Proper financial advice is crucial for consumers

By Staff Writer

 

Direct marketing by product providers has become a challenge for financial intermediaries in the distribution of financial products. Because financial products need to be accompanied by appropriate advice, the recent phenomenon has become a concern to intermediaries and consumers.
 
This is according to Brian van Flymen, president of the Financial Intermediaries Association of Southern Africa (FIA). Van Flymen added that consumers are best served by skilled financial advisors with intimate product knowledge. “It is extremely difficult, if not impossible, for a call centre operator to communicate the workings of a complex financial product to consumers,” says Van Flymen. 
 
Whose advice can you trust?
 
According to Sasfin financial consultant, Gavin Came, one of the main limitations of a financial intermediary contracted to one product provider, is that he/she can only give advice on the product of the financial institute they are affiliated to. An independent intermediary has the freedom to offer advice on a variety of products.
 
“This doesn’t mean that contracted financial intermediaries will give you bad advice. The Financial Advisory and Intermediary Services (FAIS) Act stipulates that the consumer must get accurate advice from a contracted or independent financial intermediary. An independent advisor is able to give you advice on more than one product,” says Came.
 
Customer service is a joint effort
 
Jonathan Dixon, deputy director of insurance at the Financial Services Board (FSB), emphasized the importance of independent advice as a key element of consumer protection. “A key element of adequate consumer protection is the value of good advice, and the FSB places a high value on independent advice to customers. One of the criticisms of the Financial Advisory and Intermediary Services (FAIS) regime has been that it created a perception that the responsibility for the delivery of fair outcomes rests solely on the shoulders of the intermediary. With Treating Customers Fairly (TCF) we are making it clear that delivery is a joint effort between product provider and the intermediary,” says Dixon.
 
Van Flymen added that the FIA will build on the successes it has achieved over the past five years by keeping a close watch on industry developments and taking cognisance of challenges that will affect members.
 
“Above all, we strive to remain the dominant player in the financial product distribution channel. It is thus crucial for intermediaries to support pro-consumer initiatives by increasing their knowledge and providing sound advice whenever called upon,” states Van Flymen.
 
Don’t take products at face value:
 
Came warned that when consumers purchase a product directly marketed by a company, they are not protected by the FAIS Act.
 
“Consumers who are ‘advised’ on a product through advertising are often misled. An example would be buying more than one funeral cover which may not be appropriate for your needs,” said Came.
 
It is therefore important to speak to an independent financial intermediary or advisor to ensure you choose a product that suits your specific needs.

Recent Articles

Featured Rating agencies may come knocking

It is only the middle of February, but the rand has already made two big moves. The first was the rand moving from R14.60 to R 13.20 at the beginning of the year, as emerging markets (EM) became fashionable again. The second was where the rand gave away nearly 90 cents in 2 weeks as the EM rally ran out of steam, and local events started to hit the headlines.

Read more

The cost of sending money home to neighbouring countries

Transferring money home within the Southern African Development Community (SADC) provides vital financial support for many households in neighbouring countries.

Read more

Student bank accounts: Which come out on top?

Being a student signals budgeting and not having a lot of money at your disposal. This means streamlining expenses such as your grocery costs and entertainment budget. But what if your bank account is in fact costing you more than you can afford?

Read more

Can you afford an ambulance in South Africa?

When a loved one is straddling the line between life and death, you won’t hesitate to call an ambulance. This week, Justmoney found out how much an ambulance ride costs in South Africa, whether you can refuse to get into an ambulance, and who pays the bill if you’re unconscious. 

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

President Hotel Easter Special

Price: From R1,500
When: 15 March to 30 April
Where: Cape Town

Kulula-Preskil Island Resort Special

Price: R16,999
When: 11 May -14 September
Where: Mauritius

A Touch Of Madness Tuck In Tuesday Special

Price: R70
When: Tuesdays
Where: Cape Town