by Dr. Andrew D. Schmulow
The Conversation, (2019), published electronically.
South Africa’s regulatory regime for the financial services sector is going through major changes. The question is whether companies can adapt to a principles-based approach. Or will they default back to rules-based compliance during the implementation of the Conduct of Financial Institutions Act? The aim of the new law is to improve financial sector conduct and ensure fairer outcomes, particularly for customers.
There are strong arguments that a business that prioritizes the values of good conduct will be rewarded with loyal customers. They, in turn, have a high degree of trust in the business, and are more likely to source products and services from it. There are also indications that more loyal customers are less concerned about marginal differences in the price of a product or service, when compared to those of competitors.
In a wider social context, the South African government has made it clear that it expects financial services companies to take seriously the idea of a social contract. And that this, is essentially, their licence to operate in the financial industry.