Advertising Direct marketing

Transcription

1 17 November 2011.

2 Advertising Direct marketing 2

3 Background Objectives of the FAIS Act Ensure consumer protection. Uphold the integrity of the financial services industry. 3

4 Prescribed minimum registration requirements - Fit & Proper General Code of Conduct Adjudication of disputes between clients & FSPs via FAIS Ombud 4

5 Section 8 (8) of the FAIS Act: reference to the fact that the provider is authorised. Intention : give clients comfort that providers are registered clients protected when doing business with registered providers. 5

6 Compliant Authorised financial services provider Noncompliant Authorised FSP FSP 000 Nice, not obligatory Authorised financial services provider, 000 6

7 Face to face orally Writing: business docs, newspaper, pamphlets, bill boards etc. Electronically: , website, online communication media. Voice 7

8 Business cards What must be stated? How visible? 8

9 Example: Business Card Joe Soap Investment Executive Soap s Best Investment Services Tel: Soap s office park Soapville Soap Town 000 Authorised Financial Services Provider 000 9

10 Soap s Best Investment Services We offer the absolutely most amazing investment services ever! Always on your side, unlike others in the market Contact us today if you are a winner in life! FSP

11 Survey conducted to determine whether FSPs gave effect to the intention of the FAIS Act. Looked at TV, Newspapers, Magazines advertisements. Listened to Radio advertisements. 11

12 1. Print media & TV Information not visible. No/ little effort by FSPs to give effect to the intention of the legislation 2. Radio audible enough When to disclose promotional ads VS invite of FSP employee by the Radio Station 12

13 Direct Marketing 13

14 Direct Marketing rendering of financial services by means of telephone, internet, media insert, direct mail, or electronic mail excluding advertisements not containing transaction requirements. Direct Marketer a provider who provides all or predominant part of financial services in the form of direct marketing. 14

15 Minimal compliance with provisions of Section 15 of the General Code of Conduct Approved telesales scripts do not address all required disclosure information. Lack of call centre facilities e.gvoice logging facilities. The identity of the entity rendering financial services withheld, due to; -Misinterpretation of principal vsagency capacity. 15

16 - Exclusive right to market or distribute financial products. - One party claiming ownership of client relationship e.gprovides contacts or database for the 2 nd entity to sell. Challenge is that client has recourse on the FSP (seller) & not the relationship owner. 16

17 Some FSPs set very high sales targets for call centre consultants resulting in a focus on quantity and a compromise on providing the client with the best product (i.e. quality of service), which is not in line with the Conflict of Interest requirements. Value added products are often sold to clients without establishing whether the client needs the product and can afford it. Call centre consultants rush through disclosures in terms of the General Code of Conduct. 17

18 Quality assessment of calls is not focused on whether the call centre consultants made the required disclosures. Lack of disclosure of the product supplier by the FSP, the product is sold as if the FSP is also the product supplier. Misleading marketing, i.e. making empty promises about what the FSP can provide for the client. 18

19 Speaking negatively about other FSPs/product suppliers when attempting to sell a product. Failure to list all the call centre consultants involved in the rendering of financial services on the representatives register. Background checks are not conducted on representatives. 19

20 Failure to implement supervision process for representatives that should be rendering financial services under supervision. Lack of training/awareness of FAIS and FICA requirements. Appointment of key individuals that can practically not be able to oversee the activities of representatives. Lack of monitoring of calls by the Compliance Officer 20

21 Direct marketing, means the rendering of financial services by way of telephone, internet, media insert, direct mail, or electronic mail, excluding any such means which are advertisements not containing transaction requirements. GCoC- definitions 21

22 Direct marketer means a provider who, in the normal course of business, provides all or the predominant part of the financial services concerned in the form of direct marketing. GCoC: Definitions 22

23 Provide clients with info about: Direct marketer FSP 23

24 Name of FSP Details Contact Info PI Cover? If DM a rep Business name FSP? Tel # DM Details of FSP Trade name Products A/ I.S Tel # CO of DM 24

25 Risk profile Financial needs Circumstances Financial Product appropriate Provide info about product supplier Business/ trade name Legal status & relationship Name, class or type Nature and extent of benefits Manner in which such benefits are derived or calculated material investment or other risks Info about Product Client rights Monetary obligations Payment methods Whether cooling off rights are offered 25

26 take reasonable steps to establish whether the financial product identified is wholly or partially a replacement for an existing financial product of the client and, if it is such a replacement, inform the client of actual and potential financial implications, costs and consequence set out in clause 8(1)(d) of this Code before any transaction is concluded. [Para (c) substituted by BN 43/2008 with effect from 14 May 2008] 26

27 Completely Partially Replacement product? Actual / potential financial implications Costs Consequences Refer to section 8(1)(d) for detail Inform client Before any transaction is concluded Do this 27

28 Compare Explain Fees & Charges Different tax implication Different investment risks Terms & conditions exclusions of liability Waiting periods loadings, penalties, excesses loadings, penalties, excesses Restrictions where benefits not provided 28

29 Insurance product Termination Replacement: extent What is lost? Terminated/ replacement Provider receives/ payable Age & health Penalties Readily realisable Vested rights incentives consideration Minimum benefits remuneration commission Impact on premium Unrecovered expenses Fund accessability Other guarantees fee brokerage 29

30 Telephone contact details: Compliance department of the product supplier Extent that product is readily realisable and/or the funds concerned are accessible Details of manner in which benefits will be paid; Early termination or withdrawal: restrictions, penalties, other effects Charges and fees: amount and frequency thereof net investment amount ultimately invested for the benefit of the client; DM: Commission, consideration, fees, charges or brokerages Paid by the client, or by the product supplier or by any other person; 30

31 On request provide past investment performance of the product Explain Insurance product explain: Consequences of non-payment by client escalations, increases or additions; abbreviated disclosures of contractual increases; Concise details special terms and conditions, exclusions, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided Guarantees Any guaranteed minimum benefits or other guarantees where appropriate. Will be available upon request Recordings 31

32 S9(1)(a) to (d) Provide where appropriate -a record of advice in writing. Record telephone calls Store & retrieve Copy provided o client or Registrar in reasonable time S 4, 5 and 7 Provide info to client In writing Within 30 days of concluding transaction 32

33 Is it clear to the client who he/she is dealing with? Can they see whether the product/ service is a regulated/ non-regulated product? If a client reacts to an invitation on a website to inquire about a product or service the normal disclosures would apply & record keeping requirements 33