FSB warns insurers on telesales agents
Published: 2011/05/11 08:00:45 AM
LONG-term insurers should improve the training of telesales agents to avoid contravening new tougher regulations that protect customers from buying financial products based on wrong or misrepresented information.
This is the advice of the ombudsman for long-term insurance, Brian Galgut, who yesterday said wider powers being given to the Financial Services Board (FSB) will penalise insurers offering shoddy service.
He was discussing issues raised in his annual report launched in Johannesburg yesterday.
His office last year received 9236 complaints, an increase of 2% from the previous year, which Mr Galgut said was a record.
He said while telesales agents were a cost-effective marketing channel for insurers, their use had not always benefited customers.
For example, he said some of the recordings of telephone conversations between agents and customers his office had listened to had revealed agents demonstrating poor product knowledge.
In other cases, they used industry language that had the potential to confuse a potential consumer.
Insurers defend the use of telesales agents, saying it lowers their customer acquisition costs as the commission paid to the agents is usually relatively lower than those paid to brokers. But some industry experts say brokers provide a human face to an industry where trust remains key to many potential customers, particularly those in the lower end of the market.
While accepting the use of telesales agents, Mr Galgut appeared unimpressed in his report with the experience of some customers with them.
Mr Galgut said the text used by telesales agents during their discussions with a potential client was not always accurate or complete. A further complication was that agents were almost universally remunerated by commission, which put them under pressure to achieve sales.