The ABCs of regulatory compliance
We live in an increasingly litigious society whereby people who are in positions of influence will be held accountable for their actions if they act in an improper manner. This is becoming very evident in South Africa. We already have the Consumer Protection Act (CPA) which gives increased powers to consumers who purchase physical goods. We are also seeing a wave of regulatory reform set to hit the financial services industry in the coming years.
We have heard the warnings from the Financial Services Board regarding compliance, so how do we comply?
A philosophical view
If a company/individual wants to be compliant, they need to look at the inherent philosophical departure point of the act that they need to comply with.
Speaking at the 2016 African Insurance Forum, Christine Rodrigues, Director at Norton Rose Fulbright, points out that the philosophy of Treating Customers Fairly is simple; “Customers have high expectations of their financial services providers and they rely on the information provided by these professionals when making decisions on products and services they want to engage with," she said.
UK compliance
Before regulatory reform came to our shores, it was implemented in many developed markets. One of these was the UK where TCF had a significant impact on the market.
Following the implementation of TCF, Rodrigues points out that there were a few sweeping reforms which could also impact the South African market in a similar way. “Senior management are expected to embed the principles of TCF into the firm’s corporate strategy and build it into the culture. With TCF, fair treatment of customers’ needs to happen through the product cycle,” said Rodrigues.
Some ways of measuring these outcomes include:
– Findings from TCF or other relevant thematic work;
– Findings from day-to-day supervision of individual firms;
– Financial Sector Authority (UK based) research; and
– Data received from Ombudsman complaints and determinations.
Analytical approach
Any person who works in a trade profession will tell you that the only way to find out how something works is to take it apart and deconstruct it to its bare minimum. In essence, those offering a service/product in the financial services industry need to do the same.
Since the FSB is approaching market conduct from a whole new standpoint, it makes sense that intermediaries need to do the same. Rachelle Best, Associate Director at PwC, said that by asking five key questions, a new approach can be achieved.
“The first question a company needs to ask is how they are identifying the conduct risks inherent within their businesses. From there, they need to determine who is responsible for managing conduct within the business. The third issue is a bit harder to determine. Companies and intermediaries need to asses if there are any support systems in place which will enable people to improve the conduct of their business or function,” said Best.
Understand the journey
One of the best ways to ensure compliance is to understand the client journey. Riaz Mia, Head of Claims at Zurich, said that international experience in this aspect has helped the company.
“Determine whether your business services and product offerings are creating value to customers or destroying it throughout the value chain; optimised customer journeys are able to detect the missing link and areas which require improvements throughout the customer journey. The customer experience has become a key differentiator for competitive businesses, organisations are improving customer loyalty and profitability by creating consistently positive end-to-end experiences for their customers,” said Mia.
He added that with the explosion of multiple channels and the advantages of real-time communication – many new ideas and best practices are emerging on how to create both unique and superior customer experiences that makes a difference. Data analytics makes it possible for organisations to move beyond mass segmentation towards a completely personalised journey for each customer.
Editors Thoughts:
Compliance is not the pointless search for the Holy Grail. It is very achievable and is easier than what we may think and it just it takes a slight adjustment in the point of departure. Do you feel compliance is as easy as this or is there something missing? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
