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Whose information is it any way?

A reader recently shared an example of one of the problems independent financial advisers face when attempting to provide holistic advice to a client.

As often happens, clients have an array of products, including ones with product providers with whom the adviser does not have a contract, or where the contract is dormant.

In this particular instance, the adviser requested policy information from such a product provider, only to be told that the information would not be sent to him, but to the client, despite a perfectly legal request from the client that it should go directly to the adviser.

“….We re-iterate that this is done to protect our customer’s personal and confidential information and ensure that any personal information does not land up in the hands of unintended recipients.

There are a number of fraudulent letters of authority in circulation and we have to ensure that all requests are legitimate.

This process is not designed as a means of delaying assistance that a broker provides to the customer…”

Broker’s response

If one accepts the provider’s rationale that it has to ensure that all requests are legitimate for refusing to provide information to allow us to assist our clients with its products, then this logic should surely also apply to Astute?

We can immediately access core provider information from Astute, but to render professional advice may require more detailed information. Notwithstanding that this information is required to service a specific provider’s client, they impose hurdles to prevent or delay IFAs access to detailed information. With the greatest respect to this particular provider – this argument is irrational, and I submit that the prime purpose for this decision is to inhibit servicing of their clients by Financial Advisors who do not hold a contract with them.

Furthermore, notwithstanding that the financial advisor is a qualified financial professional “CFP”, they consider them untrustworthy to receive information. Our professional data, including verifying our email address, can be checked immediately on either the FSCA or FPI websites, thereby negating their professed argument that they are ensuring legitimacy of requests.

My experience with another product provider is instructive. The client wrote and instructed them to provide me with the information; however, they still refused and would only forward it to the client. Their argument then was not ‘legitimacy of request’, but that they would only provide information to someone “fully trained on their product” i.e. someone contracted to sell their products. In this case, the client was contacted by one of its contracted intermediaries – I cannot assume a lead was given and thus must assume it was just an unfortunate coincidence.

Lastly, the highlighted comment above “not designed as a means of delaying assistance” is disingenuous. You can profess an innocent intention, but you cannot deny the absolute reality that this does in fact delay the process. A delay that prejudices the owner of your product.

Underpinning this, and similar issues, is the turf war between IFAs and product providers as to who owns the client relationship. Obviously for agents, the relationship is owned by the product provider; but when an IFA is the servicing intermediary, contestation for this relationship remains.

The IFAs want to retain the relationship to render holistic financial advice particularly true with the move to fee-based advice whereas some product providers want to retain the client relationship as a means to generate more sales of their product.

This is an issue for investigation by ASISA and/or the FSCA as it blatantly disregards TCF principles.

Further reaction from provider

This matter was raised in a discussion forum. One of the readers took the matter up with the specific provider, who responded as follows:

“In order to ensure compliance with the POPI Act and ensure that all customer information is protected and securely managed, we introduced a new process that has been in place with effect from 1 March 2017. The process specifically applies to brokers who are not contracted to us and do not have a valid broker’s code with us.

In this specific case, we will send the information to the customer who will then pass the information onto the broker.

There are a number of fraudulent letters of authority in circulation and we have to ensure that all requests are legitimate.

We acknowledge your concerns in terms of accessibility challenges the customer may have and, in this regard, the agent assisting the customer may contact the customer telephonically to obtain the requested information.”

The person who raised the matter commented as follows:

“Why should it matter if the broker has a code with this provider or not? If they are doing it to protect the client’s interest as stated, why do they accommodate brokers with codes, who may also have fraudulent letters of authority?”

There are easier ways to protect the client, such as verifying the signature of the client. Unless, of course, it is a bullying tactic to force IFAs to contract with the provider, and be subjected to minimum production standards to retain such a contract?

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