REGULATION
Are ‘discriminatory’
lending practices
here to stay?
Some companies could contravene the spirit
of Treating Customers Fairly regulations.
D
ifferentiated rates and ‘discriminatory’ lending
within the financial services sector are responsible
practices that protect customers and should
continue into the future despite the proposed
introduction of new ‘Treating Customers Fairly’
regulations, says Deloitte.
‘The Treating Customers Fairly (TCF) regulations will be
similar to the programme being implemented in the UK,
which was introduced to compensate for the failure of existing
consumer protection legislation,’ says Pravin Burra, director,
capital markets at Deloitte. ‘Regulators in the UK decided to focus
on outcomes – the culture they wanted to instill in the financial
services industry as a whole – rather than attempt to amend
existing regulations.’
In South Africa, Burra points out, Financial Services Board (FSB)
regulations on Treating Customers Fairly would be an addition
to the plethora of existing consumer legislation and regulations
such as the Consumer Protection Act (CPA), National Credit Act
(NCA) and the Protection of Personal Information Act (PPI).
With the TCF regulations, the onus could also be placed on
company leadership to prove that they are adopting, promoting
and instilling measureable consumer-friendly practices throughout
their businesses. ‘But because of the unique circumstances
surrounding South African society,’ says Burra, ‘it could be argued
that some business practices, based on the management and
reduction of risk, could contravene the spirit of TCF regulations.’
‘The proposed South African TCF will be built on the
premise that all South Africans are entitled to be treated in
a non-discriminatory manner, with no regard being applied
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THE BANKER
Edition 2
to gender or race. ‘Our industry, however, is using criteria to
differentiate target markets from a pricing and sanctioning