The Financial Sector Conduct Authority (FSCA) has released a draft conduct standard for South African banks. The new rules are aimed at addressing some of the weaknesses that have been identified in the banking sector, including concerns as to whether customers are treated ‘fairly’.
Banks have until Tuesday (18 June) to comment on the new conduct rules, which are set to be introduced on 1 October.
According to Dawid de Villiers, a partner at law firm Webber Wentzel, the new rules highlight the need for meaningful supervision of the country’s banks.
“The draft Conduct Standard has been designed to follow the sequencing of six Treating Customers Fairly (TCF) Outcomes and the sequencing of the typical financial product lifecycle,” he said.
Each requirement set out in the draft Conduct Standard has been directly informed by the TCF Outcomes as follows:
- Customers are confident that they are dealing with financial institutions in which the fair treatment of customers is central to their culture;
- Products and services marketed and sold in the retail market must be designed to meet the needs of identified customer groups and must be targeted at these customer groups;
- Customers must be provided with clear information and kept appropriately informed before, during and after point of sale;
- Where advice is given, such advice is suitable and takes into account the circumstances of the customer;
- Products perform as firms have led customers to expect, and service is of an acceptable standard and as customers have been led to expect;
- Customers do not face unreasonable post-sale barriers imposed by firms to change products, switch providers, submit claims or make complaints.
De Villiers said that the new conduct standard is likely to lead to improved outcomes for customers in terms of improved disclosure mechanisms and the requirement that product offerings must be designed and targeted to appropriate customer groups.
It may have also had cost implications for some banks, he said.