NAIFA petitions government to secure future of intemediary market

26 May 2011 NAIFA

The National Association of Independent Financial Advisers (NAIFA) today announced that the organisation's board has petitioned the Minister of Finance, Pravin Gordhan requesting that a commission of enquiry or oversight committee be appointed to look into the conduct of the Registrar of Financial Service Providers, with respect to certain decisions being made without adequate regard to the results of consultation with the industry.

“NAIFA was established in 2010 to serve the best interests of independent financial advisors by ensuring that that part of the industry's rights are protected and that the longevity of this vital industry can be ensured,” explains Chris van der Walt, a director of NAIFA. “The need for an organisation such as this came about as a result of a combination of a more onerous regulatory environment, often without apparent purpose, and legacy issues where the image of independent financial advisors had been maligned.”

NAIFA has chosen to petition the Minister of Finance to address these issues as previous attempts to engage with the Registrar of Financial Service Providers were unsuccessful. “This approach is in line with a strict internal procedure established by the NAIFA board to first attempt to exhaust all other alternatives before elevating a matter to the political arena. We feel this action best serves the needs of the industry and our members at this moment,” continues van der Walt.

NAIFA's current petitions to the Minister of Finance seeks to resolve issues surrounding proposed regulatory exam requirements for financial advisors and the establishment of an oversight committee to monitor the implementation of the objectives of the Financial Advisory and Intermediary Services Act (FAISA) by the Registrar.

“Our main concerns around these matters pertain to provisions in subordinate FAISA legislation, which are not subject to parliamentary scrutiny and may infringe the individual rights of our members, with specific reference to the Determination of Fit and Proper Requirements for Financial Services Providers,” explains van der Walt. “We are also concerned that certain steps currently undertaken by the Registrar with respect to the first set of regulatory industry exams may adversely affect consumers and the economy as a whole, by possibly creating job losses as high as 300,000 at a time when increased employment is one of the highest priorities within Government.”

Industry support for NAIFA and their petition has grown steadily since launching. “We submitted a combined petition that included one initiated by NAIFA, covering all matters mentioned above, and the other that only relates to the regulatory exams,” says van der Walt. The combined petition has in excess of 2,500 signatories and has also received support from trade union Solidarity, who supports the initiative from the perspective of civil rights and the potential for job losses. “Trade union Solidarity supports the setting of standards in financial services, the concerns expressed in this petition as they relate to the enforcement of Fit and Proper Requirements for Financial Services Providers, the issue of language policies, the lack of a proper assessment of the impact of disintermediation on the industry and economy, and the establishment of an oversight committee,” states van der Walt.

“Our aim with this action is to secure legal certainty as a basis on which to build the future of independent financial advisors in this country, and join the Financial Services Board and the product providers to map out the industry's future over the short-, medium- and long-term,” he continues. “We are not against regulatory exams or the passing of legislation that will benefit the industry, we would just like to ensure that the proper consultation and interaction with the industry takes place to build sustainable businesses, and we hope this petition will finally enable that,” he concludes.

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