FAIS Fit and Proper Compliance a business imperative

The Financial Advisory and Intermediary Services Act (FAIS) is designed to create a professional code of conduct with specific outcomes and measurements which Financial Services Providers (FSPs) must comply with. Angelique Strumpher, Administration Manager at SilverBridge, takes a closer look.

All parties across the insurance value chain (Insurers, Underwriters, Intermediaries, Brokers, Consultants, Agents and Representatives) are accountable for the type of and suitability of financial products sold, customer information gathered in terms of “know your customer”, the needs analysis conducted, if the new policy constitutes a replacement policy, and the type of advice given.

According to Strumpher, a potential customer should be assured that interactions with their chosen product provider is done in an honest manner, they have not been taken advantage of, their financial interests and position have been considered, and their rights have been protected.

Non-compliance with FAIS can include fines up to one million rand and / or imprisonment of up to 10 (ten) years as well as the suspension of your FSP licence and debarment of a Representative.

“FAIS Fit & Proper competency requirements is needed across all financial sectors to ensure that customers get the best service and advice from industry experts. Accomplishing this has been a journey that started in 2002. It is continuously evolving based on customer experience and expectations from service providers, industry complaints, and FSCA findings in terms of irregularities. This constant evolution of FAIS Fit and Proper and TCF standards remains an expensive undertaking for any business within the financial services and insurance industry.”

Awareness of compliance has been a priority since the process began more than a decade ago. FSPs are all governed and guided by a host of Acts of which the FAIS Act and subsequent Board Notices overseen by the FSCA (Financial Sector Conduct Authority), previously the FSB (Financial Services Board) has been key. A great way of ensuring that you are always aligned to Fit & Proper requirements as well as all prescribed Acts is to subscribe to the FSCA’s electronic newsletter.“What FSPs struggle with most are ineffective, time-consuming manual processes to manage FAIS Fit & Proper, Product Specific Training, Competency requirements, and electronic record-keeping of data and documents in a central place where the information is easily accessible and retrievable. Technology is an enabler that assists in demonstrating that you as an FSP are operationally compliant with legislated regulatory requirements and you have ticked all the prescribed governance boxes,” she says.

An FSP is required to have their own solution that supports all aspects of FAIS Fit & Proper as per Board Notice 194 of 2017. The adoption of a robust software solution can assist with effective automated and digital management of this end to end process as agile and cost effectively as possible. Learn more about our FAISapp by visiting www.silverbridge.co.za.

About SilverBridge

SilverBridge has over 20 years’ experience as a leading provider of insurance software solutions in the African financial services industry. Our footprint extends to 14 African countries. SilverBridge has introduced an enhanced service offering allowing financial services companies the opportunity to respond quickly to changing markets. With customers throughout Africa, SilverBridge has the knowledge, experience, and technology to help its clients do better business.

Marketplace model provides insurers with opportunities

Marketplace model provides insurers with opportunities

Nelson Camara, marketing at SilverBridge

With consumers expecting their service providers to deliver more tailored products providing better experiences at more cost-effective rates, insurers are under pressure to adapt their business models to ones better suited to this new environment. Given its mainstream appeal and success in driving adoption of mobile apps, the marketplace model has emerged as such an enabler.

While end-users understand how marketplaces work (think the Apple App Store and Google Play), it provides insurers with an opportunity to create an enabling platform for future growth. For example, in the music industry EVAmore has emerged as a convenient way for people to book musicians for their events. Previously, the process involved either knowing someone in the industry or having to go through agents which typically charge premium rates.

However, EVAmore adopted a marketplace model that lets customers create free listings including time, location, budget, and music genres required, with artists able to search for and ‘pitch’ to play at the gigs. The marketplace platform manages all the back-end payment and messaging between customer and artist to remove the cumbersome traditional way of making bookings.

With the marketplace model presenting insurers with opportunities to better engage with customers and meet future demand, decision-makers need to carefully asses how best to integrate it into its existing operations.

Customisation

Most insurers already offer a unique suite of products. Typically, these are developed in-house and are nuanced to meet customer demographic requirements. However, no insurer can be the best at every solution or even cater for every possible client requirement.

Whether through lack of resources or just difficulties in keeping up with continually evolving trends, insurers are realising that they need to rethink how they approach meeting customer requirements in the modern world. This requires the organisation to take a step back and focus on how it will meet customer needs to create a more enabling experience, reduce cost of development, and minimise churn.

Going to market

The marketplace model provides insurers with an exciting new option to enhance their existing business models. In this dynamic, an insurer will provide customers with access to third parties that have the best products in each segment as the means to complement their own solutions. Think about it as a one-stop shop where a customer can go for the best insurance experience at the lowest costs and able to select an offering tailored to their specific needs.

So, just like with a mobile app store, the end-users get continuous access to the best products and services in the market. For the insurer, it is an effective way to reduce churn while at the same time build a reputation as a solution provider that empowers its customers with the best possible products.

The marketplace model is poised to positively impact the insurance market. We expect to see movements in the industry that will result in many of the incumbents partnering with emerging insurtechs. These will be mutually beneficial agreements focused on delivering more value to customers.

About SilverBridge

SilverBridge has over 20 years’ experience as a leading provider of insurance software solutions in the African financial services industry. Our footprint extends to 14 African countries. SilverBridge has introduced an enhanced service offering allowing financial services companies the opportunity to respond quickly to changing markets. With more than 30 customers throughout Africa, SilverBridge has the knowledge, experience, and technology to help its clients do better business.