Batting for intermediaries as the regulatory ‘wicket’ quickens up
One of the speakers at a recent Norton Rose Fulbright Retail Distribution Review (RDR) feedback session commented that nobody was ‘going to bat’ for financial advisers. This criticism was picked up by a handful of advisers who subsequently escalated the matter to the industry media.
The suggestion that nobody is supporting intermediaries as the regulatory environment evolves is patently untrue. In fact, the Financial Intermediaries Association of Southern Africa (FIA) is in the proverbial trenches each and every day, fighting for our members’ rights to run sustainable financial services practices. The risk and financial advisers who suggest that the FIA does not take their interests at heart are either non-members or totally out of touch with our activities.
Clarifying areas of uncertainty
The FIA has engaged extensively with regulators on RDR by way of formal and informal meetings with the Council for Medical Schemes (CMS), Financial Service Board (FSB) and National Treasury. The FIA uses these interactions to communicate its members’ views to the regulator, to ensure that these views are understood by the regulator and to seek clarity on areas of uncertainty.
What the naysayers forget is that the RDR process has been underway for a number of years and that the paper has already been influenced by interactions between the FIA and the FSB. By getting involved early in the process the FIA could assist the FSB in gaining a better understanding of the main financial advice disciplines within the broader financial services context.
Progressing along the regulatory path
The substance of the FIA’s submissions on proposed legislation is provided by its members - practising intermediaries – who work tirelessly to debate issues at branch and regional level before feeding these views into the FIA’s decision-making executive committees in the healthcare, employee benefits, financial planning and short-term insurance disciplines.
The FIA’s role as a trade association is to follow the legislative process from the beginning to the end. The organisation will do so in a responsible way by polling its members’ views and representing these views to the regulator in its meetings and, ultimately, in its formal RDR response.
It is absurd to suggest that the FIA stands down on issues to be ‘politically correct’. It is easy to snipe from the side-lines when there is no responsibility to negotiate the final dispensation for the intermediary. It is easy to be wise from a public platform, but it is a different matter when negotiating for members’ livelihoods.
A tough stance when required
The industry and the regulator will never agree on every issue, so the process has to play out with mutual respect and consideration. If the FIA encounters a non-negotiable clause or proposal, we will stand our ground to ensure the best possible outcome for its intermediary members. We have done so recently (with some success) in escalating the issue of healthcare broker remuneration with the Minister of Health.
What would the legal fraternity have the FIA do regarding RDR? An opinion from Norton Rose Fulbright costs thousands of rand per hour and it would cost hundreds of thousands of rand to prepare an adequate opinion on the 97-page RDR paper. But it makes no sense to seek legal opinion during the regulatory process as nobody knows what form the final legislation will take.
There is a time for everything, but right now it is the time to debate and negotiate – to consider the regulator’s position and to counter various views. Until such a time as the FIA encounters insurmountable differences in opinion, we will continue with our planned approach of methodically work through the RDR document and seeking clarity from the regulator wherever a proposal is unclear. The organisation will not shy away from a fight if an unworkable proposal is made law.
