SAICA advises accounting professionals to understand how this legislation will impact business at large
Johannesburg, Tuesday, 25 September 2012 – The South African Institute of Chartered Accountants (SAICA) cautions the accountancy profession that with the advent of the Consumer Protection Act (CPA) and now TCF, it is important for accounting professionals to understand how this legislation will impact businesses at large when it is passed into law in January 2014.
This caution has been made following the increasing amount of legislation impacting the accounting profession, with the latest being the Financial Services Board’s (FSB) roll out of its Treating Customers Fairly (TCF) programme in a bid to regulate market conduct of financial services industry to promote a culture of fair treatment of customers.
TCF is a regulatory approach that seeks to ensure that specific and clearly articulated fairness outcomes for the financial services customers are demonstrably delivered by financial services institutions. According to the FSBs enforcement committee, there are measures put in place to deal with those who are found to be in contravention of TCF.
Many accountants, particularly chartered accountants, hold managerial and strategic positions within South Africa’s large financial institutions. According to a research conducted by SAICA, a remarkable 32% of the chief executives of the JSE’s top 194 companies ranked by market capitalisation are chartered accountants, while
as many as 75% of those companies’ chief financial officers are also chartered accountants.
“With all the market conduct regulatory frameworks in place, for instance, the CPA, National Credit Act and the proposed “Twin Peaks” model of regulation, it is important for accounting professionals to understand where TCF fits in and how all these frameworks will work together”, says Tshegofaco Rametsi SAICA’s Project Manager: Financial Services.
It is clear that some form of consolidation is required to avoid regulatory mismatch. The timing of TCF however, is significant in the drive to acquire a better arrangement for financial services customers, she adds.
“Customers have high expectations of their financial services providers and they rely on the information provided by these professionals when making decisions on products and services they want to engage with”, narrates Rametsi, stating that professionals working in the financial services sector need to be consumer centric, particularly in addressing the customers’ preference for relevance with respect to products and services. “These are some of the principles embedded in the six TFC outcomes.”
South Africa has once again been ranked No 1 by the World Economic Forum, Global Competitiveness Report 2011/2012, for its strength of Auditing and Financial Reporting, therefore it is imperative that chartered accountants remain in the forefront of legislation landscape in order to continue to add value to South African businesses as accountants, advisors and auditors. Rametsi confirmed that SAICA continues to engage with the FSB, and other regulators, to influence these types of initiatives.
“SAICA encourages accountants who work within the financial services sector to identify the business implications of achieving the TCF objectives as set by the FSB, and linking them to the strategy of their organisations”, says Rametsi.
According to Leanne Jackson, head of the TCF at the FSB, “TCF needs to be thought through right across a group’s strategy as it could impact on profitability, marketing, business processes, product design, human resources, distribution and more.”
Communications Coordinator: Corporate
SAICA Communications & Marketing Division
Tel: 011 621 6712
QUICK FACTS ABOUT TCF
What is TCF?
- FSB to regulate market conduct of financial services firms;
- Promote a culture of fair treatment of customers.
- Regulate financial product design, marketing, information provided to customers, aspects of financial advice, after-sale support of consumers and the complaint procedure.
Roadmap issued by the FSB
- Supply of appropriate financial products and services;
- Enhanced transparency and discipline;
- Improved customer confidence;
The six fairness outcomes to be demonstrated by financial services firms:
- Customers are confident that they are dealing with firms where the fair treatment of customers is central to the firm culture;
- Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly;
- Customers are given clear information and kept appropriately informed before, during and after the time of contracting;
- When customers receive advice, the advice is suitable and suitable and takes account of their circumstances;
- Customers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and what they have been led to expect;
- Customers do not face unreasonable post sale barriers to change a product, switch provider, submit a claim or make a complaint.
The South African Institute of Chartered Accountants (SAICA), South Africa’s pre-eminent accountancy body, is widely recognised as one of the world’s leading accounting institutes. The Institute provides a wide range of support services to more than 33 000 members who are Chartered Accountants and hold positions as CEOs, MDs, board directors, business owners, chief financial officers, auditors and leaders in their spheres of business operation. Most of these members operate in commerce and industry, and play a significant role in the nation’s highly dynamic business sector and economic development.
SAICA serves the interests not only of the Chartered Accountancy profession, but also of society in general through its key objective of upholding professional standards and integrity. The pre-eminence of South African Chartered Accountants [CAs(SA)] nationally and internationally attests to the successes achieved by SAICA on a broad global canvas. SAICA’s members enjoy the privilege of using the highly regarded and prestigious CA(SA) designation. Members of SAICA are subjected to a Code of Professional Conduct, which provides guidelines for ethical and professional behaviour. Fundamental ethical principles to which CAs(SA) are expected to achieve include:
- Professional Competence and Due Care;
- Confidentiality; and
- Professional Behaviour.
SAICA members serve on international accounting bodies including; the Trustees of the International Financial Reporting (IFRS) Foundation, the International Accounting Standards Board (IASB), the IFRS Interpretations Committee, the IFRS Advisory Council and the Council of the International Federation of Accountants (IFAC). SAICA is also a member of The Global Accounting Alliance (GAA).
For more information visit www.saica.co.za