Blue Chip Issue 96

BLUECHIPPRACTICE

BLUECHIPPRACTICE MANAGEMENT | ComplianceThe FPI has renewed its Code of Ethics. What is thefundamental difference in the revised Code?LB: The fundamental change in the revised FPI Code ofEthics is the addition of a new principle: accountability. Thisprinciple requires members to take ownership of their actions,maintain transparency and be willing to explain decisionswhen asked. It includes addressing the consequences ofactions by making necessary corrections and improvements.In practice, FPI members demonstrate accountability byclearly defining scope, deliverables, timelines and pricing;maintaining open, honest communication; promptlyinforming clients of issues or changes as well as complyingwith legal and ethical standards. Accountability builds trust byensuring responsibility, transparency and commitment toethical, client-focused conduct.across the entire client journey, from advice and productdesign to implementation, review and beyond.What are the ethical considerations of compliance?AS: COFI demands that financial institutions must demonstratean ethical culture. Currently, the ethical considerations ofcompliance are captured in the provisions of Section 2 ofthe FAIS General Code of Conduct. The nine principles inthe reviewed FPI Code of Ethics provide a comprehensiveoverview of what constitutes ethical behaviour of financialadvisors and intermediaries.Please expand on the competence and ethical standardsthat underpin the CFP® certification. How does the CFP®certification align with COFI?LB: Financial planning standards have been establishedglobally for over 50 years and have been applied in SouthAfrica since 1981, with the CFP® designation formally introducedhere in 2001.COFI, introduced decades later, reflects many principlesthat have long underpinned financial planning. It emphasisesclient-centricity, ethical culture, fair treatment and thesuitability of advice – all of which are embedded in the CFP®framework through:• Fair treatment and suitability, achieved via structured andclient-focused advice processes.• Governance and accountability, maintained throughadherence to a strict Code of Ethics.• Conduct alignment, supported by professional standardsextending from advice delivery to post-sale engagement.CFP® certification already operationalises the core principlesof COFI, ensuring that CFP® professionals are well-preparedfor its focus on ethical, competent and accountable deliveryof financial services.What are the nine building blocks of the FPI Code of Ethics?How do these principles align with COFI?LB: The FPI Code of Ethics guides members to conductthemselves ethically, protecting clients, the profession andsociety while supporting its credibility and sustainabledevelopment. It promotes ethical behaviour, sets clearconduct boundaries and fosters ethical awareness anddecision-making.The Code consists of three parts: definitions, nine ethicalprinciples and practice standards (the six steps of financialplanning). The nine principles are competence, integrity,professionalism, client first, fairness, objectivity, confidentiality,diligence and accountability.These principles align closely with COFI’s focus on clientcentricity,ethical culture, fair treatment, governance andaccountability, ensuring that FPI professional members areprepared for COFI’s requirements.Please talk to us about the psychology of risk managementand compliance.AS: The way we think about compliance has a significantimpact on how we respond to it. If we have a “groan mindset”when it comes to risk management and compliance, we willalways experience pain and discomfort in this area. We needto change our thinking and adopt a “growth mindset”.Risk management and compliance have more to do withprofessional practice management and creating a foundationfor growth than simply abiding by the rules.What about the need for compliance officers when COFIcomes in?AS: Every FSP should embrace their compliance officer asa valuable resource in their business. No practice shouldoperate without an FSCA-approved compliance officer. Itprovides the business with an extra pair of eyes to look afterthe interests of the business. I am in favour of compliance24 www.bluechipdigital.co.za

PRACTICE MANAGEMENT | ComplianceBLUECHIPofficers and believe that sole proprietors will no longer bepermitted to render financial services without appointing acompliance officer.How are compliance and practice management two sides ofthe same coin?AS: Every component of the operational framework in everyFSP is regulated and the same components require a bestpracticeapproach to business to create a competitiveadvantage in the market.Please outline what effective practice management entails.LB: As with any professional practice, such as those of doctorsor legal practitioners, effective practice management in afinancial planning context entails running a sound, profitablebusiness in South Africa with the necessary skills, resources andadherence to the practice’s regulatory universe (all regulationsthat apply to the practice).It involves implementing strong governance frameworks,maintaining robust compliance and risk managementprocesses, ensuring the competence and ongoing developmentof staff, embedding a client‐centric culture, leveragingappropriate technology and applying the financial planningpractice standards.Together, these ensure sustainable operations, ethical conductand consistent delivery of value to clients.What are the three types of cultures that COFI demands?LB: We need to be clear that this should not be confused withthe New Zealand COFI Act of 2022, which came into effect on31 March 2025. In the South African COFI Bill, Chapter 4 sets outprinciples relating to culture and governance for financialinstitutions. It mandates that institutions build and maintain aculture of fairness, integrity, market trust and transformation,supported by strong board-level governance and clearinstitutional accountability.How does the 10-step process of professional clientengagement align with COFI?AS: The 10-step process of professional client engagement canbest be summarised in the following table and all these stepsare currently, and will remain, regulated. The client engagementframework has remained unchanged since before and duringFAIS and it will continue to exist in some form during COFI.COFI will not have any effect on the client engagement process.It may affect the way we conduct ourselves from a compliancepoint of view during each of the steps. This process is one of thethings that will not change under COFI.The ten steps of professional client engagement and compliance frameworkProcess EngagementBest practice Compliance Technology Adviser ClientStep 1 ProspectingStep 2RDRStep 3Step 4ActivitiesCBRSetting up appointmentFSRCOFI1 st Meeting: Professional introductionShare info and gather client informationStep 5 Agree on service to be renderedClient engagementStandards Standards Innovation Experience ExperienceStep 6Step 7Step 8Step 9Step 10Conduct an analysis and prepare reportPresent proposal / recommendation(s)Agree on financial plan and/or product(s)Implement financial plan and/or product(s)Ongoing rendering of (financial) serviceswww.bluechipdigital.co.za25