Ensuring fair customer outcomes : the role of representatives in South Africa's financial services industry

Abstract

The document discusses the role of representatives in enhancing fair customer outcomes in the South African financial services industry. The common law, the Financial Advisory and Intermediary Services (FAIS) Act, Policyholder Protection Rules (PPRs), and the General Code of Conduct provide duties and responsibilities of a representative when rendering financial services. The role of fairness, utmost good faith and achieving fair outcomes in contracting has been discussed in various case law and are referenced for a common law perspective on the requirement of fairness in contracting. The implementation of the FAIS Act, General Code and the PPRs codified the protection customers by establishing standards for financial services providers. Despite these regulations, financial customers still encounter challenges, such as mis-selling, being charged inappropriate fees, receiving insufficient disclosures, and are exposed to conflicts of interest between the representative and their personal interests. Using a doctrinal approach, the study aims to outline the role played by representatives in enhancing fair customer outcomes in the South African financial services sector. A representative is defined as an agent under common law and a representative under the FAIS Act. What entails fair customer outcomes is outlined including the regulatory development dealing with the protection of customers which include the FAIS Act, the General Code, PPRs, RDR, FSRA and the upcoming COFI Bill. The regulatory development on the protection of fair customer outcomes is compared against the UKs regulatory environment and any key takeaways are recommended for South Africa. Significant issues impacting on fair customer outcomes in both South Africa and the UK include inadequate disclosures on fees payable in financial products, inadequate explanation on the product, mis-selling. Recommendations include continuous staff training, explicit policy explanations, and ensuring remuneration structures do not compromise advice quality.