31 May 2017
NEWS & OPINION 5
Protecting financial intermediaries and consumers
The Financial Intermediaries Association of Southern Africa ( FIA ) has issued comprehensive public comments on a range of draft and proposed regulations that will have a significant impact on intermediaries and consumers in the financial services sector .
The extent of regulatory change is evidenced by the number of draft regulations issued for comment , including Draft Replacement Policyholder Protection Rules – Long Term & Short Term ; Proposed Amendments to Regulations under S70 of the Short Term Insurance Act and S72 of the Long Term Insurance Act ; and the proposed FAIS and Insurance Conduct of Business Reports . Comment on the Financial Services Board ’ s most recent Retail Distribution Review ( RDR ) update was due by 31 March 2017 .
Fair remuneration ( under the principle of ‘ cost plus a reasonable rate of return ’) is important to financial advisers and insurance brokers . The FIA is concerned that the sheer volume and complexity of regulatory change currently underway will negatively impact the long-term sustainability of advice-based practices .
“ Our members face a double-edged sword of rising business and compliance costs on the one side and income pressures on the other ,” says Lizelle van der Merwe , FIA CEO . “ Changes in the ‘ cost and income ’ balance affect the value of their practices as well as their ability to participate in a transforming insurance economy where financial inclusion and business development is at the heart of the broader strategy for the financial services industry ”.
The draft insurance regulations may cause hardship and loss of employment , particularly in the middle to lower earning brackets . The additional expenses necessary to give effect to increasing regulation , whether operational or compliance-related , will further render many small to medium size intermediary practices unsustainable . “ There are thus genuine concerns that regulation will result in unfavourable outcomes for the very consumers that our members ’ insurance delivery currently serve to protect .”
Van der Merwe adds : “ We are also concerned about the possible impact of the proposed regulations and regulatory structure on the affordability of advice , the seamless delivery thereof and the knock-on effect on important objectives such as financial inclusion and transformation in the sector . “ The latest wave of proposed regulation will make it more difficult for new entrants to enter the market , hinder transformation initiatives and restrict competition .”
The FIA represents a diverse constituency across multiple insurance disciplines and with different business models ; but the consumer always takes centre stage . “ Our concerns with the proposed regulations range from the need for a holistic comprehensive economic impact study on the remuneration earned by the various intermediary and delivery models as well as the lack of enforcement of the current regulations when discipline is required ,” Van der Merwe says .
Despite these challenges , the FIA is actively engaging with the regulators with the aim of ensuring disciplined and sustainable intermediated delivery in the financial services sector . “ We are closely monitoring the process to ensure that our members ’ concerns are adequately reflected in the eventual legislation .” She adds that being a financial adviser or insurance broker remains a relevant career in South Africa .
“ There are six sectors identified as promising for Africa-based companies to enter into , with insurance and healthcare being two of them ; however , the three biggest areas of disruption are likely to take place in the insurance , retail banking and payments areas .”
Lizelle van der Merwe , FIA CEO
Allan Gray Proprietary Limited is an authorised financial services provider . 92875 / E
IT DOESN ’ T TAKE 2 HOURS 30 MINUTES TO PERFORM SWAN LAKE
IT TAKES 20 YEARS
Margot Fonteyn is regarded as one of the greatest
Margot Fonteyn , regarded as one of the greatest ballerinas of all time . By the time she was twenty
ballerinas of all time , was twenty years old when she years old , she had performed Swan Lake as the
performed Swan Lake as the prima ballerina . For her prima ballerina . For her it was a lifetime of sore
it was a lifetime of , sore feet , straight backs and lifted feet , straight backs and lifted chins . Sticking to a
chins . Sticking to a goal , day in and day out . At Allan goal , day in and day out . At Allan Gray we value
Gray we value this kind of commitment . It ’ s the same this kind of commitment . It ’ s the same philosophy
philosophy we apply to investing and it has worked we apply to investing and it has worked well for
well for our clients for 42 years . our clients for 42 years .
Call Allan
Call Gray Allan on Gray
0860 on 000 0860
654 000 or
654 your or financial your financial adviser , or visit adviser www . , allangray or visit www
. co . za . allangray . co . za
92875-Swan Lake 155x220 FPFC . indd 1 11 / 30 / 16 2:15 PM