TREATING CUSTOMERS FAIRLY (TCF) (Policy 1)

1. Introduction

Section 2 of the General Code of Conduct states that a provider must at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interest of clients and the integrity of the financial services industry which ties in with TCF principles.

TCF affects the following FSPs:

• FAIS regulated intermediaries, including brokers;
• Long-term and short-term insurers;
• Collective investment schemes;
• Pension funds;
• Friendly societies;
• FSPs (including discretionary and administrative FSPs); and
• Entities falling within the jurisdiction of the JSE and STRATE.

2. TCF Principles

The generally accepted TCF Principles that we follow include, but are not limited to:

• Customer's Interest: We pay due regard to the interest of our customers and treat them fairly in all our dealings with them.
• Integrity: We conduct all business activities with integrity.
• Skill, Care and Diligence: We conduct all business with due skill, care and diligence.
• Management and Control: We take reasonable care to organise and control our affairs responsibly and effectively and with adequate risk management systems.
• Financial Prudence: We maintain adequate financial resources.
• Market Conduct: We observe proper standards of market conduct.
• Client Communications: We pay due regard to the information needs of our customers and communicate information to them in a way that is clear, fair and not misleading.
• Conflicts of Interest: We manage conflict of interest fairly, both between ourselves and our customers and between customers and other clients.
• Customer Relationship of Trust: We take reasonable care to ensure the suitability of our advice and discretionary decisions for any customer who is entitled to rely upon our judgement.
• Client Assets: We arrange adequate protection for customer assets that fall under our responsibility.
• Relations with the Regulator: We deal with the Regulator in an open and cooperative way and appropriately disclose to the FSCA anything relating to the business of which the FSCA would reasonably expect notice.

3. Product Life-cycle Stages

The product lifecycle of any financial services product can be divided into three stages. During the product life-cycle all six outcomes of TCF are adhered to.

Stage 1 is with regards to the product itself and includes the design of the product and the promotion and marketing of the product.

Stage 2 entails the rendering of advice and intermediary services as well as the point of sale of the product mentioned in stage 1.

Stage 3 includes the information provided after point-of-sale and complaints and claims handling.

4. The Six (6) Outcomes of TCF

OUTCOME 1:

General measures of the FSP to ensure that clients can confidently contract with business

Phuti Life Financial Service will be affected by TCF and therefore all employees, contractors, and intermediaries, must adhere to the requirements of TCF. Recruitment processes must adhere to TCF objectives as set out in the Recruitment and Selection Policy, which stipulates the minimum standards and qualifications when appointing personnel.

A TCF Forum will be established, and the forum comprises of senior management members and Directors of Phuti Life Financial Service. This forum will be accessible to all employees with regards to TCF complaints or queries.

Senior management and the compliance officer will be responsible for the implementation and enforcement of TCF principles and objectives. TCF information letters will be circulated amongst staff on a regular basis. Quarterly TCF reports will be submitted to the TCF Forum. Quarterly audits will be conducted by the appointed compliance officer to determine the compliance and progress with TCF. TCF training will be provided to all the employees on an annual basis, which will form part of their Continuous Professional Development (CPD).

Disciplinary processes will be instituted in cases of non-compliance should this be necessary.

OUTCOME 2:

Products and services selection

Products and services marketed and sold in the retail market must be designed to meet the needs of identified customer groups and must be targeted accordingly. Customers can be broadly grouped into three categories:

• A Low sophistication group (relatively inexperienced groups with a high level of dependence);
• A Moderate sophistication group (general consumers group falling into the mass market); and
• A High sophistication group (investment groups who have expertise).

When products are selected, an assessment of promotional and information material is performed to ensure that it is suitable for the customer group. The product is analysed to ensure that it is suitable to a particular market segment, satisfies the needs of that market segment and the commission or fee will be justifiable.

A financial needs analysis is done on each consumer. Correct information will be collated in order to draft the financial needs analysis. The financial needs analysis will set out that the consumer understands the products and services offered as well as the explanations given and the information supplied.

An annual critical review of all products will be performed where after the TCF forum will decide on discarding or promoting the specific products.

OUTCOME 3:

Providing information

Customers will be given clear information and be kept appropriately informed before, during and after the time of contracting. Representatives must pay due regard to the information needs of the customers and communicate information to them in a way that is clear, fair and not misleading. Before and at the point of sale, all financial promotions will be clear, fair and not misleading.

Appropriate advice consists of the quality of advice, impartiality of advisers, assessing customer needs, point of sale communications and on-going advice.

Effective point of sale disclosure is essential to enable customers to understand the characteristics of the product they are buying and to help them understand whether and why it meets their requirements.

Post-sale disclosure plays an important role in helping to ensure that customers are kept aware of product performance, their opportunities to act at certain points in the product lifecycle and changes in the terms and conditions.

Prior to the selling of the product we will ensure that all sales and marketing material are written using plain English, jargon and technical terms will be fully explained, the product material will contain sufficient risk warnings where applicable, all costs and charges are accurate and disclosed to the customer, restrictions/exclusions/opt-ins and opt-outs associated with the product will be clear and in simple terms, all charges, including any early redemption/early termination charges, will be highlighted and made clear, the product literature will state clearly who the products are most suitable for and the promotional and product material will be tested with a lay person.

During and after sales all correspondence with customers will be kept and be easily retrievable. A record of provision of all the disclosure documents (initial disclosure, product disclosure, quotations, and/or any other written document/s explaining or containing information on the product) will be kept, and notes on telephone calls and meeting conversations will be kept and easily retrievable. We will keep in contact with customers after the product has been sold. All customer contacts will be recorded.

Clarity, appropriateness and fairness of information will be assessed prior to being communicated to customers. All marketing material will be signed-off by a member of the TCF forum. Before and during contracting the financial advisers will ensure that information provided is accurate and applicable to the customers in order for the customer to make an informed decision. Customers will be adequately informed of product changes in good time. Contact details of customers will be maintained. Customers will have accessible contact points if they need information.

OUTCOME 4:

Suitability of advice

Where customers receive advice, the advice will be suitable and will take account of their circumstances. Currently Phuti Life Financial Service staff are not required nor qualified to give advice, but when they are, the advice processes will be sufficiently robust to ensure that instances of consumer detriment are extremely rare. Financial advisers will be subject to financial penalties and commission claw-back for poor advice if applicable. Financial advisers will always receive detailed training on product technicalities with a strong focus on risks. Knowledge will always be tested with case studies. Financial advisers will be actively encouraged to achieve and continuously improve qualifications.

We will, before deciding to market a product, assess whether we have the appropriate skills and business processes in place to provide advice and service that will be suitable for the target market and the product concerned.

The Conflict of Interest Management policy is personalised to enable us and our representatives to identify and address any conflicts of interest between the FSP, the customers and the Phuti Life Financial Services whose products are marketed.

A policy for fair compensation of customers who have been financially prejudiced as a result of inappropriate advice provided by our representatives will be implemented when our representatives commence with giving advice.

We will regularly monitor the published decisions of the FAIS Ombud, guidance from the FSCA and other relevant information sources in relation to advice practices, to ensure that our controls and practices in relation to the suitability of advice remains relevant and effective.

We expect of Phuti Life Financial Service to conduct, before contracting with any product provider to market their products, an appropriate level of due diligence to satisfy them that their products and service levels are likely to meet our customers' reasonable expectations.

Phuti Life Financial Service will provide the FSP and its representatives with adequate training on the specific products the FSP markets to be in a position to provide our customers with suitable advice on those products. The training register will be kept up to date.

We will have reasonable access to any product information required from the product provider in order to provide suitable advice.

Phuti Life Financial Service will require feedback in relation to any aspects of their products or services that inhibit our ability to provide suitable advice or deliver other TCF outcomes to customers.

Agreements between the FSP and the Phuti Life Financial Service whose products we market must set out the respective responsibilities in relation to providing customers with advice, information and service support. Customers must understand who they should look to in relation to different aspects of the financial products or services provided to them.

We will regularly test the representatives' knowledge and skills on the products of the FSP and market and prevent our representatives from providing advice on products where they do not have adequate product training.

We will record and monitor feedback or complaints received from customers, product suppliers or other third parties regarding the quality of advice they have received from the representatives, to identify any training needs and/or risk of inappropriate advice.

We will conduct regular monitoring on the advice and services the representatives provide customers to identify instances and mitigate the risk to customers where the representatives have provided inappropriate advice or misleading information.

When it becomes applicable, we will record and analyse insurance claims, product retention/early termination data, investment portfolio switching, type and frequency of product changes in relation to the customers associated with the representatives, to identify and mitigate risks of inappropriate advice or poor customer outcomes attributable to the representatives concerned.

Clear TCF measures will be included in the criteria that the representatives are required to satisfy to meet incentive or remuneration targets, regardless of whether the remuneration or incentive is determined by the product provider or by the FSP. The FSP will implement controls to identify and act on instances where the representatives have provided advice that they are not authorised to provide, either in terms of their specific contract or mandate with the FSP and/or with any product provider, or as a result of non-compliance with the FSP's FAIS licence conditions or other legal requirements.

OUTCOME 5:

Product performance and service levels are of expected standard

Phuti Life Financial Service products must perform as they have led their customers to expect, and the associated service must be of an acceptable standard. In turn, customers are provided with products that perform as FSPs have led them to expect, and the associated service is both of an acceptable standard and what they have been led to expect.

The foundation of complying with this is found in the General Code of Conduct under the annual review process.

Section 7(4) states that a provider who has provided advice to a customer or is rendering on-going financial services to the customer in respect of one of more financial products, must on a regular basis (but not less than annually) provide the customer with a written statement identifying such products where they are still in existence, and providing brief current details of:

• Any on-going monetary obligations of the customer in respect of such products;
• The main benefits provided by the products;
• Where any product was marketed or positioned as an investment or as having an investment component, the value of the investment and the amount of such value that is accessible to the customer; and
• Any on-going incentives, consideration, commission, fee or brokerage payable to the provider in respect of such products.

Thus the FSP will have three (3) processes in place; namely an annual review process, a process to stay abreast of product and market developments and a process to gather and analyse the customers' behaviour.

a. An annual review process includes:

• keeping close to the customers;
• keeping them informed and delivering on the promises made;
• providing the customers with an annual written statement containing the information as set out in Section 7(4) above; and
• processes that will be in place to alert the customers to the risks of non-action on their part, such as a failure to review insurance cover needs, investment goals and risk profiles and beneficiary nominations.

b. To stay abreast of product and market developments, processes are in place to:

• mitigate the risks to the customers where it becomes apparent that products are not performing or are unlikely to perform as they have been led to expect; and
• further processes are in place to alert customers to the risks of particular actions on their part (such as early termination of a product, non-payment of contributions, investment portfolio switches, and benefit reductions) in reasonable time for them to respond to or act on the information.

c. To gather and analyse the customers' behaviour to:

• the product retention/portfolio switching/early termination behaviour of the customers;
• identify the risks that products or services are not meeting expectations created;
• conduct research or testing of the service standards to determine whether they are in line with customer expectations and monitor; and
• act on feedback, complaints and suggestions received from customers or staff that identify the need for improvements in types of services or service standards.

Service standards are clearly set and communicated to customers. Regular testing of standards or conduct surveys will be conducted to test customer satisfaction. Processes will be in place to protect customer information as required by legislation (for example POPI).

OUTCOME 6:

Customers are not barred from making changes or instituting claims and complaints

There are no unreasonable post-sale barriers to change product, switch provider, submit a claim or make a complaint. We will have dedicated complaint handlers with appropriate authority to resolve the complaint and to ensure a consistent message and regular updates for the customer. Senior management will routinely sit in with the complaints handling unit to listen to calls. Root causes analysis is consistently carried out, reported to senior management and the underlying issues resolved promptly.

Customers will be informed timeously of how to make changes or modifications to products should their needs change. Customers will be informed of the risk of switching providers.

Complaints will be responded to in writing and reasons for the decision will be provided.

5. Conclusion

The fair treatment of customers must be central to Phuti Life Financial Service's culture and customers must be confident in that they are dealing with such a provider when obtaining any form of financial product. TCF is about an ethical way of doing business in a sustainable manner.