The existing market conduct provisions in the financial services sector laws will be significantly affected by a comprehensive piece of market conduct legislation which should be published for public comment soon.
Some of the existing financial services sector laws will be repealed, others stand to be amended by overarching principles and hopefully some will be consolidated in order to clarify market conduct provisions.
The Financial Sector Regulation Act will usher in an era of market conduct regulation for retail banks under the new market conduct regulator, previously the FSB. The Treating Customers Fairly (TCF) regime will now be applicable to all insurers, financial services providers and banks that fall under the market conduct regulator.
“The Conduct of Financial Institutions (COFI) Bill, which will be open for public comment and destined for Parliament once finalised, will impose outcomes based standards on products and services offered by financial services institutions, including the assessment of whether charges levied are fair,” says Candice Holland, Deloitte SA Director at the Risk Advisory Practice.
The outcomes based method to be implemented via the COFI Bill will mean that Financial Services Providers (FSP) will not just be measured on rules and compliance but on the ability to demonstrate good customer outcomes.
“Organisations will need to assess the potential impact that the COFI Bill will have on the activities of compliance functions as well as business operations. Deloitte has developed an expedited approach and methodology to assess the COFI Bill to ensure that businesses understand this piece of legislation as well as its impact on business operations. It is essentially about leveraging what organisations have already achieved to comply with various elements of market conduct legislation that have been passed over the years, and understand the legislative gaps that need to be remediated”, adds Holland.
“FSPs will face the challenge of conducting sufficient business analysis to provide meaningful comment prior to the COFI Bill being finalised. There will likely be a short window period during which to provide comment and feedback on the draft COFI Bill, Deloitte will conduct numerous initiatives to make sure our clients are equipped with the appropriate tools and knowledge to understand the impact of the COFI Bill,” says James Alt, Deloitte SA Associate Director.
Alt recommends the following approach as a starting point for businesses: