Financial sector to clean up its act

Cape Town - Financial intermediaries have vowed to crack down harshly on members who are tainting the image of the industry with unethical practices.
 
According to Seamus Casserly, president of the Financial Intermediaries Association of Southern Africa (Fia), whistle-blowing by members will be encouraged as a more preventive approach to combating abuses within the financial services industry.

Casserly said the decision to focus on identifying unethical service providers - as well as the association's adoption of a new code of behaviour - should benefit clients.

The Financial Advisory and Intermediary Services Act (Fais), which came into force in 2004, is unfortunately repeatedly being contravened by unethical financial intermediaries, he said.

The association has adopted the promotion of whistle-blowing to bring malpractices to light because non-members of the organisation are guilty of such behaviour. The conduct of a few promotes a perception that every broker is a scoundrel.

He said his organisation is cooperating with the Financial Services Board (FSB).

Casserly referred to investment schemes such as Masterbond and Leaderguard, in which many investors had lost money.

The organisation is intent on preventing malpractices such as these by highlighting them, instead of simply leaving them until they collapse. It has resolved to clean up the industry. Should it come across dubious practices in the marketplace, these would immediately be reported to the FSB for investigation. A couple of instances have already been reported.

Gerry Anderson, deputy registrar for financial service providers at the FSB, said the council supports any process that will contribute to compliance with the law and promote the clients' interests. He also believes this should encourage a more preventive culture.

Casserly said the new code of conduct would help the association raise standards within the industry and protect consumers.

FIA CEO Manie Booysen said the code had been rewritten, the FSB's support obtained, and it had been approved by the FIA's national advisory committee. It had recently been sent to members.

The code of conduct was updated to be in line with legislation and other industry behavioural codes. The new code contained many more specifics, and its principal focus is that clients' needs must always be paramount - it's all about the customer and giving good advice at all times.

There should be no incentive for a broker to recommend certain services that will benefit the intermediary or the insurance company, Booysen said.

 - Fin24.com