Running an approved provider list isn’t exactly a compliance requirement – yet – it is good communications practice, which arguably makes it important right now.
Monday, February 12th 2018, 6:00AM
The rationale runs like this: you did a great job for a difficult client but the very next adviser they meet is someone who doesn’t like you – you can’t please everyone, so it is bound to happen sometime. They cast doubt on what you did “I wonder why they recommended ThatCoLife? I would have considered OtherInsure for your situation. Could be something to do with qualifying for their trip to…”
Everyone is limited in the product range on which they may give advice. Even if you may have said “I consider the market” in the past it is worth considering just what that means. Does it include all the bank products? Even SBS Life? What about all the direct products? What about the products of GBG insurance, or RL360? All of those could be available to New Zealanders.
Since everyone has a limit to competence, everyone should have a clear explanation ready for the client as to how those companies or products were chosen. You might have had an ‘emergent’ list – a list that just ‘grew’ out of experience and practice – but there are usually reasons why you end up choosing those companies. A little thought and you should be able to recall them. This is the basis of the first step:
Have criteria – things such as access (companies that deal with advisers), service, range, awards, claims performance, price, options, and product quality (see disclosure of interest). Start with a list – a big list – and develop criteria which narrows the list down to your preferred set. List, criteria, and measurements should all be written down. Start by figuring out what your current criteria are – then challenge them. The best way to challenge them is to take a good description of your target market, and see if your list actually delivers to the market. If it is deficient in some way, maybe you should look at your criteria again.
Have a process for review - Ideally, the criteria can be externally assessed based on measurements about which there is little debate. But in some cases, it cannot – take service for example – in those situations you need a fair way to turn the ‘gut feel’ into an actionable benchmark. You could survey your advisers every quarter, getting them to give a service rating to each company under consideration. That provides evidence for the basis of selection – it is also a great way to engage staff. If your business is just you, you could keep track of complaints and claims performance to substantiate your choice. Larger businesses have a formal committee – often with external members – to administer their approved provider / product list.
Have a process for exceptions – can you have an exception? What never? Or can you have a special form of limited advice when client requirements mean you may have to go outside the list? Whatever it is, have a process for documenting and limiting exceptions. You may wish to have a limitation of scope that goes along with an exception. “I will look at your Dubai Life policy, but my opinion will be based solely on the English language version of the policy document, and I will have access to no third-party information on the policy”
Have a way of checking the process is used – so if you are part of a team, include checking if product is on the APL in checklists, audit process, and peer review mechanisms. If it’s just you then at least the checklist, or talk with your compliance consultants about review.
Report on the list – evaluate the performance of the entire process, say, once a year. That can only be done if you keep records. If all the business goes to one company / product, that can cause regulators to stare at you hard and ask hard questions. Keeping good records means you can answer them.
