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Tuesday, July 1, 2008
Altogether now

Two new ‘Super Associations’ are coming together shortly. This should eliminate around ten divergent representative bodies from the financial services arena.
The Boards of the Financial Intermediary Association of Southern Africa (FIA) and the Association of Professional Financial Planners (LUASA) have announced their intention to merge subject to member approval.
FIA President Arnold van der Linde says members of the intermediary industry had long since recognised and discussed the need for a unified body that would collectively represent and protect the interests of all financial intermediaries operating within Southern Africa.
This follows the establishment of the FIA on 1st January this year via the merger of the Independent Brokers’ Council (IBC) and the South African Financial Services Intermediaries’ Association (SAFSIA), which brought together intermediaries responsible for over 80% of all short term insurance transactions, over 60% of all life assurance and collective investments transactions, and 80% of employee benefits business in South Africa.
If the merger between FIA and LUASA goes through it would create the first-ever intermediary association that represented the interests of all financial intermediaries giving financial advice, including independent and corporate brokers plus tied agents, currently totalling over 16 000 individuals.
LUASA President Fanie van Wyk now believed that joining forces would be in best interests of members.  “LUASA had been invited to join the original merger of the IBC and SAFSIA, but the timing hadn’t been right for us for various reasons.”
There was some disquiet about this on the part of some LUASA members but the reality is that membership has been declining (down to around 1700) to the point where its very existence is threatened; it has become too small a voice to be heard and one might say “irrelevant” in terms of its constituent representation.
The FIA says it has extended similar invitations to other intermediary representative bodies such as the Association of Black Insurance Brokers (ABIB) and the Black Brokers’ Forum (BBF).
A single, over-arching association for financial intermediaries would remove fragmentation in the industry and confusion regarding which association to join. Furthermore, it would ensure that industry efforts were no longer duplicated. “But perhaps most important,” says Van der Linde, “merging the various industry bodies into one entity would enable us to speak with ‘one voice’, thereby intensifying the impact of our initiatives and objectives.”
Significantly, for the first time one association will bring together the interests of independent brokers, large broking houses, tied agents, and bancassurance representatives.
A final decision was expected 9th July.

Meanwhile the Association of Collective Investments (ACI) says it will be dissolving and its members will move to an association “representing the interests of a broader group of financial services players later on this year.”
Current chief executive of the ACI, Di Turpin, says she will remain at the association until all assets, activities and intellectual property have been transferred over to the new organisation.
She will be pursuing other interests thereafter, which will include ongoing involvement in key collective investment industry projects on a consulting basis.
At the Life Offices’ Association (LOA) life insurance member companies have voted in favour of a new association. In a related announcement Sanlam said that the current chief executive of the LOA, Gerhard Joubert, is leaving to head up a new distribution initiative for Sanlam Developing Markets’ (SDM) operations in India. He will assume office on 1st October 2008.
SDM conducts its business operations in India through the Shriram Life Insurance Company, in which it acquired an interest in 2005.
30 June 2008.
The LOA is now the fourth association to vote in favour of dissolving and transferring its functions to a new association.
The LOA, together with the ACI, the Investment Management Association of South Africa (IMASA), and the Linked Investment Service Providers’ Association (LISPA) will therefore disband before the year is over.
The new association is aiming at formally opening its doors on 1st October 2008, with Leon Campher as the first CEO. The first chairman of the new association’s Risk (Life Insurance) Committee will be Herschel Mayers, CEO of Discovery Life, and the deputy will be Wilhelm van Zyl, CEO of Metropolitan Life.

Background to the new association

For just over two years, various financial services providers who are members of the ACI, IMASA, LISPA and the LOA have been exploring the possibility of creating a single new association to represent the investment and life industries of South Africa.
The aim of the new association will be to represent the interests of asset management companies, linked product providers, multi-managers, unit trust companies and life insurers.
The reason is that a single association would enable the financial services industry to work towards greater level playing fields, creating an environment for more holistic regulation.
Fundamentally all this activity recognises the convergence in the industry taking place, partly driven by the FAIS legislation, introduced 2002. Intermediaries are now required to provide financial services holistically, and therefore to consider the broader needs of the consumer.
The FSB says it welcomes the mergers of the various associations. With the financial advisers coming together under the FIA and the product providers coming together under their new association will mean from a regulatory point of view that people with divergent interests will be able to “speak with one voice”. This should simplify legal enactment and reduce confusion.
We should end up with the following three associations: the SA Insurance Association (for short term insurance and reinsurance companies); the new life association (for life insurers, LISPs, investment managers, asset managers, and employee benefits organisations); and the FIA (for all the intermediary services).
That will just leave the question of the Ombudsmen – of which there are six. Calls for a ‘SuperOmbud’ may well be thrust into the spotlight leading to a single complaints resolution channel for all financial services products. By Nigel Benetton

Copyright © Insurance Times and Investments® Vol:21.6 1st July, 2008
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