The RDR ele­phant

RISKSA Magazine - - Career -

Through­out the panel dis­cus­sion of day two, fo­cused on the three di­vi­sions of the PSG Kon­sult busi­ness – PSG In­sure, PSG Wealth, PSG As­set Man­age­ment – was the loom­ing im­pact of the pro­posed RDR changes. Barry Tay­lor of the FIA em­pha­sised the need for all ad­vis­ers and bro­kers to in­form them­selves thor­oughly of the reg­u­la­tion and read the doc­u­ment in full. “The bet­ter in­formed we are, the bet­ter able we are to do our jobs.” The FIA’s role, he said, was to work to in­flu­ence the out­comes for the in­ter­me­di­ated space. Fun­da­men­tally, the as­so­ci­a­tion agrees with the prin­ci­ples be­hind the doc­u­ment, both its pro­tec­tion of clients and con­sumers, and its pro­tec­tion of the in­tegrity of the mar­ket. It would also as­sist in rid­ding the in­ter­me­di­ary space of any lin­ger­ing im­proper prac­tices. Nonethe­less, there are con­cerns, said Tay­lor. He sug­gested there was need for a thor­ough eco­nomic study of cost ver­sus benefits on the spe­cific changes pro­posed. “Our con­cern is that there will be in­creased costs, re­duced rev­enues and losses in hu­man cap­i­tal. We are also con­cerned about the likely re­duc­tion of in­no­va­tion as a con­se­quence of the changes. With­out this – our busi­ness is dead.” The panel noted also that in the United King­dom, the only other mar­ket with sim­i­lar reg­u­la­tion, the reg­u­la­tion does not ap­ply to the short-term in­dus­try there, only long term. The chal­lenge, said Tay­lor, would be to per­suade the reg­u­la­tor of the nu­ances within the dif­fer­ent lines and dis­ci­plines – com­mer­cial ver­sus per­sonal lines for in­stance – within the con­text of RDR. He added that in Australia, mar­ket con­duct is heav­ily reg­u­lated but that re­mu­ner­a­tion is un­reg­u­lated and that in that mar­ket, that bal­ance works well for them. Ul­ti­mately, be­cause South Africa is a mem­ber of the G20, reg­u­la­tion is here to stay and what­ever hap­pens within that broader com­mu­nity will come here. “Ul­ti­mately, we need to pre­pare for that,” noted Tay­lor. CEO of PSG In­sure Dis­tri­bu­tion, Ber­tus Visser, noted that a fur­ther evo­lu­tion that would be in­ter­est­ing to watch was the trend for di­rect play­ers to come af­ter the com­mer­cial space, which has un­til re­cently still been largely the domain of the in­ter­me­di­ary. Nonethe­less, he said that in a chal­leng­ing mar­ket strug­gling with reg­u­la­tory change, com­mer­cial re­mained the more prof­itable and stick­ier part of the busi­ness to fo­cus on.

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