obligations under POPI and related laws.
These are but two examples of the complexity and volume of compliance within the regulatory environment that need to be taken into account when providing sound financial advice. And, the right consulting means the right advice.
Current economic circumstances raise the spectre of average and making clients aware of the dangers is crucial It is not only the rising fuel price that is making consumers gasp. The value of many household goods has also skyrocketed, leaving many policyholders with insufficient cover. Inflation and the depreciation of the Rand could have serious consequences if clients don’t keep up with changing replacement values.
Many categories of goods, especially consumer electronics and engineering equipment, are imported. Adverse exchange rates also push up the local price of items such as computer hardware and software, and manufacturing plant and equipment.
The depreciation of the Rand against the Euro, South Africa’s major trade currency, as well as against the Dollar and the Pound, impacts not only on consumers’ wallets, but also on their insurance cover – a fact many policyholders overlook. Constant vigilance is needed to keep under- insurance at bay.
A client’s understanding of the product is crucial. A close relationship with your client will help to better analyse their needs and convey the suitable product benefits
For many insurance buyers, entering into a contract is very daunting. Highly technical with pages of small print and confusing jargon … it’s too easy for consumers to sign on the dotted line without really knowing to what they’ve just committed. This is where the services of a reputable broker or intermediary are indispensable.
If a client is searching to get cover, or to change it, it’s worth insisting that the broker does the necessary groundwork. It remains the clients’ prerogative to create clarity and structure. Give some serious thought to what they really need as the benefits of a close relationship with your customers should never be overlooked.
This exercise should help your client understand that you are putting them in the picture, and why you are recommending certain options, with their best interests at heart. This approach follows a partnership model that will lead to better behaviour. Dedicate time to the client to build a relationship of trust. Be client- centric, giving full attention to detail, with a view to delivering appropriate solutions. There is no one- size- fits- all approach.
The objective must be to deliver the best solutions for a client’s changing needs
The objective must be to provide new and distinctive solutions that address and benefit every client’s ever- changing needs, taking into account the ever- changing legislative landscape.
Johan Wolhuter Portfolio Manager at Renasa Insurance Company Limited Klerksdorp