The Financial Intermediaries Association of Southern Africa (FIA) is preparing to participate in the World Federation of Insurance Intermediaries (WFII) 15th World Council and Executive CSE Committee meetings in Sydney, Australia from 15 to 17 March 2014.
Justus van Pletzen, CEO of the FIA, and Seamus Casserly, past president and director of the FIA and current chairman of the WFII, will represent the Africa Regional Structure this year.
The FIA was among the founding members who launched the WFII in January 1999. Today the WFII represents over 400 000 insurance intermediaries from more than 100 national associations in more than 80 countries.
“The purpose of the WFII is to detect international trends in intermediary-related issues and to give policy direction to its members on current and future issues on the international agenda,” says Casserly. The principles and positions of the WFII are defined each year at the organisation’s Committee meetings, which serve as guidelines for intermediary associations around the world.
As an advocacy group representing the interests of global insurance intermediaries, the WFII provides inputs to the powerful International Association of Insurance Supervisors (IAIS). The IAIS represents more than 170 insurance ‘supervisors’ and is instrumental in debating and steering global insurance regulation.
“The WFII creates an additional channel for the FIA to engage with its own market regulators,” says Casserly. “Jonathan Dixon, Deputy Executive Officer of Insurance at the (Financial Services Board) FSB, along with other FSB staff, is active in a number of the IAIS committees that are responsible for setting the rules that global insurance regulators abide by.”
Aside from structural regulatory impediments to cross border insurance trade it is likely that the US introduced Foreign Account Tax Compliance Act (FATCA) will be under discussion at this year’s WFII gathering.
Member associations of the WFII have engaged with the appropriate structures in their respective country markets to provide feedback on these issues. The FIA has discussed concerns with the FSB in the hope that the regulator can use its position in the IAIS and its access to SARS and the DTI to ensure positive outcomes.
“The FIA’s participation in WFII structures ensures that we are kept up to date on the open exchange of information and the frank assessment of issues that are potential future drivers of change in the industry,” adds Van Pletzen. “It is important for South African intermediaries to be represented on the global platform in order to anticipate regulatory interventions and to inform their on-going discussions with local regulators.”
Remuneration structures in the life risk and investment space and the global trend towards comprehensive financial consumer protections will feature on the WFII agenda.
“A number of European countries have already adopted a no commission approach with respect to intermediation in the life risk and investment disciplines,” says Casserly. “Stakeholders in the South African financial services industry are still formulating a policy in this regard.”
The FSB is leading a comprehensive review of broker remuneration through its Retail Distribution Review (RDR) discussion paper, which will redefine advice, intermediary services and product sales and appropriate ways to remunerate financial intermediaries.
“The experiences of other country markets have informed our position on the remuneration issue and we will not support regulatory reform just for the sake of it,” says Van Pletzen. “The FIA will ensure that intermediaries are adequately remunerated for what they do, whether it is for giving advice or related intermediary services.”
“Without the involvement of an intermediary no financial product will fulfil the purpose for which it is sold,” concludes Van Pletzen. “The value of independent financial advice to customers is a critical component for adequate consumer protection.”
The WFII is tasked with the liberalisation of insurance intermediary markets to the benefit of consumers, by focussing on the IAIS Core Insurance Principles, in particular market conduct rules for intermediaries. South Africa is on track with consumer protection responsibilities through the FSB’s Treating Customers Fairly (TCF) regime and other pro-consumer legislations.