Certainty is key

SIR — With reference to Stuart Theobald’s opinion piece (Tax hikes to temper tax-free savings, February 16), and with specific reference to his comments on the proposed tax-free savings products, we share his concern about stimulating domestic retail savings and moving consumers away from their reliance on short-term, unsecured credit.

Unfortunately, however, his comments on the “reticence on the part of industry”, and the demand that “financial service providers need to step up to the plate, pronto” are indicative of a failure to understand the regulatory compliance risks involved. He further comments that the absence of the regulatory framework details “are issues at the margin”. If only this were so. The reality is that there are likely to be extensive market conduct regulatory and supervisory imposts from the Financial Services Board that will affect the design, marketing, advertising, selling, consumer education and operational characteristics of the new products. There may even be a need for the products to be preapproved by the regulator.

Given this, it is essential that the final regulations are known to ensure full compliance with all applicable regulations, over and above those already fixed within the Tax Act.

As an example, a simple question to Mr Theobald: should it be found at some stage that the design of the product within this market conduct regime fails a compliance inspection, and the tax-free benefits are consequentially aborted through no fault of the saving consumer, would Mr Theobald support such failed benefits (costs) passing to the consumers?

If not, then clarity over the exact regulatory dictates is an important precondition for the “gung-ho” marketing and selling of such new products by all service providers, irrespective of the perceived urgency and national interest noted. Stuart Grobler Senior GM, Market Conduct Division, Banking Association SA