Liberty has successfully implemented the Effective Annual Cost (EAC) measure – a useful tool for customers and financial advisers to compare charges on investment products.
Gustav Jenkins, Divisional Director for Product Management at Liberty said the insurer was pleased that this tool was already available and accessible to its intended users.
“We spent an enormous amount of time gearing up for this important milestone and making sure that we meet the implementation date of 1 October across our major products. I can confirm that since implementation, we have received a fair amount of interest from our advisers and some customers. The balance of products will be implemented during the month of October.”
The Association for Savings and Investment South Africa (ASISA) initiated the implementation of EAC in order to ensure that the Treating Customers Fairly framework is met.
“As a customer centric organisation, mandates that are concerned with putting the customer first align to our ethos at Liberty. The implementation of EAC makes it easier for customers to make better informed decisions on retail savings and investment products. It means our customers can now be fully equipped with knowledge on their investments. Even better, advisers will be just as equipped,” Jenkins said.
He calls on customers to request an EAC when engaging with financial institutions.
“There are a number of benefits for customers with the implementation of EAC. For example, the standardized presentation of costs will make costs comparisons easier. Consequently, this promotes comparability for customers, healthy competition and transparency in costs. It also puts more information in the hands of the customers for them to make more informed investment decisions.”
EACs will show costs on an annualised basis, and will have a phased implementation for products sold prior to the introduction of EAC. Any new quote requested needs to include the EAC disclosure. The EACs can then be used to compare financial products between providers.
Previously, it was almost impossible to compare costs between collective investment schemes and life assurance investments products.
“Liberty is looking forward to helping customers make the best investment decision for their needs. Contact an accredited financial adviser for more information,” advises Jenkins.
Which products does EAC apply to?
Retails savings products
Collective investment schemes
Insurance savings contracts
Endowments and living annuities sold via a life license