Column 2 of 7

Economically vulnerable consumers

Part 1

 

 

By Bruce Cameron
Co-author to The Ultimate Guide to Retirement in South Africa

 

Bad treatment of economically vulnerable consumers by the financial sector

Many financial service companies create a range of barriers to their customers, particularly when they want to complain. And it is made even worse for economically challenged customers.

Economically challenged customers can range from people with partial or total hearing, seeing or speech problems, through to those who are forgetful, and people who cannot operate a computer or simply cannot afford the repeated phone calls to required to deal with a complaint. This is particularly the case as people grow older. They could include your father, mother, grandmother and grandfather.

The institutions from banks to insurers, as well as financial scoundrels, make it worse by simply exploiting them for their money and then lead them into a maze where most people, including those with disabilities, simply give up on their justified complaints.

It is well past the time for this to change. It is amazing how the Treating Customer Fairly (TFC) changes being imposed by the financial regulator, the Financial Sector Conduct Authority (FSCA), seem to be implemented grudgingly, or at times even ignored by the financial sector.

 

Miss South Africa

The new Miss South Africa, Mia Le Roux, said at her crowning about her deafness: ‘At the tender age of two, I was blessed by my community with the gift of a cochlear implant. Family, friends and strangers rallied to raise funds for this operation – a life-changing opportunity that allowed me to hear. It was also the start of a long journey to listen to sound and connect with the world through speech, a journey that also has taught me to never give up.

‘It took two years of speech therapy and continued repetition of words before I looked up to the sky one day and said my first four words: ‘Kyk daar, wit wolke – look there, white clouds’.

‘Today, it is my turn to be your community, to be a voice for those who, like me, have experienced the challenges of being different and feeling excluded. I am here to serve as your representative, to champion the causes that matter to South Africans and to create a space where everyone can shine in their unique, beautiful way.

‘The Miss South Africa Organisation has provided me with a powerful platform to advocate for change and to inspire others. I am deeply grateful for this opportunity and I am committed to using it to address the issues that affect our communities by working with the government, corporate South Africa and anyone who is able and willing to play their part. South Africans face many challenges, from financial exclusion and lack of access to resources, to the struggles faced by those who are differently abled. These are not just issues; they are opportunities for us all to come together and build a more inclusive and supportive society,’ Mia said.

 

The Good and the Bad

Often the bad moves affect everyone, but they just become so much worse for the economically vulnerable. Fortunately, there are institutions trying to assist but there are others that are plain bad. Here are two recent examples.

• The Good: The City of Cape Town recognised the special needs of those who are deaf or hard-of-hearing in its efforts to allow equal access to essential service. In a public statement the municipality says people suffering from full or partial deafness can contact the City’s Public Emergency Centre directly without ‘needing to make a telephone call. The new functionality lets users register their details in advance and request assistance in life-threatening situations quickly and easily with a few taps.’

• The Bad: TaxTim, which offers to do tax, makes it impossible to ask questions of any type before signing up. You must first sign up with your tax details. The TaxTim website says it is registered in the name of Registered Tax Practitioner, Marc David Sevitz (PR0009352).

There is no email, no telephone number and even their registered address is phoney. The provided address is at the office of a space hire company and there is no TaxTim person there to see you. And the space hire company will not give you any details of TaxTim.

The response from Sevitz is that registration is required for two reasons:

• For us to process your personal information accurately and securely; and,

• like any professional service provider, we at some point ask a fee for our services.

He then goes on a long-winded response about what happens once you have signed. He says the lack of a telephone number, an email address or an actual physical address  is because: ‘Compared to SARS eFiling, we offer more help, use simple language to explain things, check your tax return for mistakes, pro-actively remind you of deadlines, try to get you a greater tax refund, and actively try to improve your tax inefficiencies (through education on Retirement Annuities, Tax-Free Savings, Medical Aid, Wills etc).

Then he adds; ‘We do however not operate as a high-touch traditional tax practitioner.’

On not having a proper address, he says, the provided address is only a postal address. It does not say this on the TaxTim website.

And TaxTim makes a number of questionable claims. Among them is one that says you can ‘Cheat the Taxman’. Lower down the word ‘legally’ is added. The is no such thing as legal cheating. Cheating is cheating.

Sevitz says this was an article published by another publication. However, the article is published on TaxTim’s website.

TaxTim sends out many emails garnering business but if you reply it comes back as a “No Reply” email. This is currently one of the favourite tricks of the entire financial services industry to keep you at bay.

The banks some years back refused to give you details of a new account before you opened the account and the life industry only used to declare everything to you when you took out the policy. Fortunately, these practices are no longer acceptable.

This issue affects everybody but particularly the economically vulnerable who may have a greater need for sound tax advice.

 

The Problems

Many of the poor practices of the financial services industry affect everyone – not only those with vulnerabilities. It just becomes far worse for those with vulnerabilities.

There is a reason, for example, why elderly people were the main targets of one of the biggest, yet unacknowledged, scams in South Africa - property syndications.

Property syndication investors thought they were getting a better ‘guaranteed’ return on their investments because, on average, the returns were two percent higher than bank deposit returns. Unknown thousands, many of whom invested close to all or all of their savings in the syndications, were badly burnt in the process, with many losing most of what they invested.

And it was not only the marketers of these properties that were involved – there were others, such as property valuators, lawyers, accountants, banks and financial advisors. They all must have known about how people were being paid back with their own money and that the costs involved were often more than 30% of the invested capital. The high costs meant that there would never be a return. And this was just the seemingly normal ones. There were others that were simply scams from beginning to end, including the sale at very high prices of un-proclaimed land that was a mealie field. Many of the people who bought the ‘investment’ also suffer from at least one vulnerability.

Apart from the scams, such as property syndications, the regulated financial services industry imposes obstacles on all customers (both those with, or without vulnerabilities). For those who are economically vulnerable it becomes far worse.

Over the next few week this column will focus on a limited group of vulnerable consumers, namely those people who suffer from hearing, seeing and speech challenges, particularly the elderly.

 

There is a lot more detail on this in the book, The Ultimate Guide to Retirement in South Africa. For more information on how to purchase the book go to Buy Now on the website  www.retirementplanning.co.za

 

Related topics:

https://retirementplanning.co.za/new-system-for-complaints-about-financial-institutions/

https://retirementplanning.co.za/be-careful-about-how-you-invest-in-your-two-pots/

https://retirementplanning.co.za/col-13-name-and-check-your-beneficiaries/

https://retirementplanning.co.za/col-12-a-better-complaints-system/

https://retirementplanning.co.za/the-two-pot-saving-system-bruce-cameron/

https://retirementplanning.co.za/two-pot-system-should-low-income-earners-belong-bruce-cameron/

https://retirementplanning.co.za/column-11-your-future-and-the-two-pot-retirement-system/