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So you treated me fairly. Should I be grateful?

It’s a rather poor standard to be held to.
It's worth remembering that financial services are, after all, services. Picture: Shutterstock

The debate that has been stirred up by the Momentum-Ganas case, and the way it has tested the idea of ‘Treating Customers Fairly’, has raised a particularly interesting question: why is it that the financial services industry should have to be forced to treat its customers fairly?

Read: The Momentum question: What is fair, and who decides?

Surely giving their customers fair treatment is the least any business can do? In many industries, if fairness was the bar you set for customer service you would quickly find that you had no customers.

Imagine if restaurants and hotels only aimed to treat their customers fairly, rather than providing outstanding service. There would be no such thing as fine dining or five-star hotels. The best you could hope for would be a decent steakhouse and a passable bed and breakfast.

How would any beauty salon or wellness spa survive if they were content to just be fair to their customers? What would be the incentive to return if you didn’t receive personalised, attentive care?

Skewed power dynamic

It’s worth remembering that financial services are, after all, services. So why should clients in this industry be grateful just to receive treatment that is fair to them?

The power dynamic in that equation is clearly wrong. In most service industries, the client is the party with the influence. If you don’t receive the treatment that you expect, you take your custom elsewhere.

This hasn’t been the case in financial services, however, and for a number of reasons. As Viresh Maharaj, chief executive at Sanlam Corporate Sales and Marketing, recently pointed out, there is a combination of factors that makes the financial services industry unique.

Long term

The first is its long-term nature. Most financial products are designed to deliver an outcome over many years, or potentially a lifetime.

Life insurance is the most obvious example. You are only going to need it once, and that may be decades after you purchased it. In the interim, however, you have no way of testing it.

You may pay premiums over all that time in the expectation that your beneficiaries will receive the benefit, but there is no way of being certain that they will. And apart from a lower premium from a different provider, what might possibly induce you to change your insurance at any point? You don’t know what level of service your beneficiaries will receive from any provider when they need it.

Information asymmetry

Secondly, there is a huge asymmetry of information when it comes to financial services. This is a complex space, and clients are almost always at a disadvantage.

The policy documents from one local life insurer run to over 150 pages. Can any of its clients honestly say that they fully understand everything in there?

When you go to the hairdresser, you likely have a good idea of what you want your haircut to look like afterwards. If you invest in a unit trust, however, do you have a clear picture of what a well-managed portfolio looks like?


The third issue is that the industry is highly intermediated. It is not the norm for clients to be in direct contact with the service provider. There is more often than not a broker, financial advisor or consultant acting as a go-between.

What this means is that the industry often regards these intermediaries as their clients more than the actual end-customer. Financial firms have often been more concerned with treating these intermediaries well than delivering quality service to the people actually using their products.

Legacy issues

Finally, the industry has a history of poor practices that it has been allowed to get away with for far too long. Companies have been built on designing products that have been much better for shareholders than they ever were for customers.

There is also a legacy of terrible customer service that is only slowly being eroded. The advice industry is becoming more professional, but the conflicts of interest inherent in it are not easily overcome.

All of these factors have come together to create an environment where many financial services firms are quite comfortable with the status quo. The truth is that they have done just fine for decades treating customers any way they like.

At least we have now accepted that that is not good enough. Regulators and legislators have made it clear that they are going to require more from this industry.

That is a start, but it shouldn’t be the end of it. Getting financial services firms to treat customers fairly should only be a baseline. As Maharaj points out, it’s now up to companies themselves to go further.

“Is treating customers fairly good enough?” he asks. “You should be expected to be treated fairly. If you buy a packet of washing powder from the supermarket, you expect it to work. You need to treat customers exceptionally to differentiate yourself.”

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Patrick, I think you are carrying out an effective watchdog role after the Momentum debacle for which you will get very little thanks – other than you knowing you have acted professionally.

This is an excellent summary and appraisal of this stinking problem, Patrick.

This is an industry turning over huge amounts of money and dealing with customers who cannot be expert in the subtleties of complex products.

Any business where large amounts of money can be easily and quickly generated off the backs of naive non-repeat customers is a killing field for dangerous predators.

And this is exactly what happened.

The industry has attracted shysters by the thousands.

And the FSB, which should supposedly act in the public interest, is actually a body that really represents the industry only, and when nobody is looking, makes damn sure it also acts in their – and NOT – the public interests.

Imagine how different this cesspool would be if it was instead headed by genuinely public-servicing like Raymond Ackerman – who gave products that customers actually want.

Rather than, as now, shysters who have every intention to shaft the customer in every way they can.

The problem lies in the poor ethical quality of the current leadership.

They, and the FSB, need to be replaced en-masse.

Unfortunately, scoundrels seldom volunteer to depart the feeding trough.

>>> And the FSB, which should supposedly act in the public interest, is actually a body that really represents the industry only, and when nobody is looking, makes damn sure it also acts in their – and NOT – the public interests.

The whole so-called Western economic model has become a dystopian mercantilist hell where the fox demands a ever increasing fee to keep guarding the hen-house.

Excellent article.
You are spot on.

“As Viresh Maharaj, chief executive at Sanlam Corporate Sales and Marketing, recently pointed out, there is a combination of factors that makes the financial services industry unique.”

As you say it is a very complex field and how often have we heard columnists write: don’t be afraid to ask what your advisor’s fees are; no question is stupid, how much will I ACTUALLY get at the end of the term etc etc.

No one wants to look like an idiot no matter how much money s/he has to invest and I think this is what allows “consultants” to do what they want with the funds.

From personal experience a few years ago I found that FSB were on first name terms with the perpetrators of unethical and fraudulant practices. Definitely not pushing for customers rights and there were no penalties applied or negative consequences for those that were proven to have attempted to defraud the customer. I learnt a valuable lesson. NEVER take out any insurance product as an individual directly with an insurance company. They will screw you over every which way they can until you give up the fight. As an individual you have no power. Buy only through a big, well established and reputable broker. (I am not in the insurance business)

Brilliant article Patrick, absolutely correct. Great follow-up to your previous one on the same issue. Moneyweb needs more writers like you. Salute & bravo!

Once upon a time, to reduce the impacts of fishermen lost at sea, on widows and their families, it was agreed amongst those sailors to contribute to a common fund. From this, life insurance and maritime insurance for vessels and cargoes were born.

Now this modern insurance industry has abandoned these principles. It is now one that:
– claims to be a responsible “indispensable service,”
– for which there is no independent competition, only collusion amongst all providers,
– makes the rules that it expects customers (victims?) to comply with,
– expects expression of “utmost good faith” by said customers,
– appoints its own referees,
– denies involvement in these appointments but pays them,
– charges customers money (“premiums”) for this,
– then does not “treat customers fairly”
– and does not behave in “utmost good faith” itself.

Pray tell me how is this different from a rip-off scam?

Patrick, the life insurance industry is a complete angel when compared to the motor industry.

There is no more corrupt industry in this country, they will screw you at every turn and have signed a code of conduct on “how to screw the ignorant and the uninformed”. They are blatant incompetent liars who prey on the weak and females mainly.


Absolutely Patrick! Being treated fairly is the minimum any customer should expect in any industry. Unfortunately unfair business practices creep in. Sometimes they are there intentionally but most times they are there unintentionally.

Business practices that have the unintentional consequence of unfair outcomes for customers come about when business leaders fail to thoroughly think through the possible consequences (from the customer’s perspective) of their decision.

Good business thinking driven by targets and profit objectives is not yet sufficiently balanced with further good business thinking: striving to look out for customer’s best interests or at least striving to avoid customer harm. This is how unintentionally unfair business practices come about.

I have seen numerous firms make every effort to deliver great customer experiences but only with the intention of increasing profits. Hidden amongst these customer-pleasing experiences are unfair business practices that customers are often unaware of. To further complicate matters, these unfair business practices are at times fully compliant with the law.

Fortunately, I have also seen numerous financial services firms grappling with this challenge to expand their business thinking to see how greater long-term success can be achieved by proactively avoiding unfair customer outcomes beyond the letter of the law.

Yet, while endeavouring to ensure all their business decisions and practices treat customers fairly, there are and will be times they miss one or more. It is most helpful when customers speak up and provide feedback to companies, highlighting where they need to improve their fairness. The way a company resolves a complaint reveals their true intentions. This is where Momentum ultimately did well and right.

No need to be grateful for this in isolation, but I for one, am most grateful to all those companies who are genuinely trying to eradicate unfair business practices while still delivering healthy returns for shareholders.

“… It is most helpful when customers speak up and provide feedback to companies, highlighting where they need to improve their fairness. The way a company resolves a complaint reveals their true intentions. This is where Momentum ultimately did well and right.”

WHOA! Stop right there!

That is indeed the litmus test of determining genuine client-care.

Did Momentum pass this test, Samantha?



They gave in ONLY under MONUNUMENTAL (pun fully intended) public PRESSURE.

There has been no “mea culpa” from Momentum in ANY WAY that they got it wrong in meeting the GENERAL client expectations in this regard.

Instead, they have RELUCTANTLY paid out in this incident as a “one-off”, and are now wanting gratitude from the victim and public for their “great act of kindness (not!)”.

What Momentum NEEDS to do is announce that they will CHANGE their general policy, and in future, policy claims will only be denied on the basis of DIRECT, MATERIAL reasons related to each individual claim.

That’s the MINIMUM restitution that Momentum must do.

Until this happens, there should be a a complete public boycott of all Momentum products and their shysters business model.

End of comments.





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