Image
Icon

Directory

IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconFinancial Planners
IconLife Insurance Companies
IconLife Insurance Products
IconOmbud
IconOnline Quotes
IconPublic Loss Adjustors
IconPublications
IconRe-insurance Companies
IconRegulatory Authorities
IconSocial Grants (Government)
IconWellness Programs
Advertise Here
  Subscribe To »

A loss Consumers can ill afford

Published

2012

Mon

06

Feb

The FSB regularly provides an update on the number of licences which were suspended or withdrawn and those whose status was reinstated after withdrawal or suspension.

The table below provides details of such reports released over the last 13 months.
 

FSP update on:

Suspended

Suspension Lifted

Licences Withdrawn

Licences Reinstated

30/01/2012

514

79

3

 

13/01/2012

10

123

125

7

03/10/2011

3

323

15

9

10/11/2011

826

56

10

22

23/09/2011

27

122

15

22

15/08/2011

258

57

21

25

22/07/2011

57

50

15

33

19/05/2011

26

106

502

22

31/05/2011

67

158

5

19

16/05/2011

909

114

23

20

15/03/2011

29

10

8

17

18/02/2011

5

46

1485

2

Total

2731

1244

2227

198

 

The majority of suspensions and withdrawals were imposed as a result of non-payment of levies and failure to submit compliance reports and/financial statements when due.

It is difficult to believe that FSPs are still unaware of these requirements, 8 years after the FAIS Act was implemented. There must be other reasons for this loss in FSP numbers.

A closer look reveals that the “offs” (4 958) outnumber the “back ons” (1 442) by 3 516.

This is a staggering number in anybody’s language.

As someone who has spent a large part of his career recruiting, appointing and training financial advisors, I am more than aware of the high turnover of advisors in the industry. Positive growth in real numbers is a major achievement under normal circumstances.

What makes the figures even more startling is the fact that we are not talking about 3 516 individuals; these are licenced entities, often comprising reps and clerical staff. The real damage is therefore considerably bigger than the figures would suggest.

Whilst there is no empirical evidence to support this, we are of the opinion that a substantial number of advisors plan to exit the industry when the deadline for the writing the regulatory examinations arrive.

Most of these will be vastly experienced practitioners. To calculate the impact on the quality of advice is not possible, but it will be vast, and in stark contrast with the aim of regulation, namely to improve the service given to consumers.

Proposed future changes in the industry include the introduction of a “Treat the Customer Fairly” set of rules and a review of commission, with the stated intent of changing advisor remuneration to a fees-based model. There are also plans to introduce a Super ombud to replace the current system of industry appointed ombuds.

One must assume that the figures quoted above will be taken into account when plans are made to implement further control measures.

There are certain positive signs as well: the current requirements in terms of financial soundness is under review, and we think that other measures are also receiving attention, mainly as a result of the financial impact thereof on the the smaller FSPs.

Most of what we see in place today, in terms of regulation, stems from what is used overseas, particularly in the UK and Australia.

Whilst there is no need to re-invent the wheel, one wonders how much consideration was given to our uniquely South African set-up, particularly from a demographics perspective of consumers of financial product consumers?

As we said in an earlier article: the cost of financial advice could become so expensive that only the rich would be able to afford it.

Where would that leave those consumers most in need of it?

To paraphrase an old saying:

If you think advice is expensive, consider the cost of ignorance.

 
Source: Paul Kruger: Moonstone Information Refinery (Pty) Ltd
 
« Back to previous page Print this page » |
 

Breaking News »

Constitutional Court restores in duplum rule

By Daniel McConnell, Director Norton Rose Fulbright South Africa The Constitutional Court has restored the law on the running of interest on outstanding debts – reversing the SCA’s 1997 decision ...
Read More »

  

Survey reveals South Africans are recognising the need for disability cover

DISABILTY COVER: Assessing the efficiency of the South African insurance market in its provision of disability cover by True South Actuaries and Consultants - an update to the 2013 study Key findings: There ...
Read More »

  

FSB warns the public against Stephan Richards and Tshepiso Lekganyane (Gomolemo Benefit Plan)

The Financial Services Board (FSB) would like to warn the public to act with caution when dealing with Stephan Richards (“Mr Richards”) and Tshepiso Lekganyane (“Mr Lekganyane”). Both Messrs ...
Read More »

  

A convincing first set of full-year results for PSG Konsult

Independent financial services provider PSG Konsult has reported a convincing first set of full-year financial results. This follows its successful listing on the Johannesburg Stock Exchange (JSE) and the Namibian ...
Read More »

 

More News »

Image

Healthcare »

Image

Investment »

Image

Retirement »

Image

Short-term »

Advertise Here
Image
Advertise Here

From The Glossary »

Icon

Risk Management:

Procedure to minimise the possibility of loss.
More Definitions »

 
 
By using this website you agree to the Terms of Use.
Copyright © Stoker Risk & ICT (Pty) Ltd 2004 - 2015.
All Rights Reserved.
Icon

Advertise

  Icon

eZine

  Icon

Contact IG

Icon

Media Pack

  Icon

RSS Feeds