Page 93 - Profile's Unit Trusts & Collective Investments - September 2025

Legislation and guidelines Chapter 5

As noted earlier, the conduct of financial advisers is currently governed by several separate pieces
of legislation and overlapping regulations (such as the FAIS Act, the General Code of Conduct, Fit
and Proper, policyholder protection rules, and so on).
The COFI Bill aims to consolidate and streamline a host of requirements which financial service
providers have to meet. When the Bill becomes law it will replace legislation repealed by the Act,
such as the Long Term Insurance Act, the Short Term Insurance Act, the FAIS Act, the Financial
Institutions (Protection of Funds) Act, and major amendments to the Financial Sector Regulation
Act itself, as well as the Pension Funds Act and other laws.
In relation to the Code of Conduct, financial advisers should take note that COFI, once law, will
control the conduct of advisers and regulate intermediary businesses.

Complaints procedures
As noted above, Section 17 of the General Code of Conduct requires the establishment of a
complaints management framework. The provisions of Section 17 became effective in stages, but
all provisions had to be implemented by the end of June 2021.
Under Section 17, FSPs are required to appoint responsible persons to handle complaints and
there has to be a clearly defined internal escalation and review process. This has to be documented.
Each FSP must keep a record of complaints and monitor complaints received in order to identify
possible ongoing and recurring issues, to improve risk management and improve outcomes for
clients. Complaints must be categorised into defined categories. These include:
R complaints relating to the design of a product or financial service, including around fees,
premiums or other charges
R complaints relating to information provided to (or not provided to) clients
R complaints relating to advice given
FSPs are also required to maintain summary data about complaints, including:
R number of complaints received
R number of complaints upheld
R number of rejected complaints and reasons for the rejection
R number of complaints referred to an Ombud and their outcome
Retail Distribution Review (RDR)
The FSB (now the FSCA) first published its Retail Distribution Review (RDR) in November 2014.
The RDR is an ongoing project.
The RDR proposed several regulatory reforms related to the provision of financial advice and
the distribution of financial products. Amongst other things, the RDR sought to incorporate the
principles contained in the FSCA’s TCF code.
In its June 2018 update, the FSCA stated that it would “continue to implement the RDR proposals
in a phased manner, aligning the development of regulatory instruments to broader legislative and
regulatory developments giving effect to the twin peaks model of financial sector regulation”. This
means the RDR proposals will be implemented using a combination of instruments available under
existing financial sector laws (such as the Financial Sector Regulation Act) and the planned Conduct
of Financial Institutions (COFI) Act.
As a result of the RDR proposals new terminology may be introduced, including product supplier
agent (PSA) for tied broker and registered financial adviser (RFA) in place of an independent
financial adviser (IFA). The proposed RDR changes could require PSAs to state that they do not
offer independent advice but merely represent the products of their employer.
These proposals are still subject to industry feedback.
Consumer research conducted by the FSCA found that terms like “broker,” “agent” and “tied
adviser” were not well understood by retail investors. The term “financial adviser” was reasonably
well understood by urban respondents. However, in its December 2019 update the FSCA stated
that: “Notwithstanding the finding that some terms are reasonably well understood by some

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