Page 104 - Profile's Unit Trusts and Collective Investments 2021 issue 2

CHAPTER 5

3. Where appropriate, institutional investors should consider a collaborative approach to
promote acceptance and implementation of the principles of CRISA and other codes and
standards applicable to institutional investors.
4. The institutional investor should recognise the circumstances and relationships that hold a
potential for conflicts of interest and should proactively manage these when they occur.
5. Institutional investors should be transparent about the content of their policies, how the policies are
implemented and how CRISA is applied to enable stakeholders to make informed assessments.
The code requires that institutional investors fully and publicly disclose at least once a year to
what extent the code has been applied. Reasons must be given if any of the principles of the code
have not been followed.
Although CRISA is a voluntary code it has become the standard for investment activities in
South Africa. The full code is available on the website of the Institute of Directors of SA
(www.iodsa.co.za).
Treating Customers Fairly (TCF)
One of the responsibilities of the FSCA is to protect consumers of financial products offered by
regulated entities. As part of this objective, the FSCA released a Treating Customers airly discussion
paper in May 2010 based on the TCF initiative of the UK Financial Services Authority (FSA) started
in 2001. In November 2011 ASISA published a TCF est Practices uideline for its members.
The TCF principles aim to ensure that customers enjoy good service, straightforward
communication, informed advice and appropriate products from providers of financial services and
their agents. The TCF principles represents the best way to build a relationship of trust with
clients and to achieve a sustainable long-term business model. A key feature of TCF is a top-down
approach which tasks business leaders and senior managers with creating a culture of good service
rather than a delegated ‘tick box’ compliance approach.
TCF goes beyond customer satisfaction. The fact that customers are satisfied does not
necessarily mean they have been treated fairly – satisfaction might be due to ignorance, distorted
expectations, or even misleading information given by the service provider.
In applying TCF, companies should seek to achieve six key outcomes, which are encapsulated in
the mindset: doing things right and doing the right thing. The key objectives can be summarised as follows:

OBJECTIVE OUTCOME
Right Culture and Governance TCF is entrenched in the organisation so that the fair treatment
of customers is central to corporate culture
Right Targeting and Product Suitability Products are correctly designed for specifically identified
consumer groups and sold only to the targeted groups
Right Information and Disclosure Straightforward information is provided and customers are kept
informed prior to, during and after the sale
Right Advice Suitable advice that takes into account customers’
circumstances is provided
Right Delivery Products are supplied that meet customer expectations and live
up to promises made in terms of performance and service levels
Product switches, customer queries and service complaints are
Right Post-Sale Treatment facilitated without the imposition of undue administrative barriers
In December 2014 the National Treasury issued an updated discussion document titled Treating
Customers airly in the inancial ector: a market conduct policy framework for outh Africa. The FSCA’s
TCF initiative is part of the regulatory initiative spearheaded by the revised Financial Sector
Regulation Act. The TCF principles underpin the FSCA ‘s General Code of Conduct (GCOC) and
are one of the building blocks of the draft COFI bill.
At a practical level, the TCF principles are being incorporated into the new regulatory
structures evolving under FSRA and COFI – TCF will not exist as a separate piece of legislation. In
the words of the FSCA’s Caroline Da Silva, the TCF objectives are “the guiding principles that the
FSCA will use to design both our regulatory as well as supervisory frameworks to ensure that
financial institutions will indeed prioritise these outcomes.”

102 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts