Duty to advise

Definition

The duty to advise is the obligation on an insurance intermediary to establish the client's demands and needs, to give objective information about the product and, where advice is given, to explain why the recommended policy is suitable. In the EU it comes from the Insurance Distribution Directive (IDD), which requires a personalised recommendation before the contract is concluded; in the UK the same principles sit in the FCA's ICOBS rules and, since 2023, under the Consumer Duty. In South Africa, the FAIS Act and its General Code of Conduct impose a comparable suitability analysis and a record of advice on every financial services provider. The duty is distinct from disclosure, which covers the features of the product, and it survives the sale: a client can challenge unsuitable advice years later, and the brokerage must be able to produce what was recommended and on what basis.

What you need to know

For a South African brokerage, the record of advice under the FAIS General Code is the document the FSCA and the Ombud for Financial Services Providers will ask for in a complaint. For a UK broker, the demands-and-needs statement and the file note serve the same purpose, and Consumer Duty adds the expectation that the firm can show the client understood the advice. Namibia and Kenya have their own codes, so confirm the local requirement with the regulator rather than copying the South African template.

WhatsApp is a good channel for gathering needs and a poor one for evidencing advice unless the brokerage controls the conversation. Advice that lives on an adviser's personal phone cannot be retrieved for a complaint, an FSCA inspection or a Lloyd's audit. The practical split: ask questions and collect documents on WhatsApp, deliver the recommendation as a document the client can keep, and retain the full conversation at firm level.

ORIS keeps every WhatsApp conversation in a shared inbox owned by the brokerage, with the history attached to the customer record, so the exchange that led to a recommendation is still there when needed. AI drafts suggest service replies; they do not give advice. Our guide to a shared WhatsApp inbox under Consumer Duty covers record-keeping for UK firms, and the compliance and regulation hub covers the other markets.

Concrete example

A client in Cape Town messages the brokerage asking for "the cheapest car cover". The representative asks about the vehicle's use, overnight parking and any finance on it, sends a short record of advice as a PDF explaining why comprehensive cover is recommended on a financed vehicle, and the conversation stays in the brokerage's inbox. Eighteen months later, a complaint to the Ombud is answered with the record and the messages around it.