Download - The role of the organization
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The role of the organization
Presented by: Brian van Flymen
“QUO VADIS TUSSENGANGER?” / “QUO VADIS INTERMEDIARY?”
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The three strategic pillars
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RECENT SUCCESSES Pre-merger industry feedback - Negative
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap Code of Conduct / Perceptional change
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap Code of Conduct / Perceptional change FSB realize that FIA Members are more informed
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap Code of Conduct / Perceptional change FSB realize that FIA Members are more informed Broker mandates / direct writers as well as no agreements
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap Code of Conduct / Perceptional change FSB realize that FIA Members are more informed Broker mandates / direct writers as well as no agreements FSGLAB / Institutional failure
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap Code of Conduct / Perceptional change FSB realize that FIA Members are more informed Broker mandates / direct writers as well as no agreements FSGLAB / Institutional failure Value of the intermediary (FIA) / Level playing fields
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap Code of Conduct / Perceptional change FSB realize that FIA Members are more informed Broker mandates / direct writers as well as no agreements FSGLAB / Institutional failure Value of the intermediary (FIA) / Level playing fields Exco member of WFii – IAIS Access
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap Code of Conduct / Perceptional change FSB realize that FIA Members are more informed Broker mandates / direct writers as well as no agreements FSGLAB / Institutional failure Value of the intermediary (FIA) / Level playing fields Exco member of WFii – IAIS Access President of WFii
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RECENT SUCCESSES Pre-merger industry feedback - Negative 2008 FIA Dream Insurance Laws Amendment Act – Parliament 2008 Binder agreements / Secure income streams for brokers RE Level 1 exams / Member support / Pass mark / Afrikaans / Format RE Level 2 exams / In limbo until after house is in order Health Care fees / FIA Approach Minister of Health Office Sasria Commission Section 156 Interest on premium Human Capital Project / FIA, SAIA, IISA, FSB / Industry Roadmap Code of Conduct / Perceptional change FSB realize that FIA Members are more informed Broker mandates / direct writers as well as no agreements FSGLAB / Institutional failure Value of the intermediary (FIA) / Level playing fields Exco member of WFii – IAIS Access President of WFii FIA Awards / Industry benchmark
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BURNING ISSUES
Remuneration
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BURNING ISSUES
Remuneration RE2
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BURNING ISSUES
Remuneration RE2 CPD
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BURNING ISSUES
Remuneration RE2 CPD Pro-intermediary Campaign
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BURNING ISSUES
Remuneration RE2 CPD Pro-intermediary Campaign Demarcation Health Products
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REALITIES
Regulation Commoditisation – Consumerism Value of the intermediary (lack – perception) Image and Reputation
o Wfiio IAIS
- Core principles 18/24
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COMMUNICATION (HOW)
Technology New Connect
o Dailyo Weekly – Indabao Monthly – Inform
Selective – What is relevant for me One consistent message through structures Regional Coordinators Branches Regional Conferences
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REPRESENTATION (WHAT)
Threats (Reality or Perception) October 2004 (FAIS) 14700 FSPs July 2012 10750 FSPs 3206 Cancelled
o Consolidationo Retire/ Leave the industryo Fraud (minority)
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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
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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
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TWIN PEAKS
National Treasury - Prudential FSB – Conduct CMS Inseta SAM TCF FSGLAB Binder Regulations
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CHALLENGES
Capacity to represent all disciplines in the industry
Our own worst enemy
Trust the leaders you elect and believe in them
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Member priorities
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PRODUCT LIFE STAGES APPROACH TO TREATING CUSTOMERS FAIRLY (TCF)
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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 industry2. Clarity of regulatory expectations 3. Education to encourage consumer responsibility4. A supervisory approach that is pre-emptive and
intensive5. Enforcement and compliance
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Product life cycle
Cultural Framework
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Desired Outcomes
Developing products for specific target markets, based on a clear understanding of the likely needs and financial capability of each group of
customers
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Desired Outcomes
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”.
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Desired Outcomes
Balancing the commercial objective of increasing sales with the objectives of Treating customers fairly.
With assessment, offering suitable alternatives to consumers.
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Desired Outcomes
Providing clear and appropriate information, making charges transparent.
Being clear to customers about what the firm, its products and services offer.
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Desired Outcomes
Monitoring and responding appropriately to changes in the wider environment that may affect products and impact on particular classes of new or existing
customers.
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Desired Outcomes
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.
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Culture Change: Six Key Drivers
Leadership Strategy Decision making Controls Recruitment, training and competence Reward
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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
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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 self-
assessment tool will be published
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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
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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
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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
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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
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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
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Thank you