Advisers play a critical role in shaping financial outcomes
Government, regulators, and the private sector must work together to deliver fair customer outcomes across the financial services landscape. This inter-stakeholder collaboration sentiment was ‘top of the agenda’ at the two-day 2025 Financial Sector Conduct Authority (FSCA) Industry Conference, held in Johannesburg recently.
The regulator listens
The event, themed ‘Embracing the evolving financial sector landscape; improving industry practices for fair customer outcomes’, included a panel discussion made up of two diversified financial services CEOs and representatives from three industry bodies, expertly steered by FSCA Deputy Commissioner, Farzana Badat. The panel was held under an ‘FSCA Listens’ tagline in recognition of the basic premise that successful collaboration starts with a conversation, and for that conversation to be meaningful, participants must practice active listening.
Badat jokingly introduced the panel as “having way too many CEOs on a stage” before welcoming Geraldine Fowler, president of the Institute of Retirement Funds Africa (IRFA), Lizelle van der Merwe, CEO of the Financial Intermediaries Association of Southern Africa (FIA), Harry Kellan, CEO of FNB, Hylton Kallner, CEO of Discovery SA, and Kaizer Moyane, CEO of the Association for Savings and Investment South Africa (ASISA) to the stage. The purpose of the discussion was twofold: first to reflect on the outlook for the sector, and second to identify opportunities for collaboration between the regulator and other stakeholders.
The hour-long event generated too much information to digest in a single newsletter, so your writer has chosen to share key insights from each of the panellists in the order they were called to make their opening remarks. Fowler was first up, asked by Badat to comment on the main pain points and opportunities arising from recent regulatory interventions in the pension fund space. FAnews readers should be quite familiar with the major change in this area, being the introduction of the two pots retirement solution.
Focus on inclusion and TCF
The IRFA president singled out inclusion and treating customers fairly (TCF) as worthy of further discussion before noting that industry and the regulator had to find alignment in these critical areas. “It is no use the regulator puts something in place which they believe is going to enhance TCF outcomes when [the solution introduces] unintended consequence for the industry, or is perceived differently by customers,” Fowler said.
One of the IRFA’s concerns is that reforms such as two pots only benefit a small pool of people in the formal retirement space, protecting existing fund members but doing little to grow the fund member universe. Fowler said the socioeconomic potential of the retirement fund sector was curtailed by millions of informally employed being excluded from its protections. Customer mistrust of the financial sector was mentioned as a major challenge too, exacerbated by negative media coverage of claims rejections and investment scams, among others.
Kellan was asked how a retail bank kept pace with evolving customer demands and whether the FSCA’s regulatory approach was keeping pace. He commented that banks and other financial services providers (FSPs) had to satisfy evolving customer demands without neglecting the human element. He pointed out that the pace of regulation would always try and align with the pace of industry development but warned of the danger in forcing international regulatory norms on South Africa.
Rethinking communication, education
The digitisation of information and the speed of its dissemination was singled out as a major challenge for leading financial services brands. “Financial education and how we disseminate information has not kept pace with how technology is being used,” Kellan said. “The single biggest challenge is to be able to disseminate large, complex sets of data and information in more simplified terms, or sound bites if you prefer.” Commenting on regulation, the FNB CEO reminded the audience that banks and insurers did not stand in opposition to the regulator.
Kallner was introduced as someone who has worked at executive level in multiple financial lines, always with an intermediated distribution skew. He singled out affordability constraints as a key issue facing customers across the group’s insurance and investment product landscape. “In the non-life insurance business, we see this financial pressure in the kind of cover being bought, the buy downs and excesses being negotiated, and insureds ‘shopping the market’ for cheap cover,” he said, warning that lower premium did not always deliver needs-appropriate cover.
Financial services brands have to excel at data management. Discovery sits on data that gives detailed insights into how its customers are driving, living, spending etc. “How you use this data becomes a fundamental issue around how you treat customers fairly and [will] become a major conduct issue in areas like benefits and ratings,” Kallner said. He reminded the audience that his firm had adopted a socially optimistic model centred around the consumer, rewarding consumers for behaviours that improve financial and wellness outcomes.
AI and data present governance challenge
The Discovery CEO hinted that data plus the innovative deployment of technology created a win-win-win scenario for customers, FSPs, and regulators. By incentivising positive customer behaviours, the insurer is able to underwrite sustainably and offer an overall improved customer experience.
To conclude, Kallner singled out the use and governance of artificial intelligence (AI) and data as major challenges to both industry and regulators. He said customers will dictate the approach by seeking convenience and simplicity and demanding some kind of trade-off for making their data available to financial institutions.
The ASISA CEO was up next. Moyane was asked to weigh in on how industry and regulators might collaborate on financial resilience and sustainable wealth creation. “Our mission is to foster a culture of savings and investment in South Africa by continually encouraging people to save whatever they can,” he said, before conceding that disposable income was a major hindrance to this aim. ASISA held that economic growth was essential for the furthering of its savings and investment goal. Higher growth generates more disposable income for households to direct towards insurance and investment products.
According to ASISA, closer collaboration between industry and government can remove barriers to economic growth and improve financial inclusion. At the consumer level, the association lamented product complexity as a major constraint to uptake. Moyane hoped that innovation might address complexity and called for product flexibility during tough times. He held up the two pot retirement reform process as an example of what is possible when industry and regulators work together.
The intermediary view
For an intermediary view, Badat turned to the FIA. Van der Merwe praised the FSCA’s open and progressive approach to industry engagement, noting that South Africa’s regulator stood out internationally for its willingness to collaborate.
Speaking on behalf of a diverse range of intermediaries across the healthcare, financial planning, employee benefits, and investment disciplines, she highlighted the need for product and service certainty. “Clients want to know what they are paying for, how much commission their intermediaries receive, and how their funds are being invested, and this desire is common across the advice disciplines,” she said. Transparency is a universal expectation that builds trust and credibility.
Intermediaries were praised for their role in managing client expectations, especially during periods of market volatility. “Customers are eroding their long-term financial outcomes because of emotional decisions they are taking today,” Van der Merwe said, and our members are there to help prevent this wherever possible. She commended the FSCA for its commitment to the TCF principles and consumer education, but urged it to improve enforcement, keep pace with innovation, and simplify regulation for smaller advice businesses.
Working together to achieve more
All that remained was for the moderator to wrap proceedings. “Collaboration is extremely important to strengthen financial resilience, to restore confidence and trust among all stakeholders, and ensure sustainable economic growth,” Badat concluded, emphasising the value of the ‘FSCA listens’ approach. Going forward, consumer- and industry-focused education will have to meet the dual objective of reducing misinformation and demystifying complex regulation.
Writer’s thoughts:
The growing volume and complexity of financial sector regulation casts doubt on the ‘FSCA listens’ claim. Do you think the regulator is doing enough to act on the feedback it receives from the frontlines of financial and risk advice? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
