New regulations herald age of the consumer

South Africa’s financial services regulatory bodies have been drafting and implementing a spate of new regulations – including the Consumer Protection Act, Conflict of Interest amendments and Treating Customers Fairly (TCF) guidelines – to help better protect the rights of the consumer.

According to Christelle Fourie, Managing Director of MUA Insurance Acceptances these new requirements suggest South Africa’s financial services industry has finally embraced the age of the consumer. “New financial regulations are putting the rights of the consumer first. From now on all product providers, including financial services companies, will need to be transparent and open when dealing with clients.”

She says these developments should help to promote the reputation and integrity of the financial services industry.

“The purpose of the Consumer Protection Act is to protect and enforce the rights of the consumer and it places an increased emphasis on the part of product providers to ensure they meet strict guidelines.”

“Insurers will need to make sure that no terms in the policy document are unfair, unreasonable or unjust. A court will also have the power to rule in favour of the insured against the insurer on the basis of any ambiguous clauses.”

Fourie says Conflict of Interest (COI) amendments to the FAIS Code of Conduct, which are being introduced by the Financial Services Board to address concerns regarding conflicts of interest between financial services providers, brokers and clients, should also go a long way to help further protect consumers.

“People often assume that others have already investigated the safety and integrity of financial services suppliers and therefore rely heavily on their broker or the product provider to assist them to receive the best possible financial service to fit their needs.”

She says these new requirements are particularly important given the bad reputation some parts of the industry have suffered in recent years. “All participants have a professional interest in ensuring that confidence is maintained in the financial services industry and it is therefore essential that we prioritise these changes.”

Fourie says that while there is a huge emphasis on companies and brokers to familiarise themselves with the new legislation, it is equally important for consumers to understand what their rights are and what they should expect from their providers.

A further initiative, inspired by similar actions by the Financial Services Association (FSA) in the UK, is the Treating Customer Fairly (TCF) framework, which aims to ensure that companies must pay due regard to the interest of their customers and must treat them fairly. “This is an essential development for the South African financial services landscape as its purpose is to restore faith in the financial services industry, starting with senior management.

“All the recent developments and regulations point to the fact that as financial services providers, we must conduct our business with integrity and professionalism by putting the interest of the customer first,” concludes Fourie.