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Alexander Forbes backs oversight plan

Butsi Tladi

Financial services company Alexander Forbes has voiced its support for the Treasury ’ s plan to bring regulatory oversight of medical schemes under the same umbrella as insurance products, as spelt out in the draft Conduct of Financial Institutions Bill. /

Financial services company Alexander Forbes has voiced its support for the Treasury’s plan to bring regulatory oversight of medical schemes under the same umbrella as insurance products, as spelt out in the draft Conduct of Financial Institutions Bill.

The bill, which was released for public comment in December 2018, aims to regulate how the financial services industry treats its customers.

It includes a proposal to move core regulatory functions from the Council for Medical Schemes (CMS) to the Financial Sector Conduct Authority (FSCA), a suggestion that has upset the medical schemes regulator. Last week CMS registrar Sipho Kabane accused the Treasury of failing to consult it on the bill and said it would be rendered a lame duck if the draft legislation is passed in its current form.

Alexander Forbes Health MD Butsi Tladi said on Tuesday a single regulator will ensure better protection for consumers and the FSCA is well placed to oversee the medical schemes industry.

The current regulatory framework, in which medical scheme brokers are accountable to the CMS and the FSCA, does not provide optimal consumer protection, and its “untidiness ” creates scope for conflict, she said.

The Financial Intermediaries Association, which counts Alexander Forbes among its members, strongly advocated for the end of dual regulation in its submission to the Competition Commission’s health market inquiry.

Tladi said the FSCA’s ability to regulate the market conduct of financial institutions is more advanced than that of the CMS, and that the medical schemes regulator already refers complaints about broker conduct to the FSCA.

“The FSCA has proven that it is far more capable of managing possible conflicts of interest in the provision of independent advice to consumers,” she said. The CMS is conflicted, as it is charged with protecting the interests of medical schemes and consumers, she said.

CMS spokesperson Grace Khoza declined to comment on the issues raised by Alexander Forbes.

The bill is part of the government ’ s reforms to strengthen governance of the financial services industry, following the promulgation of the Financial Sector Regulation Act in 2017, which established the Prudential Authority and the FSCA.

It outlines what consumers and industry players can expect of financial institutions and seeks to create a consolidated framework for market conduct, which is currently dealt with by several sets of laws. These include the Financial Advisory and Intermediary Services Act, the Consumer Protection Act and the Medical Schemes Act.