The Code compromising 8 steps which ensures that all FIA Members comply with both current and forthcoming legislation when they interact with clients.

CEO Justus van Pletzen stated that the Code is fully aligned with the FAIS Act and is also aimed at ensuring that intermediaries are aligned with future legislation such as Treating Customers Fairly, and ensures that all our members are able to align their businesses with the new legislation as easily as possible.

Die FIA het onlangs ons nuwe Etiese Kode bekend gestel.

Wanneer FIA lede die 8 stap Kode navolg gedurende hul interaksie met kliënte, word daar voorsien dat daar ook dienooreenkomstig voldoen sal word aan wetgewing.

HUB Justus van Pletzen noem verder dat die kode ten volle belyn is met die FATD wetgewing en ‘n verdere oogmerk is om te verseker dat tussengangers ook aan toekomstige wetgewing soos onder andere “Treating Customers Fairly” sal voldoen en te verseker dat hul besigheidsaktiwiteite outomaties met die toepaslike wetgewing belyn is.

This is according to Natasha Maroun, Managing Director of Gem & Jewel Acceptances – a specialist insurance underwriter, writing on behalf of Compass Insurance – who says such incidents can be hugely traumatic for employees and customers. “Any kind of robbery is a distressing experience for those involved but when it becomes as serious as armed robbery or potentially even a hostage situation then it is crucial for those affected to be given assistance in dealing with the aftermath.”

She says a specialised insurance policy is able to offer a number of benefits specific to the retailers’ needs, such as trauma counselling, and shoplifting cover. “This can be very relevant at this time of year, as the risk of theft or robbery is magnified in the festive season, particularly as retailers increase stock levels to take advantage of the increase in demand.

Maroun says even though there is an increase in security in malls in general over the festive season, the risk of armed robbery is always there. “Crime syndicates know there are many innocent customers and staff in stores, which reduces the likelihood of a retaliation by the security or staff in a specific store, for fear of innocent bystanders being harmed.”

She notes that implementing some form of access control at a store can be a very effective risk management measure. “In fact, sometimes an access control system is a necessity for an insurer to even consider insuring the risk, particularly if the shop is located in what is perceived to be a high risk area. However, this is not always the case and installing an access control system is not a factor used in determining the premium, so it cannot be used as a bargaining tool.”

“It is advisable for any jewellery retailer to consider some easy safety and risk management tips such as ensuring that sufficient trained staff are on duty at all times. Given that retailers also take on extra staff during busy periods, it is vital that students and inexperienced temporary staff are under supervision at all times.”

Maroun says other easy-to-implement advice includes keeping the number of items shown to any customer to a minimum at one time. “It is also important to be aware and vigilant when potential customers arrive in large groups or are joined during the visit by other people. If any suspicion arises, the store should have an action plan in place, for example, the panic button is to be activated in certain agreed circumstances, even prior to an adverse event occurring. Ideally this panic button should be linked to the centre security to ensure a quick response.”

“One can implement appropriate security measures yet one can never really determine when, where or how a theft may occur, so the best safety measure any jewellery store can have in place is a comprehensive insurance policy to cover against any loss,” concludes Maroun.

“For me this simply means that the responsibility to serve continues. That’s what the regulatory space is really about, service not power. I have now been given more time to carry out this responsibility, and to continue to inculcate a culture of service within the FSB,” said Mr Tshidi.

What has contributed to the success of the organization during his tenure, he said, is the consistent and continuous engagement with the Financial Services industry.

“We’ve worked hard as an organization to improve relations with the industry, and we have seen great results from our efforts,” he said.

Going forward, the regulator will turn its attention to its new mandate of being a market conduct regulator. According to National Treasury, the fulfilment of this mandate has played a key role in Mr Tshidi’s re-appointment. To successfully execute this new mandate, everyone will have to play their part.

Said Mr Tshidi: “My responsibility in this regard is to ensure that all our employees and stakeholders understand how this will affect our operations going forward”.

RE Level II has been postponed for the time being but remains firmly on the agenda. The FSB is in the process of preparing these exams as well as making sure that the required exemptions are correctly assessed and granted. Van Pletzen said that the FIA and industry stakeholders would have to work together to ensure that the teething troubles experienced with the Level I RE implementation are not repeated. “We believe that Level II, once implemented, will run a lot smoother,” he said. Success will hinge on the ongoing involvement of the FSB, INSETA and various intermediary bodies as well as on “buy in” from individual financial services practitioners.

Regulatory focus shifts to the insurers

Over the next three years the Treating Customers Fairly (TCF) initiative will dominate the market conduct segment of the South African financial services industry. “TCF is a positive move and the FIA together with all other industry bodies are serving on the FSB Steering Committee driven by Leanne Jackson,” said Van Pletzen. Seven working groups have been established to focus on the six outcomes of the proposed regulation. The challenge will be for the industry to come up with a practical and acceptable format for implementation from early 2014. Stakeholders will have to iron out any overlaps and contradictions between TCF and existing legislation such as the Consumer Protection Act, Long and Short Term Insurance Acts, FAIS Act and Medical Schemes Act among others.

The financial services industry has come under increasing legislative and compliance pressure in recent years. It is estimated there were 454 new Acts, bills, regulations, codes, circulars, directives and standards which impacted just the insurance sector through 2010… Add to this the rules and regulations applicable to other sub-sectors of the industry, and consider general business legislation such as the new Companies Act, and the impact of red tape on businesses in the industry becomes painfully obvious. “It is increasingly difficult for the small financial practice to keep up with and comply with new legislation,” admitted Van Pletzen. But he welcomed the apparent shift from adviser to product provider introduced in TCF.

The new legislation will force companies and their chief executives to take greater responsibility for their products. “Intermediaries are not excluded from TCF – because advice is one of the six outcomes – but there is more focus on all stages of the product lifecycle from design to sales and marketing and the claims and after-sales stages too,” he said. TCF will instil a new culture of responsibility among stakeholders across the industry.

The future of independent financial advice

Over the past decade the regulatory microscope has been turned on those at the forefront of financial advice – most notably the independent financial adviser. Although new legislation such as TCF and Solvency Assessment and Management (SAM) will shift focus from the adviser to the product provider over time there is no doubt the cost of compliance in the adviser space is multiples of what it was 10 years ago. “The cost of the administration and compliance burden placed on intermediaries has probably increased fourfold over that period,” said Van Pletzen. Independent financial advisers are dipping into their wallets to pay membership fees to associations and professional bodies, compliance officers, for practice management support and annual licensing fees to the FSB. Smaller practices are finding it more difficult to survive financially than ever before!

It comes as no surprise that the number of genuine independent advisers plying their trade in South Africa is in decline. Smaller practices are merging or acquiring their competitors in order to gain the critical mass required to trade profitably. A larger business can absorb compliance costs and negotiate better deals with product providers. Van Pletzen estimated the number of financial services providers licensed by the FSB has probably declined from around 14, 600 in 2005 to around 12, 000 today. And these numbers will decline further due to the high average age in the industry (currently above 50 years) and as those who fail to complete RE bow out of the industry.

“A number of independent advisers will doubtless migrate to the tied agency force,” concluded Van Pletzen. “Some will give up as compliance and education demands mount. But for the thousands who choose to remain independent there will be numerous opportunities.”

Editor’s thoughts: In recent weeks we’ve heard from a number of readers who are unhappy with the increased burden of FSB levies on their practices… Intermediaries, already under pressure due to tough economic conditions, are struggling to find the extra cash to meet all of their legal obligations. Are you comfortable with the cost of legislative and administrative compliance in your practice? Please send your comment to gareth@fanews.co.za

Debbie Donaldson from SAIA presented a presentation at the FIA Advisory Council on 15 November 2011.  To view the presentation click here

Opening debate on the Tax Administration Bill in the National Assembly, he said one thing the draft legislation did not do was transform what he called the adviser community.

“The aggressive undermining of the fiscus that some pursue – obviously at the receipt of a fee, even at a time of extreme fiscal stress – is extremely dangerous.”

This could be seen in Greece and Italy and other countries.

Gordhan said advisers and their clients should “pause for reflection, as we must also, on the damage they can do to the tax system, and South Africa more broadly, as the result of their practices”.

Responding to members at the end of the debate, he also suggested a clampdown on tax havens.

“The world needs to do much more to bring tax havens to book, so that the rich and the super-rich and the powerful corporates don’t get better opportunities to evade tax.” – Sapa