Moonstone Monitor 23 October 2008 : New F & P Regulations

A presentation was held in Pretoria last week to introduce the newly amended regulations. The relevant Board Notices containing details thereof was published in the Government Gazette on 15 October.

Normally there is quite a tussle between the various compliance service companies to be out first with details of what is contained in these notices. The fact that every notice that I have seen in this regard merely indicated its existence and a promise of details to follow is testimony to the complexity thereof.

For the same reason we are also holding back comment until we have studied the 200 pages of information to make sure we understand the context and relevance of all the information.

A lot of detail relating to the competence of advisors is provided. Training and development of staff will be a big focus area in the new dispensation, while supervision will also receive a lot more attention than in the past.

Regulatory examinations followed by continuous professional development will form the basis of efforts to increase the levels of proficiency and professionalism in the years ahead. While allowances are made for those already in the industry, a first reading of the new regulations raises concerns about the practical challenges of bringing new blood into the industry.

A question uppermost in our minds is how the ordinary broker will cope with the deluge of new information and requirements. If the experts have difficulty in grasping the practical implications, how will the man in the street cope?

There can be little doubt that those unable to employ expert assistance will be playing Russian roulette as far as their practices are concerned.

While most established brokers have some systems in place to at least stay informed, one has to wonder how the fledgling previously disadvantaged brokers can even hope to cope, given their lack of resources. The fact that this is also where the biggest need for proper financial advice of consumers exists, makes one wonder whether the regulators have looked at the reality of Africa, as opposed to the example of what happens in the UK and Australia.

There are different criteria, based on the different licensing categories, but the gap between them are so vast that one does not envy those who need to write rules that is fair to all, and particularly to safeguard the interest of the consumer, which is what it is all about.