Mapping the readiness of the South African insurance institution in the adoption of the retail distribution review legislation: a case study of ABSA Insurance and Financial Advisory, ABSA Bank.

Abstract

ABSTRACT The Retail Distribution Review (RDR) legislation has commanded the attention of insurance institutions globally from the time it was first introduced in countries like the United Kingdom, United States and others in 2006. While the legislation was introduced with good intentions, the new regulatory atmosphere is likely to modify the distribution setting considerably; an outcome for which all insurers must adequately prepare for. With the introduction of the RDR legislation it is hoped that a refined new world of financial advice would prevail. This study focuses on the readiness towards the implementation of the RDR legislation in South Africa. The research was conducted within ABSA in KwaZulu-Natal Province. A case study of an ABSA division, namely Absa Insurance and Financial Advisory (AIFA) was investigated using a quantitative research method. The population of the study was made up of 96 advisers and they were all expected to attend the quarterly provincial meetings. The questionnaire was used as the data collection technique for this study. The study was conducted during the quarterly provincial meetings in order to access all company advisers in one setting. A total of 73 advisers attended the meeting and all of them participated in the study. The findings from the study revealed that a significant number of advisers are aware of the RDR legislation and what it entails. Based on the findings, the study concluded that, to a large extent, advisers with ABSA are not adequately prepared or ready for the implementation of RDR changes. Furthermore, the study concluded that those advisers who are aware and prepared for the RDR changes achieved this through their individual efforts. The main recommendation of the study is that, there must be a deliberate effort by AIFA not only to make the advisers aware, but to also prepare and make them ready for the RDR changes. To that extent, AIFA must therefore provide a change leader whose main task will be to drive the readiness of advisers for this change.