Enjoy a fantastic festive break
How the wheel turns. It seems only yesterday that we were sending out the first newsletter of 2007 – and now we are working on the last. The FAnews Online newsletter will resume from Monday, 14 January 2008.
The FAnews team would like to take this opportunity to wish you all the best over the holiday season. We face so many challenges as we go about our daily tasks that we often forget what Christmas is all about. Apart from the religious significance, Christmas offers an opportunity to spend time with family and friends, to reflect on the year that’s past and to make plans for the year to come.
A bumper year for the financial services industry
This year has been an incredible one for the financial services industry. It served up a mixed-bag of financial scandals, ombudsman rulings, regulatory posturing and industry body mergers. Perhaps the most important development (as far as financial intermediaries are concerned) is the growing acceptance of the need for professionalism in the industry. Today’s adviser is less threatened by the scale of regulatory intervention and realises that compliance is essential for his practice to thrive in 2008 and beyond. Good news for advisers is that two significant representative bodies, the IBC and SAFSIA merged this year to consolidate intermediary interests under a single structure, the Financial Intermediaries Association of Southern Africa (FIA).
Throughout 2007 the larger financial services companies showed signs that they too realise their responsibility to act in the best interest of consumers. The LOA and National Treasury’s joint Statement of Intent is a good example of this new consumer oriented spirit. And the ongoing LOA investigation into practices in the credit life industry is another. We hope this attitude can be built upon in coming years to ensure that product providers shoulder more of the compliance burden, rather than simply passing the buck to those on the frontline, the financial advisers.
A number of new and innovative products were launched throughout the year. Top of the list was changes to HIV / Aids exclusions and the introduction of significantly improved life and disability covers for HIV positive individuals. The LOA introduced its Zimela stamp of approval for insurance products aimed at lower income consumers. And Old Mutual’s launched the Domestic Worker’s Plan to address the savings needs of South Africa’s million strong domestic worker force. Another product which we hope will be a resounding success is the Fundisa Fund, a joint initiative between the Association of Collective Investments and the Department of Education, aimed at encouraging lower income groups to save for their children’s education.
The industry ombudsman made a number of rulings in 2007. Prize for the most controversial will probably vest with the Pension Funds Adjudicator, Momodupi Mohlala. Her interpretation on provisions in the Pension Funds Amendment Bill, as applied to divorce settlements opened a hornet’s nest of criticism and a raft of unintended legal hurdles.
If only the financial abuses could be spotted earlier
On the negative side South African investors continue to run foul of financial scandals. Who will forget the names Fidentia and J Arthur Brown which rose to the fore in February this year in a financial swindle involving billions of rand? There are many unanswered questions around the scandal, including how a fraud of such magnitude could occur under the noses of the banks, legal firms, boards of trustees, company directors and financial regulators who initiated, processed and probed the various Fidentia transactions. The good news is three arrests have been made. J Arthur Brown, his accountant Gordon Maddock and ex TETA chief executive Piet Bothma will have to answer for their actions during 2008.
More recently the 6% home loan finance company Rudco was placed under provisional liquidation. The company is alleged to have taken as much as R7 million in fees and upfront payments from clients without processing a single loan. It subsequently emerged that one of Rudco’s directors had been barred from acting as a company director due to a prior criminal record.
The truth is regardless of the amount of legislation put in place, there will always be individuals looking to enrich themselves at the expense of others. We urge financial advisers to maintain a strong lookout in the coming year – and treat any offer of excessive returns with a healthy measure of suspicion.
A huge ‘Thanks’ to all our regular readers
We would like to end this newsletter with a word of thanks to those of you who regularly read our online newsletter and articles. Your loyal support is what makes offering the online service worthwhile, and has helped FAnews Online to grow from strength to strength. We really appreciate the responses you send through and believe the best way to tackle industry issues remains through open debate.
We trust you will join us again in 2008 (from 14 January) when we will once again supply you with your daily dose of industry news and views. So – without further ado – here’s to a Happy Christmas and a prosperous New Year.
