*According to a new leadership roundtable report from Insight Discovery
GCC consumers stand to benefit enormously from the adoption of global best practice by the financial services industry in the region, according to a new report by strategic research consultancy, Insight Discovery.
During a recent roundtable, it was agreed that financial advice and related products are sometimes viewed by consumers as complicated and unsuitable. This is recognised by the industry and companies have started to address these issues by revising their business processes, organisational structures, training and product offerings.
It was also agreed that there are certain issues with regional regulation which need to be addressed. The roundtable recognised that progress is being made, however many challenges remain and there are opportunities for international life companies, asset managers and financial advisers to take the initiative to work with the various regulatory bodies to develop a robust regulatory framework for the region.
Commenting on the latest roundtable report, Nigel Sillitoe, CEO of Insight Discovery, said:
“Consumers will be the ultimate beneficiaries of any forward-looking regulatory and industry reforms in the GCC’s financial services sector. Such moves will make it easier for intermediaries to offer strategic advice and relevant products to the end consumer. Positive regulatory developments will complement ongoing industry initiatives to bring global best practice into the region’s financial services industry.
“Following interviews with senior executives of some of the region’s leading financial services firms, I was pleasantly surprised to find that various new industry minimum standards have now been implemented in line with global best practice. It is impressive that some firms are going the extra mile by insisting their advisers are appropriately certified. This is extremely good news for GCC consumers.”
Low levels of life insurance density and penetration in the GCC countries
Lack of understanding of available products and low trust levels of financial advisers among consumers
An emerging picture for the regulation of all key stakeholders in the provision of savings, investment and life insurance products
Regulatory changes are difficult to predict
There is little co-ordination between regulators in different countries and, in some instances, within the same country
International life companies and asset managers play a key role in educating financial advisers who in turn should increase consumer understanding of life insurance and other investment products
International life companies and asset managers have a key role to engage with regulators to strengthen and clarify regulations
A few comments from the select panel of industry representatives:
“The GCC region has the potential to be one of the world’s best markets for the financial services industry. But the development of this market is challenged by different regional regulations which appear to be unclear, unpredictable and sometimes archaic.
“Whilst the GCC has a constantly evolving regulatory landscape with ongoing positive developments, much more could be done to help the growth of the industry.
“The regulators and the financial services industry need to work together towards a suitable environment for the ultimate benefit of GCC consumers. Financial advisers play a key role in intermediating between consumers and the industry and it is therefore essential they build trust and educate their customers on the various aspects of savings, investments and life insurance products and services.”
The Roundtable was made up as follows: Fadi El-Khoury of Amundi, Farah Foustok of ING Investment Management, Peter Duke of Fidelity Worldwide Investment, Steven Greenfield of Zurich International Life, Dan Rudd of HSBC Global Asset Management, Matt Waterfield of Friends Provident International, Reza Yazdi of Morningstar and Arwa Hamdieh of Financial Services Association (UAE).
Arwa Hamdieh, co-founder, Financial Services Association (UAE) concluded:
“The lack of familiarity with the financial services industry is preventing GCC consumers from utilising advisory services for their financial planning. Regulators and financial services companies in the region should collaborate to address this issue, initially by segregating the life industry from the general insurance industry and by investing in better trained and certified life insurance professionals. This will improve the consumers’ perception of the financial services industry and help to promote its role in creating a safety net for individuals over the long term.”