CAPE TOWN - A panel of advisors at the Raging Bull Awards summit today, addressing the effects of current and future regulation on the investment industry where some said that the policies of the National Development Plan is not effective in South Africa and that regulatory laws should be similar across all sectors.
The discussion opened with Head of Department of Treating Customers Fairly on the Financial Services Board, Leanne Jackson.
She discussed the different regulatory laws and how they are beneficial to the varying sectors.
According to Jackson, the focus of the regulatory mandate is creating a system and products of every sector that is readily available to the whole of South Africa.
There are different laws for different sectors. However, what is ideal amongst these sectors is that all laws are fair amongst all sectors.
The main assimilation these laws should have is to be inclusive and transformed.
Similarly, Head of Legal & Compliance at PSG, Elana Honiball said that legislation should have certain common objectives set out.
Honiball believes that the main aim of legislation is to protect and empower investors. However, there are certain objectives to legislations such as:
- Fair and efficient markets
- Lower systemic risk
- Improved access to information
- Enhanced transparency
- Encouraging investment
- Protecting the stability of financial services companies
"Once you embrace principle-base regulation, regulations and principle can balance each other out", said Honiball.
This is a greater obligation in complying with the minimum. It requires more effect and will be judged by outcomes.
Meanwhile, Jackson said that financial institutions should cater for appropriate risk management and appropriate risk-taking.
This is integral for ensuring that the investment sector succeeds.
Jackson referred to a study by CFA Institute, investors want something beyond legislation, such as:
- Fully disclosed fees and other costs
- Reliant security measures to secure data
- Clearly explained fees and cost
- Similar or better returns than other firms
- Investment reports that are easy to understand
Meanwhile, Executive of Research and Advisory at Empowerdex, Nomzamo Xaba said that legislation in South Africa is highly problematic.
Certain players are more profitable than others, based on unstable regulations.
Nomzamo says that in a perfect world, principles would work. However, the BEE scorecards are not a true indication of how companies are really transforming.
"I could easy take someone in the audience and show them how to cheat the scorecard, its that simple. Companies should make transformation a principle", said Xaba.
Taking into consideration of and being a part of this discussion, President of the Association of Block Securities and Investment Professionals, Sibongiseni Mbatha, the National Development Plan does not mount actual change within the investment sector in South Africa.
Mbatha said that over the past 23 years, there has been no real change.
He believes that policy change is not the answer. Instead, there needs to be an ideological change and a change of human behaviour.
Only 4.5% of ownership is held by the majority as opposed to 20-25% in other countries.
He further advised that we need to learn from this. Human behaviour is the fundamental change that has to be addressed, emphasised Mbatha.
- BUSINESS REPORT ONLINE