Standards of ethics
The financial industry meets key needs in society. It is the link between all of the economic actors when it comes to loans and credit, managing savings, executing payments, offloading risk and safeguarding lives and property.
High levels of expertise are essential for those who work in the industry.
Standards of ethics in the distribution system are particularly important for financial institutions to fulfil their role, be taken seriously and maintain a good reputation.
The reputation of the individual financial institution depends largely on high-quality customer-facing work. An understanding of ethics and Good Advisory Practice is important, but not sufficient.
Good advisory practice:
1. PREPARE PROPERLY FOR ALL SCHEDULED CUSTOMER CONTACTS
2. CLARIFICATION OF ROLES
Introduce yourself, your company and the basis of the contact. Establish the customer's expectations. Avoid giving a false impression that your advice is independent or impartial.
3. IDENTIFICATION OF NEEDS
Obtain the necessary information about the customer and the customer’s needs.
Insurance advisers: Cover required, risks, life situation and plans
Financial advisers: Current and expected future financial position, investment goals, risk profile, knowledge and experience of relevant investment areas
4. DUTY TO REFER
Refer the customer to an expert in situations where you are uncertain. Alternatively, ask an expert yourself.
5. KNOWLEDGE GAP
Present solutions appropriate to the needs identified. The information provided must be accurate, complete and not misleading. Make sure the customer has understood the proposed solution.
Insurance advisers: Provide information on safety precautions and preventive measures.
Financial advisers: Provide detailed information on potential returns, risks, liquidity/lock-in periods and costs.
6. CONFLICTS OF INTEREST
Make sure you put the customer's interests before those of the company and your own. Be open about any factors that may have influenced your proposal.
7. DUTY TO WARN
Advise against solutions that are not in the customer's interests and/or within the customer's means.
8. COOLING OFF
Give the customer time to consider the proposed solution before signing an agreement.
Financial advisers: This applies particularly in cases where the customer did not initiate the contact.
9. FOLLOW-UP RESPONSIBILITIES
Agree on what form follow-up is to take. Make sure the agreement complies with the company's rules and procedures.
Insurance advisers: Make the customer aware of the duty to report changes in circumstances.
Ensure adequate documentation of the contact and the agreements entered into.