PPS released the following Newsletter to PPS advisors on 5th October 2011. Althought the Newsletter is adressed to advisors we believe that it has great importance for PPS clients.

SANLAM COBALT AND PPS COMPARISON

Dear PPS Advisor,

On 28 September 2011 Sanlam’s distributed a Cobalt comparison with the PPS product range. This was followed up by Sanlam with workshops on the same topic. Reference to a number of general assumptions cast doubt over the credibility of this information and we feel obliged to caution our advisors about the use thereof. We see an increasing trend of Ombud and FSB complaints, because clients are mislead by their advisors. Non-compliant product comparisons are often the catalyst, used blindly as the truth, compromising advisors having to fend for themselves when challenged by the regulator.

The FAIS Act requires of advisors to give:

(a) Advice that is honest, fair, presented with due skill, care and diligence and in the clients interest with full disclosure or actual or potential loss caused by a replacement

(a) Information about the products considered that:

is factually correct, not creating uncertainty or confusion and not misleading in order to enable the client to make an informed decision.

clearly explains differentiating characteristics between the products, without making inaccurate, unfair or unsubstantiated criticism of any company and its products, in order to enable the client to make an informed decision.

The FAIS Act further states that when providers, like Sanlam, compare different financial products it must clearly explain the differentiating characteristics between the products, without making inaccurate, unfair or unsubstantiated criticism of any company or its products.

The information Sanlam distributed does not compare like for like:

Premiums of the PPS Incapacity benefit include OSRB, a far superior product and unique in the SA Insurance market.

Cobalt premiums without escalations in claim and for shorter terms than what PPS caters for

No mention of reduced premiums PPS members under 30 qualify for

Provide inaccurate rate comparisons. PPS actuarial calculations show a totally different view when comparing similar premium patterns over the duration of policies

On the Sanlam quote system dread disease cover is capped at R4 million, yet R5 million is presented. PPS provides more than R5 million cover.

The PPS SRA includes profits and investment growth. PPS members will in future share in the profits of our new product range. On a like for like benefit and premium pattern there is little or no saving with Sanlam. Where there is an initial premium saving, with age related increases in future, the Sanlam premiums become more expensive than PPS. The SRA cannot be compared or negated on this basis.

We request our valued PPS advisors to disregard comparisons of this nature; they carry unnecessary risks best avoided. We recommend that you follow the guidelines contained in the FAIS Act. We believe PPS products should be sold on merit, based on their unique features and strengths. You asked for differentiated rates and we added profit sharing to present you with the most compelling product range available in PPS’s existence.

Please liaise with your PPS Business Support Consultant or Regional Sales Manager for assistance to draw more accurate and comparative quotes or for any other query you might have.

Kind regards,

Frans Lombard Manager Distribution Support