Johannesburg – Where customers receive advice, the advice rendered must be suitable and take into account the circumstances of the customers. Treating Customers Fairly (TCF) has 6 outcomes that aim to ensure the fair treatment of clients, and delivering suitable advice is outcome 4 and a key component of TCF.
TCF is a regulatory and compliance framework established by the Financial Services Board, with the intention of raising the standards by which those in financial services are measured, while also increasing customers’ confidence in financial service providers.
“For a broker to render suitable and professional financial advice, or to recommend a particular product or service, they must take into account the customer’s circumstances,” says Sujeeth Bishoon, Executive Head at Acuideas. “For this to happen, the broker must undertake a full assessment of the customer’s total financial welfare and explicitly unravel the customer’s needs, so that all these circumstances are understood before the broker can provide suitable advice.”
A broker must have enough relevant information about their customer, so that they can determine the suitability of products and services to match the needs of the customer and their risk profile. A full review of the needs and objectives of the customer is essential in order for the broker to offer suitable advice.
“Communication is key and a broker must provide a comprehensive summary of the relevant information to their customer,” says Bishoon.
This includes the products that were considered, the products that were recommended – with an adequate explanation of why particular products were chosen and their associated risks – and why the selected products are likely to satisfy the needs and objectives of the customer.
According to Bishoon, “The quality of the advice is dependent on the quality of the broker, and this is why it is fundamental to have robust training and competence procedures in place.”
Brokers should only provide advice on products where they have received adequate training. With the appropriate skills and necessary expertise, the broker will be equipped to provide advice that is suitable to the needs of the customer concerned, following the objectives of TCF and avoiding conflicts of interest.
Customer responses and complaints should also be monitored to highlight any training needs, while brokers must provide suppliers with any feedback where they believe products or services prevent them from providing suitable advice.
“TCF is a permanent feature and this culture must be embedded in the way financial service providers conduct their business. Outcome 4 is an essential part of TFC, as brokers add value through the advice they render. Brokers must identify needs before giving targeted, tailor-made advice and suitable products that the customer deserves.”
Acuideas is borne of an insurance broking house, which gives it a great advantage: the company speaks and understands the pressures and needs of brokers. What makes Acuideas different is that they provide both the independent broker and the product provider with new and innovative ways of doing business. For more information visit www.acuideas.co.za or call 011 912 7300.
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