Those financial advisers and product providers who think they can continue to behave with gay aba... End is nigh for advisers&#

Those financial advisers and product providers who think they can continue to behave with gay abandon by not adhering to the requirements of the Financial Advisory and Intermediary Services Act should think again. So far, the Financial Services Board (FSB) has rejected 321 applications for financial service provider (FSP) licences, mainly because the applicants have not provided full details of their business operations.

More importantly, this week the FSB suspended one licence it had already issued and withdrew another. And more bad news may be on the way for errant financial advisers.

Auditing company Ernst & Young, which has a reputation for its high standards of forensic auditing, is completing an investigation into the collapse of currency trader Leaderguard, which cost investors at least R300 million.

If financial advisers, who were apparently being paid excessive commissions, are found to have given inappropriate advice to Leaderguard clients, they will also hopefully have their licences withdrawn.

Jano Insurance Brokers CC (FSP number 12457) has had its FSP licence withdrawn. Jano Insurance Brokers, which conducted business as a long-term and short-term insurance broker from premises at Mooikloof in Pretoria, failed to make full disclosure of all relevant information when applying for the licence to act as a financial services provider.

Currently, a lot of dubious products are being sold on the back of high commissions. At the top of my list are some property syndications. I would suggest that anyone selling these products should be aware of the consequences if they do not give appropriate advice.

Increasingly, I find evidence that financial services companies are giving intermediaries real training to enable them to provide you with appropriate advice. Gone, it seems, are the days when training focused on how to get a foot in your door and scare you into buying product without checking to see whether or not it was appropriate for your needs.

Another problem is that at the middle to upper end of the market, the financial services industry has been dominated by white independent intermediaries.

This imbalance is being corrected by Old Mutual, which is running an academy in Johannesburg for black independent financial advisers (that is, they will not be tied agents of Old Mutual). So far, 43 people have graduated from the academy after a year-long course, while another 30 are still being trained.

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