The survey by strategic intelligence company Insight Discovery found 97% of IFAs thought the Financial Services Board (FSB) should do more to monitor unregulated schemes and products. While 91% felt the industry’s image and reputation was tarnished because of unregulated schemes and products.
However, when it came to the FSB’s RDR proposals, which aim to reform South Africa’s regulatory framework for distributing retail financial products, responses ranged from IFAs who saw it as an opportunity to those who felt it would “kill independent IFAs.”
“I believe that RDR will have an impact on a large number of firms, but certainly believe that if managed and implemented correctly by taking industry comments seriously, both the customer and adviser will be in a better position,” said one unnamed respondent.
Meanwhile another wrote: “It is going to put pressure on IFAs to earn a decent liveable income and encourage well established IFAs to rethink their future in the industry.”
“Regardless of the final form of the FSB’s RDR, the burden of regulation is rising,”
The FSB ended a discussion period on its proposed RDR reforms in March this year and is expected to introduce the new regulations at some point in 2016.
Regulation challenges
Insight Discovery’s inaugural survey of 314 South African IFAs found that 60% of IFAs felt changing regulations were the main challenge facing the industry.
“Regardless of the final form of the FSB’s Retail Distribution Review, the burden of regulation is rising,” the survey report said.
“This will contribute to higher operating costs, and at a time that fees are under downwards pressure, as the industry moves from commission-based remuneration towards compensation by fees for service.”
Nigel Sillitoe, chief executive of Insight Discovery said the impact of the proposed RDR plan on the IFA industry was underlined by the length of responses received in the survey to its open ended questions.
