• During 2014, the Financial Services Board (“FSB”) announced that it would be implementing Retail Distribution Review (“RDR”) in South Africa. RDR aims to regulate financial advisors and financial intermediaries, as contemplated in the Financial Advisory and Intermediaries Services Act, 2002.  
  • RDR was introduced in order to facilitate competitive markets and fairness and transparency to clients. The RDR proposals are based on the UK retail distribution review framework.  
  • In response to industry concerns, the FSB held an industry seminar and published an RDR Discussion Paper in 2014, outlining the key changes which the RDR sought to implement. The key structural changes which the RDR introduces are:
    • to place greater responsibility on product suppliers for ensuring the delivery of fair customer outcomes through their chosen distribution channel;
    • to place limitations on the types of remuneration that intermediaries can earn and from whom;
    • putting systems in place to address conflicts of interest; and
    • enabling customers to understand and compare the nature, value and cost of advice and other services that intermediaries provide.  
  • The FSB has also announced that it plans to implement its RDR proposals in the following three broad steps:
    • the legislative changes are to be introduced either by way of amending existing subordinate legislation or by issuing new subordinate legislation. This is expected to happen between March 2015 and a date in the second half of the year which corresponds with the effective date of the Financial Sector Regulation Act (“FSR Act”);
    • further changes will be incorporated in the FSR Act and other sources of primary legislation; and
    • long term structural changes will be implemented through an overarching Market Conduct Act.