The role of the organization Presented by: Justus van Pletzen “ QUO VADIS TUSSENGANGER? ” / “ QUO VADIS INTERMEDIARY? ”

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)  FSPs  July 2012  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 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 New Product design Promotion of service or product Advice Point of Sale Information after point of sale Complaints and claims handling Cultural Framework

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 Point of Sale Advice 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 Point of Sale Advice 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 Point of Sale Advice 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 Point of Sale Advice 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 self- assessment 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