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 Business day 20 may 2011 - move to manage financial advice

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PostSubject: Business day 20 may 2011 - move to manage financial advice   Fri May 20, 2011 9:03 am

 

Move to govern financial advice
Similar changes in UK have resulted in a ban on financial advisers receiving commission for selling investment policies from 2012
SANCHIA TEMKIN
Published: 2011/05/19 07:41:05 AM
THE move towards professionalising the role of financial advisers in SA through both the Financial Advisory and Intermediary Service (Fais) Act and the introduction of regulatory examinations is indicative of a worldwide trend towards better governance of the provision of financial advice, according to the Financial Intermediaries Association of Southern Africa.

Financial Intermediaries Association of Southern Africa president Seamus Casserly said this week that, while the introduction of reforms might vary between countries, there was a common theme in various regions.

"Financial advisers provide a valuable service and this is recognised around the world. However, it is also recognised that to offer this service, it is necessary to show that one has a thorough knowledge of the industry in which one operates, hence a number of reforms … taking place both here and internationally. Changes being mooted in SA mirror those elsewhere."

The regulatory examinations being introduced by the Financial Services Board were related to the training financial advisers in the UK and US were required to undertake.

In Australia, the Securities and Investments Commission recently published proposals to raise the standard of advice provided by establishing a Financial Services Competency Certification Exam. Advisers would also be required to undergo a "knowledge update review" every three years.

Mr Casserly said SA’ s financial advice industry was at a similar crossroads. "Fais was introduced in 2004 and for the majority of advisers who comply, it has proven to be an important piece of legislation that properly governs the industry. The new regulatory examinations will ensure all advisers are not only heeding this act but are also operating with the same level of knowledge and competence."

There had been a similar tide of change in the UK, culminating in a ban on financial advisers receiving commission for selling investment policies from next year.

temkins@bdfm.co.za
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