For many financial advisers, regulation can feel like a constantly shifting landscape. New legislation, updated conduct standards, anti-money laundering requirements and the prospect of the Conduct of Financial Institutions (COFI) Bill have created an environment where uncertainty often threatens to overshadow opportunity.
Yet, according to FIA President Ronald King and Head of Legal & Regulatory Affairs Sam Williams, much of the anxiety currently circulating in the industry stems not from what financial advisers are required to do today, but from what they fear they may have to do tomorrow.
Their message is reassuring without being complacent: focus on what matters now, continue delivering quality advice, and prepare thoughtfully rather than react emotionally.
Separating perception from reality
The volume of regulatory change has understandably created concern among financial advisers. Between increasingly stringent anti-money laundering (AML) obligations and the long anticipated arrival of COFI, many financial advisers are asking whether they are doing enough, or whether another wave of compliance demands is about to disrupt their businesses.
Williams believes it is important to distinguish between immediate obligations and future reforms.
“There’s certainly a lot happening in the regulatory environment,” she says. “But not everything requires immediate action. Financial advisers should understand what needs attention now and what remains part of a longer term transition.”
That distinction matters.
The COFI Bill has attracted considerable discussion across the financial services industry, but King cautions against making wholesale business changes before the legislation has even completed the parliamentary process.
“At this stage, there is no value in trying to redesign your business around legislation that has not yet taken its final shape,” he says. “There will be consultation, transition periods and detailed guidance before firms need to implement significant changes.”
In other words, financial advisers should stay informed, but resist the temptation to respond to speculation.
The compliance priority today
If COFI represents tomorrow’s challenge, AML compliance remains today’s priority.
South Africa’s commitment to addressing deficiencies identified by the Financial Action Task Force (FATF) has placed increased emphasis on Financial Intelligence Centre Act (FICA) compliance. Regulators are paying close attention to firms’ Risk Management and Compliance Programmes (RMCPs), and this is where Williams and King believe financial advisers should be investing their time.
King says too many businesses have treated the RMCP as little more than a template document.
“The firms that struggle are often those that have adopted generic compliance documents without adapting them to reflect the reality of their own businesses,” he says. “Your compliance framework should be a living document that accurately reflects your risks and how you manage them.”
That means regularly reviewing policies, ensuring procedures remain relevant and demonstrating that compliance is embedded in day to day operations rather than existing purely to satisfy an audit.
Williams agrees that practical implementation matters more than paperwork.
“Regulation is increasingly focused on outcomes rather than simply ticking boxes,” she says. “Businesses that genuinely understand their risks and their clients are already moving in the right direction.”
Preparing without panicking
Although COFI may still be some distance from implementation, that does not mean advisers should ignore it completely. Instead, Williams encourages firms to begin thinking strategically.
One significant shift expected under COFI is activity based licensing, together with a stronger emphasis on customer outcomes and principles based regulation. Rather than prescribing every operational detail, the legislation is expected to place greater responsibility on firms to demonstrate that they consistently act in clients’ best interests.
“The important thing is to understand the direction of travel,” Williams says. “You don’t need to overhaul your business today, but you can certainly begin reviewing your governance, compliance framework and customer outcomes.”
The FIA is already part of the FSCA working groups examining draft conduct standards and intends providing practical guidance to members as further details emerge.
That support, says King, will become increasingly valuable as the legislation progresses through Parliament.
“Our objective is to make these changes understandable and practical for financial advisers,” he says. “We want members to know exactly what they need to do, when they need to do it and why.”
Good advice is still the best strategy
One of the strongest themes emerging from the discussion is that quality advice and regulatory compliance are not competing priorities. In many respects, they are becoming increasingly aligned.
Some advisers continue viewing regulation as an administrative burden that distracts from serving clients. King challenges that perception.
“If you’re genuinely understanding your client’s needs – asking the right questions, explaining available options and documenting your advice properly – you’re already satisfying many of the principles that regulation is designed to promote,” he says.
Rather than replacing personal advice, regulation seeks to reinforce it.
That is particularly important as financial needs become more complex and clients face increasing uncertainty around economic conditions, retirement planning, healthcare costs and business risks.
The adviser who invests time in understanding those realities is likely to be delivering both better customer outcomes and stronger regulatory compliance.
From product sales to risk management
Another important evolution highlighted by both King and Williams is the growing emphasis on risk management.
Williams believes advisers need to think beyond simply matching products to client needs.
“The future belongs to advisers who position themselves as risk professionals rather than product distributors,” she says. “Helping clients understand their overall risk profile creates stronger relationships and ultimately delivers greater value.”
Recognising this shift, the FIA has been developing additional continuing professional development (CPD) material focused specifically on risk management. New learning modules are intended to help advisers strengthen their advisory capability while preparing for an increasingly principles based regulatory environment.
This reflects a broader global trend.
Financial services regulators are placing increasing emphasis on consumer understanding, appropriate outcomes and holistic financial advice. Technical compliance remains important, but genuine client engagement is becoming an equally significant measure of professional practice.
Confidence through participation
One of the most practical messages from both King and Williams concerns industry participation.
Too often, legislation is viewed as something imposed on financial advisers. In reality, consultation processes provide opportunities for industry voices to influence outcomes before regulations become final.
King believes FIA members should actively participate throughout the COFI consultation process.
“We need members to tell us what works, what concerns them and where unintended consequences may arise,” he says. “The stronger the industry’s participation, the stronger our ability to represent financial advisers effectively.”
The FIA intends hosting webinars, publishing guidance and encouraging members to submit comments during formal consultation periods.
That collaborative approach ensures regulators receive practical feedback from businesses operating on the front line rather than theoretical responses removed from everyday client interactions.
Turning regulation into competitive advantage
Perhaps the most encouraging message is that regulation need not be viewed solely as a cost of doing business.
Williams has observed that many successful firms use strong compliance as a competitive differentiator.
“The businesses that thrive are often those that embrace regulation as part of delivering a better client experience,” she says. “They stay informed, continuously improve their advice processes and demonstrate professionalism through the way they operate.”
Clients increasingly value transparency, consistency and confidence in the professionals who advise them. Well governed firms are therefore likely to enjoy stronger client trust, improved retention and greater resilience as regulatory expectations continue evolving.
The road ahead
The regulatory environment will undoubtedly continue changing. COFI will eventually become law. Conduct standards will emerge. AML obligations will remain under scrutiny. New expectations will develop as financial services continue evolving.
Yet the advice from the FIA leadership is refreshingly straightforward.
Do not become distracted by rumours or overwhelmed by headlines. Concentrate on current compliance obligations. Keep your RMCP relevant and up to date. Deliver advice that genuinely serves your clients’ interests. Stay informed, engage with the consultation process and make use of the guidance the FIA provides.
Ultimately, regulation is not intended to replace the trusted adviser. If anything, it reinforces the importance of professional advice built on competence, integrity and a genuine understanding of clients’ needs.
For financial advisers willing to approach regulatory change with preparation rather than fear, the future may be far less daunting than many imagine.