In Mauritius, there is a lot of discussion about access to finance, but very little is said about access to financial services. The seminar recently organized by the Financial Services Commission on that last issue was laudable in itself, since it raised awareness of the difficulties of ordinary citizens to grasp and take advantage of the non-bank financial products that are available on the local market. But instead of being a talking shop, the industry needs to professionalize its approach to bring these products within the reach of the laymen.
It goes without saying that there is not enough interaction, communication and exchange of ideas between the financial services providers (supply) and the consumers (demand). This information gap constitutes an obstacle to the potential customer to meet the real service provider. The whole problem stems from the absence of a structured approach on the supply side as well as on the demand side.
Indeed, service providers do more selling than tendering professional advice. For sure, in all business, sale is primordial for a firm to make money and to survive. However, a true financial services provider is not only a seller but an adviser as well. When a potential customer resorts to a service provider, he regards him first as an adviser and second as a seller.
A well-structured professional advice
It is by offering valuable advice to the client that the service provider can foster a relationship of trust with him, which is the best way of nurturing customer loyalty. But how many financial institutions in Mauritius provide professional advice in its proper sense? Such a service must be well-structured so as to bring value addition through customer relationship management.
One must reckon that things have improved in this area. Insurance, stockbroking and investment companies are today aware of the importance of research in their business. They recruit analysts to carry out research work, and they publish flash notes and fact sheets. However, their analysis papers are often very descriptive and not analytical enough.
It is true that not many professionals are willing to make recommendations although they are competent to do so. Now it is expected from a professional that he voices out his opinion, knowing well that he may err. It forms part of his job to be wrong in his forecasts.
But one can understand why it is difficult for our financial service providers to offer professional advice: the customer expects to get this service for free. Mauritians are the sort of people who bring their cheque book along with them when they contact a lawyer or consult a private doctor, because they know that they are not entitled to a legal or medical service free of charge. But when they solicit an economist or a financial adviser, they presume that his services are free.
The notion of paid service
Since free professional advice is not without costs, obviously it can only be a minimum service. To access to a well-structured professional service, the consumer must accept the notion of paid service, as it is practised in developed countries.
From this perspective, a professional approach on the demand side is needed too. It means that the consumer should require of the supplier a quality of service that gives him value for money. In case he is not satisfied with the service offered, the consumer could denounce the firm publicly and even make representations to the regulator.
The problem is that there is still not an association for the protection of consumers of financial services. Such an organisation is essential to defend consumers who are victims of a deficient paid service. For their part, financial services providers have regrouped into several organisations to protect their interests.
In the absence of an association for consumers of financial services, it is the regulator who eventually takes on the role of defending them, although it is bound to remain neutral between the consumer and the service provider. Paradoxically, it is in the interest of the service providers to promote the setting up of such an association. If this happens, the conditions will be conducive to a better regulation of their activities and to a better access to financial services.
By Eric Ng Ping Cheun.
Director, PluriConseil Ltd.
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