Regulation… the road for 2014

The biggest challenge for financial planners in 2014 will most likely be the raft of expected regulatory changes. In December 2013, National Treasury released the draft Financial Sector Regulation Bill, (“the draft Bill”), which begins the first phase of implementing the Twin Peaks model of financial regulation. We see that the so called “Twin Peaks” approach to regulation will lead to a more proactive regulatory environment.

In their recent regulatory update road show, the Financial Services Board (FSB) provided some more insight into their thinking behind the Retails Distribution Review (RDR). While we do not expect a finalisation of the process in 2014, we do anticipate that the first phase of legislation will be released.

Treating Customers Fairly (TCF) has been on the radar for some time. We now know that although TCF has not officially been implemented, the FSB is adamant that companies have already incorporated the six principles into existing and future legislation, as well as in dealings with clients.

The changing environment gives true financial planners, and specifically planners who are Certified Financial Planner® professionals, the opportunity to engage and educate the public on the difference between financial planning and financial product sales people.

We also need to ask ourselves why we need the regulator to provide TCF principles. Surely treating clients fairly is something that should be core to any financial planning practices. However, the awareness that has been created provides an opportunity to planning practices that can demonstrate that practitioners have embraced and implemented the principles of TCF long ago. These are the businesses that clients will trust and
engage with.

The Financial Planning Institute will continue to stay close to the legislative changes and to the regulator to ensure that a sustainable financial planning profession is built and maintained to the benefit of the consumer that we as professionals serve.