Old Mutual welcomes the new draft regulations as released by National Treasury this week. (28 February 2008).
In December 2005, the life industry signed the Statement of Intent agreement with the Minister of Finance in which it undertook to provide minimum values on existing savings policies to which contractual changes were made.
The new draft regulations represent a further step that will move the industry from an upfront commission structure to a combination of an upfront and as-and-when structure on new savings products taken out after 1 August 2008 (when the regulations are expected to come into effect). The purpose of the draft regulations is to improve early termination values on these products.
Old Mutual is adapting the commissions on its savings products to comply with the regulations.
Peter de Beyer, the managing director of Customer Solutions at Old Mutual says: “We welcome the new direction which aims to strike the right balance between consumer protection, the provision of excellent products and the encouragement of a vibrant advice industry”.
The new proposed commission structure applies only to recurring savings products and not to life products or lump sum investments that will be sold after the regulations become effective.
“Old Mutual recognises that brokers and financial advisers have played a pivotal role in helping South Africans to optimise their financial affairs.
“We will support brokers and advisers to continue to provide this invaluable advice to consumers,” says De Beyer.
While the draft regulations are focused on improving early termination values, customers should bear in mind that investing over the long term is likely to deliver the best results.
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