I can still recall my initial reaction, way back when, when I first read that honesty and integrity would be one of the fit and proper requirements. There is no disputing the need for this, but how on earth would they measure it?
Two incidents this morning proved the necessity of the requirement.
A product provider queried a certificate produced by a job applicant. This document purported to confirm that the applicant had written and passed the level 1 regulatory exam. Although it appeared genuine, it was relatively easy to identify it as fake.
There are various security measures built into the original document which cannot be copied. Not only can we establish the authenticity of the information on the document, but we can also verify to whom the original document was issued.
The second incident concerns medical schemes using unauthorised consultants to market their products.
A FSP, who also happens to be one of our compliance clients, says that he is doing his level best to conform to the letter and spirit of the law, but is very frustrated by competitors who do not.
A number of medical schemes use their consultants to market the schemes without these people being accredited by the Medical Schemes Council.
In fact, these schemes are not accredited as an FSP, nor are their consultants licensed as representatives. Our client says that he received no feedback to complaints lodged with the authorities.
It is interesting to note that the FSB deals with this issue as follows:
We further wish to draw you attention to section 22 of the Financial Services Board Act 97 of 1990 which prohibit us to disclose any information of our investigations. In terms of this provision, we can only divulge information in the course of performing our functions under the law, for legal proceedings, when required by a court and when in the interest of the public as authorised by the board, executive officer or deputy executive officer.
What is one to do in a case like this?
Information Letter 6 of 2012 from the FSB contains details of the Regulator’s service level agreements. In terms of this document, and subject to the conditions listed therein, the FSB undertakes to finalise complaints within 90 calendar days. My advice to our client would therefore be to follow up the matter with the FSB again if the problem is not resolved in this time frame.
Let me get back to the bigger picture in so far as honesty and integrity is concerned.
Like death and taxes, skelms will always be with us. My father-in-law once said that it is no use killing flies – their relatives all pitch up for the funeral.
I am not that sceptical. The core of the industry is healthy, and law-abiding. I sincerely believe that more transgressions stem from ignorance than from ill intent.
If there is one common ground shared by the majority of advisors and the FAIS Act, it is this: Protecting the interests of the consumer of financial products.
Yes, every now and then, something comes to light that proves me wrong. Yet, on the whole, it is becoming more and more difficult for transgressors to get away with their wrongdoings.
A recent survey, conducted amongst our compliance clients, shows that 44.3% saw the future as bright, 52,7% said they will survive and 3% felt that the end is nigh.
As tough as it is to keep up with the relentless increase in regulatory enforcement, few will argue that the industry is substantially more professional now, compared to 30 September 2004.
We just need a more efficient fly trap – one that also caters for the family of the deceased.