Posted on 11 Sep 2018
The Office of the Ombud for Financial Services Providers recently published the first edition of their changed newsletter called FAIStime. In this Quarter 2 of 2018 edition, read about: Changes and new concepts introduced by Twin Peaks; The new FAIS Ombudsman, Mr. Naresh Tulsie; The effects of technology on the financial services industry; The Ombud’s … Continued
Posted on 11 Sep 2018
On 30 August 2018, the Financial Sector Conduct Authority (FSCA) warned the public to act with caution when dealing with Tshwaranang Community Stockvel (Tshwaranang) as this Stockvel is not authorised to render any financial advice and/or intermediary services. According to the information received by the FSCA, there is a person(s) purporting to act for Tshwaranang … Continued
Posted on 11 Sep 2018
The Financial Sector Conduct Authority published the consultation paper on 31 July 2018 to obtain public comment on the Exemption on Services under Supervision. The paper makes provision for representatives who do not meet all the competence requirements to work under supervision with certain conditions. In this article we focus on the entry level requirements … Continued
Posted on 11 Sep 2018
“It takes many good deeds to build a good reputation, and only one bad one to lose it.” Benjamin Franklin Many advisors do not follow all the necessary steps when providing advice, which leaves them exposed to client complaints. If these are escalated to the FAIS Ombud, who then finds in favour of the complainant, … Continued
Posted on 28 Aug 2018
Masthead can assist you in passing your Regulatory Exams with ease Attend our seminars and complete our online mock exams to ensure that you are ready to tackle the exam with confidence. RE1 and RE 5 Training seminars We run full day seminars that will equip you with an in-depth knowledge and understanding of the … Continued
Posted on 28 Aug 2018
March 2012, National Treasury published the discussion document “Reducing the risks of over-the-counter derivatives in South Africa” to outline the proposed policy approach to regulating OTC derivative markets. The Financial Service Conduct Authority (FSCA) has now published a report on the consultation undertaken during the making of Conduct Standard 1 of 2018 which sets out … Continued
Posted on 28 Aug 2018
The Financial Sector Conduct Authority (FSCA) published the following 2018 Compliance Reports on 15 August 2018 which must be submitted to the FSCA by 31 October 2018: FSCA FAIS Notice 54 of 2018 must be used by Category IV financial services providers (FSPs). FSCA FAIS Notice 55 of 2018 is the Compliance report for foreign … Continued
Posted on 28 Aug 2018
Proposed amendments to the General Code of Conduct (Code) under the FAIS Act for Authorised Financial Services Providers and Representatives seek to align advertising requirements to those set out in the Long-Term and Short-Term Insurance Policyholder Protection Rules. The proposed amendments aim to ensure transparency, raise the standard for advertising and marketing and help the … Continued
Posted on 14 Aug 2018
The Financial Sector Conduct Authority (the Authority) published the Consultation Paper: Exemption of Services under Supervision on 31 July 2018 for comments. The purpose of the Consultation Paper relates to the Fit and Proper Requirements of a representative acting under supervision and the Authority’s proposed – (a) withdrawal of the Notice on the Exemption of … Continued
Posted on 14 Aug 2018
The Financial Sector Conduct Authority (the Authority) published the Exemption of Certain Representatives from Class of Business Training Requirements, 2018 (the Exemption) on 6 August 2018. In terms of Section 29 of the Determination of Fit and Proper Requirements for Financial Services Providers, representatives must, prior to rendering any financial services, complete class of business … Continued
Posted on 14 Aug 2018
The Financial Sector Conduct Authority (FSCA), previously Financial Services Board (FSB), has the responsibility to supervise the compliance of financial institutions with financial sector laws. Where the FSCA finds that a financial institution is not compliant, it may take appropriate remedial and enforcement action. These actions could result in referral to the Enforcement Committee of … Continued
Posted on 14 Aug 2018
The Financial Intelligence Centre (FIC) has the authority to reprimand institutions and can also impose penalties on institutions when they do not comply with regulation. If the FIC or a supervisory body finds that an accountable or reporting institution or any person with an obligation to comply with the Financial Intelligence Centre Act (Act) has … Continued
Posted on 31 Jul 2018
With the introduction of the New Fit and Proper Requirements (Board Notice 194 of 2017), the requirement of a business continuity plan forms part of the governance framework that must be adopted and implemented by all FSPs. The governance framework of an FSP must be relative to the nature, scale, risks and complexity of the … Continued
Posted on 31 Jul 2018
In terms of section 52(13) of the Determination of Fit and Proper Requirements for Financial Services Providers, 2017 (“Determination”), a person who is authorised, approved or appointed after 1 April 2018 but prior to 1 August 2018 has until 1 August 2019 to comply with the class of business training requirements set out in Part … Continued
Posted on 31 Jul 2018
The Financial Sector Conduct Authority (FSCA) has issued a press release announcing the appointment of key operational Divisional Executives. The document also informs on further vacant Divisional Executives positions. Click here to read the press release.
Posted on 17 Jul 2018
The Prudential Authority and the Financial Sector Conduct Authority (FSCA) issued Joint Communication 2 of 2018 which indicates which of the regulatory policy proposals in the Third-party Cell Captive Insurance and Similar Arrangements Discussion Paper, 2013 relate to prudential matters and which relate to conduct of business matters. The Communication provides an update on how, … Continued
Posted on 17 Jul 2018
The Financial Sector Conduct Authority (FSCA) has issued Notice 362 of 2018 on the Levies of Financial Institutions. Authorised financial services providers (FSPs) are required to pay a levy to the FSCA to cover the cost of supervision and a levy for funding the Office of the FAIS Ombud by 31 October 2018. The tables … Continued
Posted on 17 Jul 2018
The FSCA has released a discussion document on investment related matters in the context of the Retail Distribution Review (RDR) initially published in November 2014. Subsequent status updates were published in December 2016 and more recently in June 2018. One of the main objectives of the RDR is to address the risk of conflicts of … Continued
Posted on 17 Jul 2018
Under the new twin peaks model of regulation, the Prudential Authority and the Financial Sector Conduct Authority (FSCA) issued Joint Communication 1 of 2018. This communication sets out the status of all instruments issued under both the Long-term and Short-term Insurance Acts from the effective dates of these Acts up until 1 July 2018 when … Continued
Posted on 17 Jul 2018
The FSCA has published Board Notice 89 of 2018 which prescribes a new format for a licence for an authorised financial services provider (FSP). Click here for Board Notice 89 of 2018.
Posted on 17 Jul 2018
Professional indemnity (PI) insurance provides vital cover if a client claims against a financial services business. A recent case reveals how the courts view a client’s loss due to a financial advisor’s bad financial advice and a PI insurer’s obligation to cover the advisor against legal liability to compensate the client for the loss. In … Continued
Posted on 3 Jul 2018
On 28 June 2018 the Financial Sector Conduct Authority published the following Compliance Reports: FAIS Notice 32 of 2018 – Compliance Report for Category I FSP with Compliance Officer FAIS Notice 33 of 2018 – Bi-Annual Compliance Report for Category II and IIA FSP FAIS Notice 34 of 2018 – Bi-Annual Compliance Report for Category … Continued
Posted on 3 Jul 2018
Insurance Act (No. 18 of 2017) has come into effect on 1 July 2018. The Act, which was assented to by the President on 18 January 2018, establishes a legal framework for the prudential regulation and supervision of insurers and insurance groups in terms of the Twin Peaks framework. This will ensure the safety and … Continued
Posted on 3 Jul 2018
On 15 June 2018 the Financial Sector Conduct Authority (Authority) published FAIS Notice 23 of 2018 which exempts FSPs from fees payable to the Authority in respect of certain amendments to approved mandates. This Notice came into operation on the date of publication. Any Category II, IIA and/or III FSP that was authorised for Long-term … Continued
Posted on 3 Jul 2018
Before you appoint a representative to work under supervision at your Financial Services Provider (FSP), take time to understand your responsibilities in terms of labour legislation, financial sector regulation and principles. The individual you appoint must be honest, have integrity and be of good standing. Information that might affect their fit and proper status must … Continued
Posted on 20 Jun 2018
The Financial Sector Conduct Authority’s (FSCA) has published an update on the status of the Retail Distribution Review (RDR). The RDR proposed a number of regulatory reforms related to the distribution of financial products and the provision of financial advice. The FSCA continues to roll out the RDR reforms, underpinned by its statutory mandate to … Continued
Posted on 20 Jun 2018
The Ombudsman for Short-Term Insurance (OSTI) published a media release on the importance of providing accurate and truthful information when reporting a claim. The OSTI emphasises the challenges of fraudulent claims in the short-term insurance industry and the terms and conditions clauses that some insurance companies have included in their policy wording to assist with … Continued
Posted on 20 Jun 2018
The Financial Intelligence Centre (FIC) released a Typologies document that gives an overview of nine different types of criminal activities and methods used to abuse the financial system. Amongst these are Money Laundering, Corruption, Cybercrime. This is a worthwhile read as each type of criminal activity is thoroughly explained and accompanied by a real-life scenario … Continued
Posted on 20 Jun 2018
This past week, cybercriminals demanded payment from Liberty after notifying them that they had seized data from their insurance business. Liberty immediately deployed a large team of IT specialists to investigate and secure their systems and fortunately were able to avert irreparable damage to the company. Read more here. Cyberattacks are becoming more frequent in … Continued
Posted on 20 Jun 2018
All FSPs must have a Governance Framework that provides for the fair treatment of customers and prudent oversight of the business. This is one of the terms of the new Fit and Proper requirements that came into effect from 1 April 2018. The framework consists of several policies and procedures. As all businesses are different, … Continued
Posted on 5 Jun 2018
The FSCA published their FAIS Newsletter Volume 26 May 2018. Please take some time to read “Update of the regulatory examinations” (page 3), which provides information on registering for examinations, amendments of examination dates, updated study material and more. RE 5 Exam deadline dates Any Representative appointed before 30 June 2015 must complete their RE … Continued
Posted on 5 Jun 2018
The new Fit and Proper Requirements [1] made provision for six new product categories (subcategories). In this article we discuss three of these product categories. Three new product categories (namely Long-term Insurance B1-A, Long-term Insurance B2-A and Short-term Insurance Personal Lines A1) were created ‘out of’ three existing product categories (i.e. Long-term Insurance B1, Long-term Insurance … Continued
Posted on 5 Jun 2018
The new Fit and Proper requirements [1] made provision for six new product categories (subcategories). In this article we only deal with two of these, namely CIS Hedge Funds and Structured Deposits. In 2015 hedge funds were declared collective investment schemes [2] and therefore, fell into the licence subcategory Participatory Interests in a Collective Investment Scheme … Continued
Posted on 5 Jun 2018
Client complaints to the FAIS Ombud are at a record high, which emphasises the importance for Financial Service Providers (FSPs) to keep comprehensive records of advice. The FAIS Ombud, who investigates and resolves complaints in terms of the FAIS Act and its Rules, received 10 846 complaints from 1 April 2016 to 31 March 2017. Rising … Continued
Posted on 22 May 2018
The FSCA warns the public to act with caution when dealing with Metro Finance (Pty) Ltd, as they are not authorised in terms of the Financial Advisory and Intermediary Services Act, 2002 (“FAIS Act”), to render any financial advice and intermediary services. Read the full press release here.
Posted on 22 May 2018
The transition to advice-based fees can reduce the impact of the proposed RDR changes on your business and improve business sustainability. The Retail Distribution Review (RDR) discussion document released in 2014 proposed changing the remuneration structures for financial advisors. Masthead proposed that the Financial Sector Conduct Authority (FSCA, previously known as the FSB) allow for … Continued
Posted on 9 May 2018
In this article we highlight two Appeal Board rulings to demonstrate the importance of understanding the role of the office of the Financial Advisory and Intermediary Services (FAIS) Ombud in performing its functions as described and mandated by the FAIS Act. The main objective of the FAIS Ombud is to consider and handle FAIS related … Continued
Posted on 9 May 2018
The Fit and Proper requirement to implement a Competence Register came into effect on 1 May 2018. FSPs must be able to report to the Registrar if asked to do so, and therefore must establish a Competence Register where they must keep a record of all qualifications, regulatory exams, class of business and product specific … Continued
Posted on 9 May 2018
On 26 April 2018, the Financial Sector Conduct Authority (FSCA) released a statement that Naresh Suresh Tulsie will take over from Noluntu Bam as the new Ombud for Financial Advisory and Intermediary Services (FAIS), effective 1 May 2018. The FSCA noted that Mr. Tulsie will be responsible for promoting consumer protection and fostering the integrity … Continued
Posted on 9 May 2018
The proposed changes to the General Code of Conduct (GCoC) published during November 2017 applies to all authorised Financial Services Providers (FSPs), Key Individuals and Representatives and any changes will therefore have a direct impact on FSPs. Although the proposed amendments have not yet come into effect, they cover several areas. This article aims to … Continued
Posted on 24 Apr 2018
In a recent communication, the FSCA reinforced that they will continue to conduct FIC onsite visits, and pointed out that accountable institutions must be able to demonstrate that they have taken steps to implement the new requirements. Click here to read the full communique.
Posted on 24 Apr 2018
The Financial Service Regulatory Act is in effect and the Financial Services Board has been replaced by the Financial Sector Conduct Authority (FSCA) from 1 April 2018. FSPs licensed at 1 April 2018 for: Short-term or Long-term Deposits must apply to the FSCA to add Structured deposits to their licence before 30 June 2018; Collective … Continued
Posted on 24 Apr 2018
Financial Services Providers (FSPs) outsource functions for various reasons, such as increasing efficiency, reducing operating costs, improving company focus and managing risk by sharing the risk. One way in which insurance companies outsource is through Binder Agreements. This sub-set of outsourcing arrangements is regulated by the Financial Sector Regulation Act, Policyholder Protection Rules and Regulations … Continued
Posted on 24 Apr 2018
Here are the steps you must follow if a client lodges a complaint with the FAIS Ombud In many cases a client will go directly to the FAIS Ombud without first lodging a complaint with you. Use this list to make sure you handle Ombud complaints fairly and follow all the required steps. Step 1 … Continued
Posted on 24 Apr 2018
The FSB, now called the Financial Services Conduct Authority (FSCA), recently proposed amendments to the FAIS General Code of Conduct (GCoC) and the Specific Code of Conduct to align the codes with other legislation, like Treating Customers Fairly (TCF). One proposed amendment focuses on complaints management and prescribes how to deal with client complaints to … Continued
Posted on 10 Apr 2018
The Registrar of Pension Funds issued Directive PF No. 8: Prohibition on the Acceptance of Gratification and is effective from 8 March 2018. The purpose of the Directive is to determine conditions to be imposed by the Registrar in order to combat and prevent bribery and corrupt conduct by board members, principal officers, deputy principal … Continued
Posted on 10 Apr 2018
On 29 March 2018, the Registrar of Financial Services Providers published the Exemption of Underwriting Managers from the Regulatory Examination Requirements, 2018 (“the Exemption”) on the official website of the Financial Services Board, now known as the Financial Sector Conduct Authority. The Determination of Fit and Proper Requirements for Financial Services Providers, 2017, which came … Continued
Posted on 10 Apr 2018
Two new authorities were created under the Financial Sector Regulations Act, i.e. the Financial Sector Conduct Authority and the Prudential Authority. The Financial Services Board (FSB) was replaced by the Financial Sector Conduct Authority (FSCA) on 1 April 2018. This marks the formal implementation of the Twin Peaks model for the financial sector. The FSCA’s … Continued
Posted on 10 Apr 2018
The Insurance Act, 2017 (“Insurance Act”) was enacted on 18 January 2017 and provides the prudential legislative framework for insurers. The commencement date of the Insurance Act is still to be determined by the Minister of Finance, but it is projected to be 1 July 2018. The proposed amendments focus mainly on aligning the Regulations … Continued
Posted on 10 Apr 2018
The proposed amendments to the General Code of Conduct (GCoC) will affect the record of advice in the future. This article focuses on the proposals regarding the format, suitability analysis, when to decline to recommend a product and what to do if a client chooses not to follow your advice. The Registrar proposes that it … Continued
Posted on 27 Mar 2018
As an FSP, you run the risk of being conned into money laundering schemes without your knowledge. The three-stage process that is commonly used for money laundering places an operational, reputational, legal, and financial risk on your business. It is therefore imperative that you safeguard your business from falling victim to fraud by being able … Continued
Posted on 27 Mar 2018
The Registrar has proposed amendments to the FAIS General Code of Conduct (GCoC) and the Specific Code of Conduct for Authorised Financial Services Providers and Representatives conducting Short-term Deposits Business. This article focuses on new definitions proposed for ‘replacement’ and ‘variation’ of financial products, as well as comparison. ‘Replacement’ defined ‘Replacement’ means substituting one product … Continued
Posted on 27 Mar 2018
When clients experience financial stress, unpaid debit orders may occur. In a recent matter, the Ombudsman for Short-Term Insurance found in favour of an insurer for repudiating a claim due to an unpaid premium. The client missed a premium payable by debit order due to insufficient funds in his account after he had been dismissed … Continued
Posted on 13 Mar 2018
FSPs with financial year end on 28 February 2018 are reminded to submit their financial statements by 30 June 2018. The FSB website states that FSPs that fail to submit their financial statements within the period prescribed (unless they have been granted an extension) are liable to pay a penalty for every day they are … Continued
Posted on 13 Mar 2018
The proposed amendments to the Policyholder Protection Rules (PPRs) were recently published in Board Notice 30 of 2018. The scope of the proposed amendments to the PPRs is to align the PPRs with the Insurance Act, enacted on 18 January 2018. This new Insurance Act, which has not yet come into effect, provides the framework … Continued
Posted on 13 Mar 2018
The Financial Intelligence Centre Amendment Act, 2017 (FIC Amendment Act) came into effect on 2 October 2017 and has forced FSPs to move to a risk-based (rather than a rules-based) approach, which modernises the way institutions conduct customer due diligence in relation to financial transactions. The FIC amendment Act introduced new processes to determine if … Continued
Posted on 13 Mar 2018
To offer your clients information, services or advice on medical schemes, you and your brokerage must be accredited with the Council of Medical Schemes (CMS) – and retain accreditation by reapplying biannually. According to the Financial Advisory and Intermediary Services (FAIS) Act, advisors who want to provide a service in the Health Service Benefits product … Continued
Posted on 27 Feb 2018
In FAIS Information Circular 1/2018, published on 13 February 2018, the FSB advised: If you are already registered to write the regulatory examinations before or on 29 March 2018, you will still write the current version of the regulatory examinations. The current version of the exam will not include questions on the new Fit and … Continued
Posted on 27 Feb 2018
Fees payable to the Registrar of Financial Services Providers has been updated and comes into effect on 9 March 2018. Click here to view the new fees that FSPs will need to pay for services such as FSP licence applications, extensions and exemptions and RE exams etc.
Posted on 27 Feb 2018
Client advice records have recently come under fire for financial advisors failing to provide their clients with an adequate record of the advice as envisioned in the Financial Advisory and Intermediary Services (FAIS) Act. One of the key reasons for this could be because a financial needs analysis is sometimes conducted as a mere formality … Continued
Posted on 13 Feb 2018
The Financial Intelligence Centre (FIC) has recently published the draft Public Compliance Communication No 38A (PCC 38A). The objective of this PCC is to provide guidance in relation to receiving and responding to requests, interventions and orders from FIC in terms of sections 27, 32, 34 and 35 of the FIC Act, specifically: How the … Continued
Posted on 13 Feb 2018
Masthead believes that when introducing any regulation (whether new or revised) it should be (1) easy to implement, (2) easy to administer once implemented, (3) cost effective for users, and (4) easy to access, broad-based. We are also mindful of the need for legislation to accommodate and support small businesses which are well positioned to … Continued
Posted on 13 Feb 2018
As regulators increasingly focus on treating customers fairly, it is important to treat clients fairly in all aspects of your business, including if they complain. Dealing with client complaints is already part of regulatory compliance for FSPs. The objective of TCF Outcome 6 is that clients should not face unreasonable post-sale barriers to change a … Continued
Posted on 13 Feb 2018
The Financial Intelligence Centre (FIC) has published a document to inform the public about different types of online scams and ways to avoid becoming a victim of cybercrime. As technology evolves and improves the lives of users, it also paves the way for criminals. Criminals use online scams to obtain your information. Examples of these … Continued
Posted on 30 Jan 2018
Update the Central Representative Register on the FSB’s website and inform the Registrar of any relevant changes to the FSP within 15 days. Update the Competence Register (from 1 May 2018) within 15 days after Class of Business or Product Specific training has occurred. Annual Financial Statements must be submitted within 4 months after an … Continued
Posted on 30 Jan 2018
Ending a client relationship can be unsettling, especially if a relationship spans many years or you believe the client is always right. You may be torn between the desire to maintain a client relationship and the difficulties it creates for your business. Whether it’s difficult or non-profitable clients or whether you need to make operational … Continued
Posted on 30 Jan 2018
The FSB published a Guidance Note – Guidance on the Reappointment of Debarred Representatives – on 18 December 2017 in order to clarify: The role of the FSB when an FSP reappoints a debarred representative; The responsibilities of the reappointing FSP; and The information which the reappointing FSP must submit to the FSB after it … Continued
Posted on 30 Jan 2018
The FSB’s third issue of its Twin Peaks Newsletter provides more information on the phasing in of the Twin Peaks regulation model. The newsletter highlights the new Financial Services Conduct Authority’s (FSCA) powers to enforce appropriate regulation. The FSCA: intends to be more proactive in executing its mandate as well as being more intrusive in … Continued
Posted on 11 Dec 2017
The Financial Services Board (FSB) held its national roadshow during November 2017. The presentations were themed around Insurance Conduct of Business and Insurance Prudential and included updates on: Twin Peaks Conduct of business regulatory reforms Retail Distribution Review (RDR) The conversion of licenses, and other transitional arrangements Feedback on the Conduct of Business Returns from … Continued
Posted on 11 Dec 2017
In December 2016, the National Treasury (NT) and the Financial Services Board (FSB) published for public comment the proposed amendments to Regulations and Policyholder Protection Rules (PPR). During February 2017, the NT, together with the FSB, hosted workshops with stakeholders to engage on the changes proposed in the draft Regulations and PPRs. The NT and … Continued
Posted on 11 Dec 2017
The Department of Justice and Correctional Services has published the Prevention and Combating of Corrupt Activities Amendment Bill 2017. The Amendment Bill aims to amend the Prevention and Combating of Corrupt Activities Act, 2004, to: deal with passive corruption in respect of foreign public officials; extend the offence of unacceptable conduct relating to ordinary witnesses … Continued
Posted on 11 Dec 2017
Draft Determination that sets out when a person or long-term insurer would not be complying with the principle of Equivalence of Reward has been released for public comment (Board Notice 181 of 2017). The principle of equivalence of reward seeks to ensure level playing fields between the remuneration of representatives and independent intermediaries. The primary … Continued
Posted on 11 Dec 2017
The Registrar of Pension Funds published a draft Directive in terms of the Prohibition of Inducement and Acceptance of Gratification. The Directive aims to ensure compliance with and to prevent contraventions of the objectives of a Board, as determined in terms of section 7C of the Pension Funds Act. The purpose is to allow the … Continued
Posted on 11 Dec 2017
An Appeal Board ruling highlights that clients have a right to be informed of and to consent to policy changes. The ruling supported a FAIS Ombud’ determination to dismiss a complaint in the case of Sibaniso Phoshera v MUA Insurance Acceptances and KPC Brokers and Auto & General. But the Appeal Board supported aspects of … Continued
Posted on 28 Nov 2017
Unregulated products, such as virtual currencies, are becoming increasingly popular. This is often because the financial rewards appear to be lucrative causing prospective investors to be less cautious in their approach than normal. However, the risks associated with unregulated products can be great and the consequences thereof can be detrimental to the financial well-being of … Continued
Posted on 28 Nov 2017
In a recent media release, the Ombudsman for Short-Term Insurance (OSTI) emphasised the importance of confirming that your clients’ vehicles are in a roadworthy condition when advising them of the appropriate insurance cover for their vehicles. Advisors must highlight to clients the requirement to maintain the roadworthiness of their vehicle. This must also be noted … Continued
Posted on 28 Nov 2017
In Circular 69 of 2017, the Council for Medical Schemes (CMS) stipulates that there has been an increase in the maximum amount which can be paid to brokers in terms of Section 65 of the Medical Schemes Act. The commission which a broker can earn on a medical aid is 3% of contribution (plus VAT) … Continued
Posted on 28 Nov 2017
The Financial Advisory and Intermediary Services (FAIS) Ombud released its Annual Report for the period 2016/2017. The Report provides insight on topics such as: a summary of complaints received by the Ombud; the settlements that were agreed to and various statistics; Financial Statements of the Ombudsman; the Accounting Authority’s Responsibility and Approval in terms of … Continued
Posted on 28 Nov 2017
FSPs are required by law to “maintain in force suitable guarantees or professional indemnity or fidelity insurance cover”. The minimum amount which an FSP is required to have in place is determined in BN123 of 2009 and differs according to the categories of FSPs and various activities, such as holding of client funds. PI Cover … Continued
Posted on 15 Nov 2017
To identify whether you are facilitating money laundering and terrorist financing (ML/TF), it is imperative that you know with whom you are dealing. Customer due diligence refers to knowing your clients and understanding their business. Properly implemented, customer due diligence measures enable you to better manage your client relationships. They also enable you to better … Continued
Posted on 15 Nov 2017
Financial statements indicate financial soundness, so the premise is that if an FSP is financially sound, it can advise clients how to take care of their financial wellbeing. An annual compliance report serves as a snapshot of your operations and provides insight to your state of affairs during the reporting period. All authorised FSPs are … Continued
Posted on 15 Nov 2017
FSPs are expected to embed TCF in their business models and culture, ensuring that customers are at the heart of everything they do. FSPs must be able to demonstrate that they consistently treat their customers fairly and are delivering their services in a way that will ensure TCF outcomes for their customers, relevant to their … Continued
Posted on 15 Nov 2017
The FSB has published the proposed amendments to the General Code of Conduct and Specific Code for Short Term Deposits which will give effect to certain RDR Proposals and align with the draft Long Term and Short Term Insurance Policyholder Protection Rules. Interested parties have been invited to submit their comments to the FSB by … Continued
Posted on 15 Nov 2017
On 1 November 2017, the FSB published Notice 7 of 2017 in terms of Section 3(2)(b)(i) and 3(4) of the Long Term Insurance Act. This notice stipulates the fee structures for applications to the FSB. We specifically draw your attention to Section 8(1)(a) of the Long Term and Short-Term Insurance Act, which requires any FSP … Continued
Posted on 15 Nov 2017
This Notice clarifies the requirements in terms of an agreement and a guarantee policy, for a juristic representative acting on behalf of Short-term insurers. The original definition of juristic representative created the impression that the juristic representative was required to enter into and maintain a guarantee policy or contract irrespective of whether it was appointed … Continued
Posted on 1 Nov 2017
The new foundation for FSPs to comply with the principal Financial Intelligence Centre (FIC) Act and the FIC Amendment Act on a risk sensitive basis is the Risk Management and Compliance Programme (RMCP). The RMCP has replaced Section 42 of the principal FIC Act, which required accountable institutions to implement ‘internal rules’. The RMCP not … Continued
Posted on 31 Oct 2017
The Financial Services Board (FSB) provides more information on the phasing in of the Twin Peaks regulation model, in Issue 2 of its Twin Peaks Newsletter. The newsletter provides clarity on the objectives of the Financial Sector Regulation (FSR) Act, which is seen as the foundation of the Twin Peaks model, and the changes or … Continued
Posted on 31 Oct 2017
The Financial Services Board (FSB) released its quarter one FSB Bulletin for 2017. The newsletter provides insight on interesting topics such as: The Impact of Twin Peaks; How the financial services sector is contributing to inclusive growth in SA; Consumer Education on the Psychology of Spending; and An article that sheds light on the question, … Continued
Posted on 31 Oct 2017
Refinery 5 (Pty) Ltd (Refinery) contravened section 7(1) of the Financial Advisory and Intermediary Services Act, 37 of 2002 in that during the period from February until April 2017 Refinery acted as a financial services provider in respect of shares when it was not permitted to render financial services in respect of this product category. … Continued
Posted on 31 Oct 2017
The FSB published a notice on 20 October 2017 to withdraw the document titled “Guideline on the Determination of Reappointment of Debarred Representatives”, published on 13 July 2011. The Financial Sector Regulation Act (FSRA) brings significant changes to the debarment procedure set out in the FAIS Act. Section 14 of the FAIS Act which deals … Continued
Posted on 18 Oct 2017
Category IV FSP’s must submit their Annual Compliance Reports to the FSB on or before 31 October 2017 in terms of FAIS Notice 55 of 2017. FSP and Compliance Officers are encouraged to use the online submission method. Should you have any enquiries relating the submission of the report please send an e-mail to the … Continued
Posted on 18 Oct 2017
Gathering appropriate information from a client before providing advice helps you to meet the suitability requirement prescribed by the General Code of Conduct, and it will enable you to give your client appropriate and suitable advice. Section 8(1)(a) of the Code states: A provider … must, prior to providing a client with advice – take … Continued
Posted on 18 Oct 2017
A virtual currency is a unit of account that is digitally or electronically created and stored. A virtual currency allows users to purchase goods and services without using a government-backed currency, provided that the participants are willing to accept the currency as a form of payment. This unregulated, ‘open source’ currency is not controlled and … Continued
Posted on 18 Oct 2017
To avoid confusion and to defend your actions should a client complain, Records of Advice should include the context in which information is given to a client and why your recommended products are relevant and suitable for the client. A complaint was recently lodged with the Ombud for Financial Services by a client who had … Continued
Posted on 18 Oct 2017
The Minister of Finance has amended the Money Laundering and Terrorist Financing Control (MLTFC) Regulations and withdrawn Exemptions made in terms of the Financial Intelligence Centre Act, 2001 (FIC Act). The following regulations have been withdrawn: R1596 of 20 December 2002 1353 19 November 2004 560 25 June 2010 461 5 June 2015 The exemptions … Continued
Posted on 3 Oct 2017
The FSB has published 3 Notices providing some relief to certain FSPs who perform certain types of services on behalf of insurers and certain juristic representatives. However, these exemptions will only apply if certain conditions are met by both the insurer and the FSP or juristic representative. Category I or IV FSPs that are underwriting … Continued
Posted on 3 Oct 2017
On 20 September 2017, National Treasury published “A Known and Trusted Ombud System for All” and invited the public to submit their views and comments to marketconduct@treasury.gov.za before 30 November 2017. Various options to reform the Ombud system are proposed in this document, which include: Enhancing the hybrid model of statutory and industry ombuds, building … Continued
Posted on 3 Oct 2017
The ASISA Retail Standard on Effective Annual Cost (EAC) is a standardised disclosure methodology that can be used by both consumers and advisors to compare charges on most retail investment products and their impact on investment returns. The EAC is a measure of the charges that an investor will likely incur in purchasing and holding … Continued
Posted on 21 Sep 2017
New legislation, such as the Financial Sector Regulation Act, may appear daunting to independent financial advisors, but we believe it will achieve its objective as consumers regain confidence in the integrity of the financial services industry. The Financial Sector Regulation Act, commonly referred to as Twin Peaks, RDR and COFI[1], seeks to achieve a financial … Continued
Posted on 21 Sep 2017
In a previous article – FSB warns public against an unlicensed company – we shared the FSB’s warning against a company purporting to offer assistance to the public to claim pension surplus benefits in exchange for a fee. The FSB has since published a Presentation on Unclaimed Benefits. The presentation highlights issues surrounding unclaimed benefits … Continued
Posted on 21 Sep 2017
The Registrar of Long-term and Short-term Insurance gave notice of the release, for a second round of public comment, of the proposed replacement of the Policyholder Protection Rules under the Long-term and Short-term Insurance Acts. The proposed replacement of the PPRs are required to give effect to several conduct of business reforms. Comments may be … Continued
Posted on 21 Sep 2017
On 8 September 2017, the Information Regulator published draft Regulations under the Protection of Personal Information Act 2013 (POPI) and invited comments from the public to be submitted by 7 November 2017. The draft Regulations cover several different procedures to be followed in relation to processing of personal information (including consent for direct marketing by … Continued
Posted on 21 Sep 2017
The FSB published Volume 24 of its FAIS Newsletter on 1 September 2017, which covers: Regulatory Updates, addressing the Conduct of Business Report, Fit and Proper amendments and Exemption notices; A must-read article from the FIC Desk which contains very important information; Debarment of individuals who obtained fraudulent qualifications or RE results; Dormancy: Lapsing of … Continued
Posted on 21 Sep 2017
On 4 September 2017, the Council for Medical Schemes (CMS) published the Prescribed Minimum Benefit Definition Guideline regarding Early Stage Colon and Rectal Cancer. The purpose of the guideline is to improve clarity in respect of funding decisions by medical schemes. The Regulations enacted under the Medical Schemes Act governs the provisions of the prescribed … Continued
Posted on 5 Sep 2017
The FSB has published FAIS Notice 110 of 2017 which exempts Category I Financial Services Providers (FSPs) that are only licensed for Long-term Insurance subcategory A and/or Friendly Society Benefits, from paragraphs 3(a) to (c) of the Professional Indemnity and Fidelity Insurance Cover requirements. Category I FSPs that qualify for this exemption will therefore not … Continued
Posted on 5 Sep 2017
On 23 June 2017, the FSB published a Press Release [1] dealing with the provisional suspension of an FSP as a result of the Key Individual not fulfilling the required management and oversight duties. We often hear of FSPs (mainly where there is only one Key Individual) appointing an additional Key Individual who does not actively take … Continued
Posted on 5 Sep 2017
The FSB issued a press release on 25 August 2017 warning the public against a company, C.Z.Z General Industry (Pty) Ltd, which is posing as a registered Financial Services Provider. In exchange for a fee, the company purports to offer assistance to the public to claim pension surplus benefits as a result of their service … Continued
Posted on 5 Sep 2017
On 25 August 2017, the Minister of Finance issued the final retirement funds default regulations (“regulations”) for implementation. This follows an extensive consultative process with the first draft published mid-2015. The regulations cover three areas: Default Preservation and Portability This regulation requires pension and provident funds (ie. funds that have members enrolled as a condition … Continued
Posted on 23 Aug 2017
The financial services industry has changed significantly over the past 13 years. As a financial advisor, you have had to adapt to the new environment in which there is more regulation, client behaviour has changed and there is greater competition from direct insurers. By understanding and applying compliance principles and processes, and incorporating these into … Continued
Posted on 23 Aug 2017
The final Credit Life Insurance Regulations published in February 2017, came into effect on 10 August 2017. The Regulations will only affect credit agreements entered into on or after the commencement date. Although the Regulations apply to credit providers, it is recommended that all Financial Services Providers who offer Credit Life Insurance familiarise themselves with … Continued
Posted on 23 Aug 2017
On 15 August 2017, the Council for Medical Schemes issued Circular 56 of 2017 relating to Personal Medical Savings Accounts. The Circular reports on the Constitutional Court judgement that the savings account liabilities do not need to be treated separately from any other liabilities in the scheme and that the scheme is the right holder … Continued
Posted on 8 Aug 2017
In their second Newsletter of 2017, the Ombudsman for Short-Term Insurance (Ombud) highlights the incidence of claims where the insured provided false, misleading or inaccurate information to the insurer, either intentionally or because of failing human recollection. The Ombud acknowledged that, “Technological advancements and the ever-increasing impact of social media and the big brother syndrome … Continued
Posted on 8 Aug 2017
During May 2017, the FAIS Ombud granted an order in favour of the complainant in a matter[1] which highlights the duties of FSPs regarding disclosures, suitability of advice and Treating Customers Fairly (TCF) principles. In brief, the complainant concluded a life cover contract for both her husband and herself but was advised by one of … Continued
Posted on 8 Aug 2017
The recent destructive fires in Knysna and the surrounding areas highlight the need for a Disaster Recovery Plan. It is also important to consider how quickly you could recover and resume business operations if a significant disruption occurred to your business. The law requires financial service providers (FSPs) to put procedures and controls in place … Continued
Posted on 25 Jul 2017
Financial Service Providers (FSPs) who ask their clients to sign blank forms or have incomplete documentation are liable for severe penalties. In Ombud cases, FSPs asked their clients to sign blank client records of advice, replacement forms, application forms and consent forms. Some said this was to have the form on file so they could … Continued
Posted on 25 Jul 2017
The Financial Services Board (FSB) has issued Notice 458 of 2017 on the Levies of Financial Institutions. Authorised financial services providers (FSPs) are required to pay a levy to the FSB to cover the cost of supervision and a levy for funding the Office of the FAIS Ombud by 31 October of the levy year. … Continued
Posted on 25 Jul 2017
The FSB has issued its first Twin Peaks Newsletter. This is an online newsletter that sets out information about the implementation of Twin Peaks, the philosophy behind it as well as the regulatory framework changes that will impact South Africa’s financial sector. This follows the Financial Sector Regulation Bill being passed by Parliament and handed … Continued
Posted on 11 Jul 2017
As an advisor it is imperative that you always act within your mandate and adhere to the General Code of Conduct. Should you fail to do so, you may find yourself experiencing the unfortunate event of having an Ombud determination against you. If you feel that you have done everything that you ought to have … Continued
Posted on 11 Jul 2017
In terms of Section 15A of the Financial Services Board Act the FSB may impose levies on the institutions it supervises, to cover the costs of supervision. These levies are calculated and payable annually. Each FSP will receive a Levy Invoice during September with payment falling due in October of each year. A portion of … Continued
Posted on 11 Jul 2017
The FIC has issued a draft withdrawal notice of exemptions issued in terms of the FIC Act of 2001. Under the FIC Act of 2001, there are several exemptions from compliance which currently apply to certain accountable institutions. The changes brought by the FIC Amendment of 2017, will require the withdrawal of many of these … Continued
Posted on 11 Jul 2017
South Africa participated in the third meeting of the Financial Action Task Force (FATF) session XXVIII, in Valencia from 18 to 23 June 2017. At this meeting the FATF continued work on a number of important initiatives relating to its mandate to promote effective implementation of measures against money laundering, terrorist financing and other related … Continued
Posted on 28 Jun 2017
As a financial services provider (FSP), you are legally obliged to send your clients annual statements of their financial products – even when product suppliers also send reports to your clients. Section 7(4) of the General Code of Conduct for Authorised Financial Services Providers and their Representatives states that if you have advised a client … Continued
Posted on 28 Jun 2017
The Council for Medical Schemes (CMS) has issued a statement on the judgment made against them by the Constitutional Court. The judgment follows a matter that was taken on appeal by Genesis Medical Scheme who argued that funds in a personal medical savings account (PMSA) may be treated as assets of a medical scheme. This … Continued
Posted on 28 Jun 2017
The Financial Intelligence Centre Amendment Act, 2017 (FIC Amendment Act) was signed into law by the President on 26 April 2017. At that time, the commencement dates were still to be determined. On 13 June 2017, the Minister of Finance, Malusi Gigaba, signed and gazetted the commencement dates of most of the provisions of the … Continued
Posted on 13 Jun 2017
Business continuity is a provision of the FAIS Act that presents a challenge to many financial services providers (FSPs), who often ask why it is important to have a workable continuity plan. The Act requires a documented plan to provide for events of voluntary and/or involuntary succession. The General Code of Conduct for authorised FSPs … Continued
Posted on 13 Jun 2017
The Ombudsman for Short-Term Insurance (OSTI) has issued its latest Annual Report for the year ending 31 December 2016. The mission of the OSTI is to resolve short-term insurance complaints fairly, efficiently and impartially. The Report provides statistics on the complaints which were received by the office of the OSTI. In summary, the following statistics … Continued
Posted on 13 Jun 2017
A requirement set by section 19 of the FAIS Act is that financial statements must be submitted to the registrar by an authorised financial services provider, no later than four months after the end of the provider’s financial year end. If an FSP had its financial year-end on 28 February 2017, the due date for … Continued
Posted on 1 Jun 2017
1. Service Level Commitment by the Registrar of Financial Services Providers The Registrar of Financial Services Providers has released the latest signed version of their Service Level Commitment. Click here to read this document. 2. Updated FAQs on Demarcation Regulations Version 2 of the Frequently Asked Question document on Demarcation Regulations has been issued by … Continued
Posted on 1 Jun 2017
Against a constantly changing financial landscape, the Financial Advisor’s role is to steer the client in developing a well thought out financial plan that establishes the client’s goals and objectives, which will ultimately achieve their identified financial goals. The financial plan must be frequently reviewed and adjusted to suit any changes in the client’s circumstances. … Continued
Posted on 1 Jun 2017
The Financial Services Board (FSB) has published the schedule of the 2017 compliance reports for the different categories of FSPs. The reporting period for Category I FSPs with a compliance officer will commence on 1 June 2017. FSPs must ensure that their relevant compliance reports are submitted prior to the submission deadline date. The various … Continued
Posted on 17 May 2017
The client of the insurer, who is the complainant, parked his vehicle and trailer in a parking area at a coffee shop whilst having coffee during his holiday. Upon returning to his vehicle, he found that his trailer with its contents to the value of R200 000 had been stolen. When the complainant instituted a … Continued
Posted on 17 May 2017
In this case, an appeal was made to the Financial Intelligence Centre Appeal Board regarding the imposition of financial penalties issued against the company in terms of the Financial Intelligence Centre (FIC) Act. The Appellant is an authorised dealer with limited authority (ADLA) in foreign exchange. The Respondent is the Financial Surveillance Department of the … Continued
Posted on 17 May 2017
On 2 May 2017, the Financial Intelligence Centre (FIC) issued a media release stating that it is pleased with the President signing the Amendment Act. The Amendment Act introduces new concepts aiming to implement another level of safeguarding South Africa’s financial system against money laundering, terrorist financing and other illicit activities. The amendments will also … Continued
Posted on 3 May 2017
The FSB has issued Survey Circulars and Schedules regarding SaXum Insurance Limited. SaXum was placed under final liquidation in October 2016 following an application by the Registrar of Short-Term Insurance. In our previous issue on 18 October 2016, we wrote about the insolvency status of the Insurer. If you are an FSP with clients who … Continued
Posted on 3 May 2017
The Registrar has issued Board Notice 51 of 2017 which is the Amendment Notice on the Determination of Recognised Qualifications for Financial Services Providers and Compliance Officers, 2017. Click here to read the updated list of recognised qualifications to ensure that you do comply with the qualification requirement in terms of the Fit and Proper … Continued
Posted on 3 May 2017
The FAIS General Code of Conduct sets out that financial services providers (FSPs) must at all times have resources and processes which eliminate the risk of clients, staff and product suppliers suffering financial loss through theft, fraud or other irregular activities. FSPs must therefore implement processes, policies and formal monitoring methods that protect all parties … Continued
Posted on 3 May 2017
The Enforcement Committee received a case from the Registrar of Long-Term Insurance regarding Assupol Life Limited. The Registrar found that from August 2014 to June 2016, Assupol contravened Section 49 of the Long-Term Insurance Act by allowing its independent intermediaries to share in underwriting profits. They were also found to contravene Rule 16.1 of the … Continued
Posted on 19 Apr 2017
Financial Year End: 28 February 2017 – Submit Annual Financial Statements to FSB by 30 June 2017 All FSPs whose financial year end was 28 February 2017 must ensure that their financial statements are submitted to the FSB by 30 June 2017. Please be sure that your accounting records have been sent to your accountants … Continued
Posted on 19 Apr 2017
The Financial Services Board (FSB) has issued a Frequently Asked Questions (FAQs) document to assist insurers to implement and comply with the Demarcation Regulations. The FAQs are grouped into 8 categories: Implications of the 1 April 2017 effective date of the Demarcation Regulations Product descriptions (regulation 7.2) Underwriting (regulation 7.3(2)-(4)) Waiting periods, variation and termination … Continued
Posted on 19 Apr 2017
The Treating Customers Fairly (TCF) framework consists of six outcomes which sets out the conduct which FSPs must display during the financial planning process and in every facet of the business. Outcome 1 – ‘Customers are confident that they are dealing with firms where the fair treatment of customers is central to the firm culture’ … Continued
Posted on 4 Apr 2017
When the FSB conducts FSP on-site visits, the supervision agreements for Representatives working under supervision are scrutinised. The supervision plan and the tracking of the supervision activities are also inspected. It is therefore of utmost importance to ensure that these documents are in place and monitored on a regular basis. In order to operate as … Continued
Posted on 4 Apr 2017
The Appellant, who was the FSP, had its licence withdrawn by the Registrar of the Financial Services Board (FSB). The withdrawal of authorisation is a result of the FSP not complying with many regulatory requirements as set out in the FAIS Act, as well as the FIC Act. The Registrar held that some of duties … Continued
Posted on 4 Apr 2017
The Minister of Trade and Industry, together with the Minister of Finance, published the final Credit Life Insurance Regulations in terms of the National Credit Act. The Minister of Trade and Industry, with the Minister of Finance, has issued and published the final Credit Life Insurance Regulations. One of the aspects set out in the … Continued
Posted on 22 Mar 2017
In our Mastering Compliance issue dated 21 February 2017, we discussed the final Demarcation Regulations to take effect from 1 April 2017. The Demarcation Regulations set out that certain insurance policies that have elements of a ‘business of a medical scheme’ (excluding primary healthcare products and hospital indemnity products) shall be considered ‘health policies’ or … Continued
Posted on 22 Mar 2017
Section 19(1) of the FAIS Act requires financial services providers (FSPs) to maintain proper accounting records and prepare annual financial statements. Section 19(2)(a) requires that these financial statements are audited. FAIS Notice 82 of 2015 sets out that the Registrar is satisfied that there are reasonable grounds for the relaxation of the audit requirements to … Continued
Posted on 22 Mar 2017
The Financial Intelligence Centre (FIC) has issued a warning to the public, distancing itself from a scam payment release order letter which has been in circulation. The letter is distributed by criminal scammers claiming that the recipients of these letters, stand to win or gain inheritance funds. The FIC advises that any person who has … Continued
Posted on 22 Mar 2017
The Financial Services Board (FSB) has published its latest FAIS newsletter. The newsletter contains the following topics: New names of the FAIS online systems which changed at the beginning of 2017; The project to update Compliance Officer contact details; Message from the Insurance Compliance Department (ICD) regarding a scenario which may be prejudicial to dependents … Continued
Posted on 8 Mar 2017
Introduction Section 8(1)(c) of the General Code of Conduct (GCOC) for Authorised Financial Services Providers (FSP) and their Representatives[1] requires that any FSP, other than a direct marketer, prior to providing a client with advice, identify the financial product(s) that will be appropriate to the client’s risk profile and financial need(s). The determination of an … Continued
Posted on 8 Mar 2017
In terms of section 19(2) of the FAIS Act, all FSPs are required to submit financial statements for the FSB to determine if an FSP complies with the financial soundness requirement in terms of the Fit and Proper Requirements (BN 106 of 2008). Financial statements must be signed by the relevant person(s) before submitting. The … Continued
Posted on 8 Mar 2017
The complainant sold her insured motor vehicle on terms to a purchaser. She notified her advisor of the sale and that the vehicle will remain registered in her name until the vehicle was paid off. Further she notified the advisor of the identity and other relevant details of the purchaser including the address at which … Continued
Posted on 22 Feb 2017
An important question which advisors must ask themselves, is whether they have given their clients enough information about a financial product and explained the different aspects of the product in such a way that clients are placed in a position to make informed decisions. Client’s should understand not only how a product is likely to … Continued
Posted on 21 Feb 2017
A client had motor vehicle insurance with Miway Insurance Company. When the client had a car accident, he claimed from his insurer, but they rejected his claim based on misrepresentation, misdescription or non-disclosure. Insurer’s version The insurer’s reason for rejecting the claim was based on the client not providing accurate information at sales stage. When … Continued
Posted on 21 Feb 2017
National Treasury has issued the release of the final Demarcation Regulations in the Government Gazette. The Regulations are the outcome of the consultative process between the Minister of Finance, the Minister of Health, the Council for Medical Schemes (CMS) and the Financial Services Board (FSB). The final draft was published and will take effect from … Continued
Posted on 7 Feb 2017
Appeal Board of the FSB decision Case No. FAB4/2016 – Mark Alexander Investments CC and Mark Alexander Eiserman vs Gail Colleen Sheel Client complaint to the FAIS Ombud During February 2016, the FAIS Ombud ruled in favour of the complainant in a matter[1] relating to a failed investment in the Relative Value Arbitrage Fund (RVAF) … Continued
Posted on 7 Feb 2017
The FAIS Act aims to protect the public by prescribing how financial services, i.e. advice and intermediary services, should be rendered. Advisors must operate under an authorised financial services provider (FSP) licence in order to operate lawfully. The Act also lays down specific duties that relate to FSPs including the obligation to disclose specific information … Continued
Posted on 7 Feb 2017
A second draft of the retirement funds default regulations, made in terms of the Pension Funds Act, has been published for public comment. The second draft regulations ensure that retirement savings of South Africans are invested in a prudent and cost-effective manner. National Treasury re-emphasises through these default regulations, that fund boards have the responsibility … Continued
Posted on 7 Feb 2017
Category II and IIA Financial Services Providers (FSPs) are required to submit their Bi-Annual Compliance Reports to the Financial Services Board (FSB), two (2) months after the reporting date (FAIS Notice 84 of 2016). The reporting dates for Category II and IIA FSPs are 30 June and 31 December of each year. The Compliance Reports … Continued
Posted on 7 Feb 2017
The office of the FAIS Ombud published its Annual Report for the financial year end of 2015/2016. The report sets out the mandate of the Ombud as well as statistics of the complaints received during the financial year. During the financial year of 2015/2016, the office of the FAIS Ombud received the highest number of … Continued
Posted on 24 Jan 2017
The Financial Services Board has issued a press release warning the public against conducting financial services business with Wayne (Zane) Wilson as he is not an authorised FSP as he purports to be. The Registrar has been informed that he provides an FSP number which belongs to a different authorised FSP. Wayne (Zane) Wilson is … Continued
Posted on 24 Jan 2017
The FIC has issued Notice 05 which provides feedback to all reporters on Phase 1 of the implementation of the FIC’s new registration and reporting system. Entities who registered on the goAML system must ensure that their information is correct and updated. This includes the registered name of the entity, registration number, business address, telephone … Continued
Posted on 24 Jan 2017
The Financial Services Board (FSB) released its FSB Bulletin for the second quarter of 2016. The newsletter provides insight on interesting topics such as illegal funeral policies, the big deal over credit ratings, the future of market conduct supervision and what it means for FAIS, and an interview with the Head of Department of FAIS … Continued
Posted on 24 Jan 2017
Draft Replacement of the Policyholder Protection Rules The Financial Services Board (FSB) has published the draft replacement of the Policyholder Protection Rules (PPRs) made under the Long-term and Short-term Insurance Acts. The draft replacement PPRs gives effect to a number of conduct of business reforms. These reforms should be read together with the amendments to … Continued
Posted on 24 Jan 2017
National Treasury has issued a media statement indicating that the Standing Committee on Finance (SCOF) is calling on the public to make written submissions on the Insurance Bill, 2016. The SCOF plans to arrange public hearings in February 2017. The Bill was approved by Cabinet in November 2015 and tabled in parliament in January 2016. … Continued
Posted on 24 Jan 2017
The Financial Intelligence Act (FICA) grants the South African Reserve Bank (SARB) with a mandate to ensure that banks have implemented adequate money laundering and terrorist financing controls. The SARB conducts inspections at the banks in order to assess whether the measures they have in place are adequate as per the requirements set by FICA. … Continued
Posted on 29 Nov 2016
One of the case studies analysed by the Ombud for Short-Term Insurance was against Alexander Forbes. The client laid a complaint against the insurer when they rejected her claim for damage caused as a result of rising damp. The insurer rejected the claim on the basis that no insured peril had occurred. After the insurer … Continued
Posted on 29 Nov 2016
The Financial Services Board (FSB) has published its annual report for 2016. The report aims to provide a balanced view of the FSB’s financial and non-financial performance for the year ended 31 March 2016. Click here to read the annual report
Posted on 29 Nov 2016
The office of the FAIS Ombud has released its latest annual report. The report includes a note by the Minister of Finance, a report by the Chairperson of the Board of the FSB as well as the Ombud’s operational report which provides trends in respect of findings for the year 2015/2016. The Minister of Finance … Continued
Posted on 29 Nov 2016
The FSB held its annual Insurance Regulatory roadshow in November, in Cape Town and JHB, where they spoke on various topics including RDR. Here is a link to the RDR presentation if you would like to have a read through it. The FSB said they would publish an RDR status update before the end of the … Continued
Posted on 15 Nov 2016
The FIC Amendment Bill will introduce a new section (Section 26A), titled “Notification of persons and entities identified by Security Council of the United Nations”. This section will be prompted if the UN Security Council adopts a Resolution requiring UN member states to impose certain actions (financial sanctions) against certain identified persons or entities, and … Continued
Posted on 15 Nov 2016
The Registrar of the FSB referred a case against Discovery Life Limited (Discovery) and Regal Financial Services (Pty) Ltd (Regal) to the Enforcement Committee owing to contraventions of Section 3A of the FAIS General Code of Conduct (the Code). Discovery was involved in employment negotiations with four financial advisors prior to the prohibition of sign-on … Continued
Posted on 15 Nov 2016
Masthead has seen an increase in cybercrime and/or fraudulent activities which affect financial advisors. We take a look at the two types of situations which can impact both a financial advisor and his/her clients. Cyber security and liability Cyber liability occurs if someone hacks into an advisor’s data or the advisor’s staff gives out personal … Continued
Posted on 1 Nov 2016
An update to the Financial Sector Regulation (“Twin Peaks”) Bill was published a week ago. This update is the result of matters raised during hearings that were held in parliament by the Standing Committee to deliberate the Bill. The Committee requested that an update, taking into account the matters raised, be made available. Click on … Continued
Posted on 1 Nov 2016
The Registrar of the Financial Services Board (FSB) intends to amend the current fit and proper requirements applicable to financial services providers (FSPs), key individuals and representatives. The Registrar intends on doing so by revoking the Determination of Fit and Proper requirements for FSPs 2008, as well as the Notice on Determination of Qualifying Criteria … Continued
Posted on 1 Nov 2016
Section 42 of the current Act refers to the ‘formulation and implementation of internal rules’. The Amendment Bill will look to replace this with the amended section 42 ‘Risk Management and Compliance Framework’. The substituted section 42 will require an accountable institution (AI) to develop, document, maintain and implement a programme for anti-money laundering and … Continued
Posted on 18 Oct 2016
When the FSB grants an application for a FAIS licence (Section 8(4)), the Registrar may impose certain conditions and restrictions. There are standard conditions and there may also be conditions specifically applicable to the FSP licence. The licensing conditions may also include exemptions applicable to the FSP. One of the objectives of FAIS is to … Continued
Posted on 18 Oct 2016
On 12 October 2016, the Registrar for Short-Term Insurance instituted an urgent application at the Johannesburg High Court for the liquidation of SaXum Insurance Limited (SaXum). The application is based on the fact that SaXum is insolvent and the Registrar is satisfied that the liquidation is in the best interest of its policyholders. SaXum is … Continued
Posted on 18 Oct 2016
The FIC has released Public Compliance Communication (PCC) No 36 on the obligations arising from FICA, pertaining to the 2016 Special Voluntary Disclosure Programme. This PCC applies to accountable institutions which render advice to clients using the 2016 Special Voluntary Disclosure Programme (SVDP). The programme relates to tax matters and/or matters concerning the Exchange Control … Continued
Posted on 18 Oct 2016
This week we take a look at the amendments that are proposed to sections on Due Diligence in Chapter 3 of the Bill. Before delving into the amendments let’s first highlight the changes to the chapter’s name which will be amended from ‘Control measures for money laundering and financing of terrorist and related activities’ to … Continued
Posted on 6 Oct 2016
The Council for Medical Schemes (CMS) announced changes to the fees payable to the Council. No changes have been made to the regulations and fee structure since November 1999. The most significant fee change that will affect financial advisors will be for: the application for accreditation, or the renewal of accreditation as a broker The … Continued
Posted on 6 Oct 2016
The FIC Amendment Bill is currently with the President for approval and signature. The amendments to Schedules 1, 2 and 3 of the Financial Intelligence Centre Act, 2001 (FICA) are also being reviewed as part of the review process of the Act. The amendment of the Schedules to the FIC Act will broaden the application … Continued
Posted on 6 Oct 2016
The FIC Amendment Bill will introduce more responsibilities on the directors, senior management and other relevant senior staff to ensure that the accountable institution (AI) complies with the stringent measures to fight money laundering and terrorist financing (ML/TF). It is therefore important that all directors and management are properly informed of the proposed changes to … Continued
Posted on 20 Sep 2016
Tax Ombud, Judge Bernard Makgabo, will have his term of office extended by another three years, commencing on 1 October 2016. This announcement made by Minister of Finance, Pravin Gordhan, was recently published in media statement from the National Treasury. Click here to read the media statement
Posted on 20 Sep 2016
The latest FAIS newsletter, published by the FSB, covers information on: Electronic submission of handover reports What you need to know about registering for the Regulatory Exams Competency Framework ‘FAIS Credits’ Feedback on the online submission of profile changes In the next issue of Mastering Compliance we write about ‘FAIS Credits’ and provide guidance on … Continued
Posted on 20 Sep 2016
The South African Reserve Bank (SARB) has launched a national campaign to raise public awareness of illegal deposit-taking and advance-fee schemes. The campaign, themed ‘Easy come. Easy go’, aims to provide South Africans with steps on protecting themselves against illegal schemes. Illegal deposit-taking includes the sending of documents, which seem to be official, and promises … Continued
Posted on 20 Sep 2016
The Protection of Personal Information Act (POPI) was signed into law by President Zuma in November 2013. In terms of Section 39 of the Act, an Information Regulator must be established. On 7 September 2016, the National Assembly approved the nominations of Chairperson, Advocate Pansy Tlakula and four other persons as members of the Regulator. … Continued
Posted on 20 Sep 2016
In the last issue of Mastering Compliance, we published the developments of the FIC Amendment Bill by looking at the Issue Papers published by the FIC. This week, we provide you with a status update of the Bill, where it currently stands and an overview of the changes it will bring. In the coming weeks, … Continued
Posted on 6 Sep 2016
As part of its commitment to Treating Customers Fairly, ASISA members have developed the Effective Annual Cost (EAC) measure. This new standardised disclosure will give advisors the ability to compare charges across most retail investment products and it will assist advisors to compare the impact of charges on investment returns. Sharing this information with clients … Continued
Posted on 6 Sep 2016
The FSB has issued an invitation to comment on the proposal of exemptions of sections of the FAIS Act and General Code of Conduct The Registrar of the FSB has published the following proposed exemptions for public comment: Exemption from Section 13(1)(c) regarding Juristic Representatives Exemption from Section 19(3) regarding the Audit Report Liquidity Requirements … Continued
Posted on 6 Sep 2016
The FSB has released a new user guide for FAIS online reporting system users. This guide provides users with detailed steps on how to use the system as well as the various services available on the system. Some of the changes and new functionalities to the system are: Handover compliance reports can be completed on … Continued
Posted on 6 Sep 2016
The Financial Intelligence Centre (FIC) has published an Issue Paper on guidance required to implement the FIC Amendment Act of 2016. The Issue Paper has been released in consultation with National Treasury, the South African Reserve Bank and the Financial Services Board. The Issue Paper provides clarity on the Amendment Bill and is meant to … Continued
Posted on 6 Sep 2016
There has been much debate about risk profiling and its relevance – or lack thereof – in determining an appropriate investment solution for customers. Risk Profiling is a process of finding the optimal level of investment risk for your client considering the risk required, risk capacity and risk tolerance, where: Risk Required is the risk … Continued
Posted on 23 Aug 2016
On 10 August 2016 the Financial Services Board (FSB) of South Africa issued a press release announcing it’s signing of a Memorandum of Understanding (MoU) with the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM). The aim of this agreement is to facilitate a partnership that promotes and maintains the integrity of … Continued
Posted on 23 Aug 2016
The Ombudsman for Short Term Insurance has issued the latest issue of the OSTI Briefcase for 2016. We take a look at two case studies in this issue which relates to clear information not being provided. We highlight the importance of understanding what is expected of financial advisors when providing clients with information about a … Continued
Posted on 23 Aug 2016
The South African Reserve Bank (SARB) has issued administrative sanctions on five banks after it found that the banks had inadequate control measures. The SARB made this finding after conducting an inspection of the banks in terms of the Financial Intelligence Centre Act (FICA) which mandates the SARB to ensure that banks have adequate controls … Continued
Posted on 11 Aug 2016
Authorised financial services providers are required to pay a levy to the FSB to cover the cost of the FSB’s supervision and a levy for funding the Office of the FAIS Ombud. Board Notice 81 of 2016 sets out the details of the levies which are payable by 31 October 2016. The FSB would have … Continued
Posted on 11 Aug 2016
The complainant is a pensioner who lost R125 000 in Realcor, a failed property syndication, based on the advice provided by her financial advisor. She contacted the FSP after hearing their marketing campaign on the radio. The investment was promoted as ‘safe’ and it guaranteed that there was minimal risk regarding loss of capital as the … Continued
Posted on 11 Aug 2016
National Treasury has issued new documents which form part of its financial sector regulatory reform programme. The programme forms part of the financial sector reform strategy for South Africa which was approved by Cabinet. The initial programme was first outlined in the discussion document ‘A safer financial sector to serve South Africa better’, published in … Continued
Posted on 11 Aug 2016
The FSB has warned the public to act with caution if contacted by entities purporting to be acting on behalf of Alexander Forbes, regarding the recovery of unclaimed pension benefits and surplus funds. These entities are tracing members of pension funds who have unclaimed benefits and surplus funds payable to them and are offering to … Continued
Posted on 26 Jul 2016
The appellant lodged an appeal against the Registrar’s decision to withdraw his authorisation/the license of the FSP, as it failed to pay its levies. The appellant lodged an appeal more than 4 months after the Registrar’s decision. The Financial Services Board Act (FSB Act) states that an appeal must be lodged within 30 days of … Continued
Posted on 26 Jul 2016
Section 7(4) of the General Code of Conduct (the Code) sets out what advisors must provide to their clients when rendering ongoing financial services to them. While the Code sets out the regulatory requirements, we also take a look at why it is makes good business sense for advisors to conduct client reviews. The heart … Continued
Posted on 26 Jul 2016
The FSB has issued a media statement to warn the public against doing financial services related business with Olmen Finance Services, which is purporting to be an authorised FSP, but has not been granted a licence by the FSB. Click here to read the media release
Posted on 12 Jul 2016
The latest FSB Bulletin published recently reports on the first quarter of 2016. The Bulletin covers industry news and views written by members of the FSB. Masthead’s managing director, Ian Middleton, is also featured in this Bulletin where he speaks about an industry perspective of “Consumers, advisors should prepare now for advice fees.” Click here … Continued
Posted on 12 Jul 2016
In our Mastering Compliance issue of 28 June 2016, we published FAIS Notice 51 on the Bi-annual Compliance Reports for CAT II and IIA FSPs. An error was noted in the numbering on the Statistical Information Sheet in the Reports of the initial notice (FAIS Notice 51 of 2016) and has therefore been repealed and … Continued
Posted on 12 Jul 2016
The complainant agreed to invest an amount of R50 000 in shares based on the advice of the respondents who informed the complainant that they “… were in the business of ‘buying and selling JSE shares under high gearing securities (CFDs and Currencies) to make profit in a short period’”. The investment agreement indicated that a … Continued
Posted on 12 Jul 2016
Background The matter started when clients of a financial advisor invested into the purchase and sale of sugar in Brazil, alledgedly on the advice of their financial advisor. Despite the advisor assuring them that the investment carried no risk, the clients lost all their money. They lodged a complaint with the FAIS Ombud, but this … Continued
Posted on 28 Jun 2016
Section 19 of the FAIS Act sets the requirement that financial statements must be submitted to the registrar by authorised financial services provider no later than four months after the end of the providers financial year end. If an FSPs financial year ended on 28 February 2016, the due date for such FSP to submit … Continued
Posted on 28 Jun 2016
On 23 June 2016, the FIC issued a revised goAML Notice, replacing Notice 01 which was issued on 25 April 2016. The revised Notice relates to existing registrants who have received an ‘Org ID’ and need to file a report with the FIC. Currently, the Centre is validating registrants who applied for access using the … Continued
Posted on 28 Jun 2016
Category II and IIA Financial Services Providers (FSPs) are required to submit their Bi-Annual Compliance Reports to the Financial Services Board (FSB) two (2) months after the reporting date (BN 51 of 2016). The Bi-Annual Compliance Reports for Category II and IIA FSPs have two reporting dates per annum, being 30 June and 30 December. … Continued
Posted on 28 Jun 2016
The FSB has issued a warning to the public after a South African based client fell victim to investment fraud. The client was approached directly by OffshoreEast Private Wealth Managers which operates from Asian countries. The FSB has stated that the Wealth Managers are not registered to render financial services in South Africa. Read the … Continued
Posted on 28 Jun 2016
The complaint arose when the complainant learnt that his investment funds were placed into a retirement annuity and would be tied up meaning he would have no access to his funds until he retires. The complainant alleged that he did not give the FSP any instruction to do so as he was out of the … Continued
Posted on 13 Jun 2016
Appointing a representative to your licence is not something which should be taken lightly. The FSB officially approves the licence of a financial services provider (FSP) and the Key Individuals who have been appointed to oversee the rendering of financial services in respect of that FSP. But the responsibility to “approve” a Representative rests squarely … Continued
Posted on 13 Jun 2016
An 81 year old pensioner invested R550 000 in the PIC Syndications (PIC) after being guaranteed interest of 12.5% per annum, payable monthly. The complainant gained the money from her late husband’s life insurance, deposited the funds in a bank account and called her financial advisor to ask if she knew of a better investment. The … Continued
Posted on 13 Jun 2016
Levies are calculated and payable annually to the FSB based on the market value of investments under management. The levy is applicable to: Category II & IIA FSPs – the investments under the discretionary management of all Cat II discretionary FSPs, as well as that of Cat IIA Hedge Fund managers. The investments under administration … Continued
Posted on 30 May 2016
On 1 March 2016 the Office of the Ombudsman for Short Term Insurance welcomed a new Ombudsman, Deanne Wood. She has highlighted the key issues which were addressed by her predecessor, Dennis Jooste in his 2015 report. The total rand value of complaints resolved in favour of the insured/complainant, was R 100,712,182. This is the … Continued
Posted on 30 May 2016
On 17 May 2016, the Registrar of Financial Services Providers published the compliance reports for the 2016 reporting period. FAIS Notice 50 of 2016 is the compliance report for a Category I FSP with a compliance officer. This notice sets out the manner in which the compliance report for such an FSP must be submitted … Continued
Posted on 30 May 2016
On 24 May 2016, Volume 20 of the FAIS Newsletter was published by the FSB. Two important matters in the newsletter that we would like to draw your attention to are: Ensuring that the FSB is informed of any changes in the business of the FSP within 15 days, as prescribed in the FAIS Act … Continued
Posted on 30 May 2016
The Financial Intelligence Centre Amendment Bill has been passed by the National Assembly in Parliament. The Bill has been sent to the National Council of Provinces for concurrence, to establish whether or not the house of parliament agrees with the Bill as it currently stands. The Bill seeks to enhance South Africa’s ability to combat … Continued
Posted on 30 May 2016
Representatives who do not meet all the competency requirements are able to be appointed under supervision but are required to meet the necessary requirements by the prescribed deadline date. This deadline is measured from their date of first appointment and always falls on the 30th June. Qualification deadline A representative must obtain a relevant qualification … Continued
Posted on 16 May 2016
The FSB has communicated that the initial RDR Phase 1 implementation plan will be delayed. The reason is that it was initially anticipated that the drafts of subordinate legislation to give effect to the majority of the RDR Phase 1 proposals, would be published for comment in April 2016. However, the legislative timetable has been … Continued
Posted on 16 May 2016
Section 7(3) of the FAIS act states: “an authorised financial service provider or representative may only conduct financial service related business with a person rendering financial services, if that person has, where lawfully required, been issued with a licence for the rendering of such financial service and the conditions and restrictions of that licence authorises … Continued
Posted on 16 May 2016
Although replacements generally have a poor reputation in the financial services industry, one must always measure a replacement against what is best for the client. Arguably there are cases where clients are led to believe that it is in their interest to replace when this is not the case. But, one cannot overlook the fact … Continued
Posted on 3 May 2016
The FAIS Act creates a duty on FSPs to submit their financial statements to the Registrar. We discuss the requirements of what these statements and records should entail. The Financial Services and Intermediary Services Act (FAIS) creates a duty for Financial Services Providers (FSPs) to comply with the provisions of the Act regarding the financial … Continued
Posted on 3 May 2016
We revisit some of the case studies published by the FAIS Ombud that illustrate the difficulties people encounter when trying to access their retirement funds and how advisors can prove that their clients were properly informed. It is a financial advisor’s duty to make sure that the needs and goals of their clients are properly … Continued
Posted on 3 May 2016
On Monday 25 April 2016 the Financial Intelligence Centre (FIC) switched over to its new registration and reporting system, goAML. All accountable and reporting institutions previously registered on the “old” system should have received their ORG ID number via email and followed the process set out. If the ORG ID number has not been received, … Continued
Posted on 19 Apr 2016
In a media statement published by the Ministry of Finance on 5 April 2016, National Treasury welcomed the release of information such as the report on clients of a Panamian legal firm and the information about clients of HSBC as it provides the basis for authorities to act against those who illegally move funds out … Continued
Posted on 19 Apr 2016
The Financial Intelligence Centre (FIC) has published a consultation document which contains amendments to the regulations to the Financial Intelligence Centre Act, 2001 in order to align them with the FIC’s new registration and reporting platform, GoAML. Members of the public have been invited to submit their comments by Friday, 29 April 2016. Click here for … Continued
Posted on 19 Apr 2016
The FSB published Information Circular No 26 on 5 April 2016 warning the managers and trustees of Collective Investment Schemes that failure to comply with the Disclosure Requirements which came into effect on 1 May 2015 (Board Notice 92 of 2014) may lead to penalties. The FSB is of the view that they have allowed … Continued
Posted on 19 Apr 2016
The FSB warns the public to exercise caution when dealing with Millenniums Financial Services and Arion Loan (Pty) who purport to be registered financial services providers, but in fact are not. Consumers are reminded to first check that an institution with which they wish to conduct financial services business is authorised to render financial services. … Continued
Posted on 19 Apr 2016
A policy was taken out by the client for legal expenses such as attorney’s costs for conveyancing services. The client subsequently bought a property and incurred attorney’s costs for the conveyancing of his property. The client did not however submit his claim within 30 days as per the wording of his policy and the insurer … Continued
Posted on 19 Apr 2016
In this instance, a father bought a vehicle for his daughter who was to take her driver’s licence test in the following month. He called his insurer to insure the vehicle and also notified them that it is intended for his daughter once she obtains her licence. The insurer, however, required that a regular driver … Continued
Posted on 5 Apr 2016
FSPs with a financial year end of 31 December 2015 need to submit their Annual Financial Statements by the submission due date of 30 April 2016. It is therefore very important that FSPs keep in close contact with their auditor or bookkeeper to ensure that their financial statements will be ready for submission prior to … Continued
Posted on 5 Apr 2016
The FSB has issued a press release on an administrative penalty of two million rand imposed by the Enforcement Committee on a funeral parlour that sold funeral insurance without being registered as a long-term insurer. The Enforcement Committee imposed a penalty of two million rand on a funeral insurance business after discovering that it had … Continued
Posted on 5 Apr 2016
On 23 March 2016 the FIC issued a Public Compliance Communication (PCC35) setting out a guideline for Accountable Institutions to assist them in implementing proper controls, processes and internal rules in terms of the FIC Act. In terms of the FIC Act, Accountable Institutions (AIs) are required to implement procedures and processes that will regulate … Continued
Posted on 5 Apr 2016
The Financial Intelligence Centre (FIC) has been preparing to launch its new registration and reporting system called ‘goAML’. The system is set to go live on 25 April 2016. In December 2015 the FIC requested all Accountable and Reporting Institutions to test the new system. Institutions already registered with FIC The FIC will facilitate a … Continued
Posted on 22 Mar 2016
On 26 February the Financial Services Board (FSB) released its first newsletter for 2016. The newsletter includes topics which we have covered extensively in our most recent issues of Mastering Compliance. While all the articles are relevant to our industry and well worth a read, we are sure you will benefit from reading Additional Services … Continued
Posted on 22 Mar 2016
Fit and Proper Requirements The proposed fit and proper requirements relating to financial soundness include amendments to the existing requirements and brand new requirements which FSPs may have to comply with. We identify and discuss the proposed changes and the impact that the “new” requirements may have on FSPs. The proposed fit and proper requirements … Continued
Posted on 22 Mar 2016
On 1 March 2016 the FAIS Ombud ordered Outsurance to replace a laptop or refund the client after finding that they had failed to provide the client with sufficient information to make an informed decision. It was also found that they failed to offer the client the option of covering certain items under his policy … Continued
Posted on 11 Mar 2016
In our first issue of Mastering Compliance for 2016, we discussed the 3 new sub-categories of financial products which the proposed fit and proper requirements look to implement. We now focus on the proposed requirements for operational ability and the changes it will bring should it be implemented. The proposed operational ability requirements are very … Continued
Posted on 11 Mar 2016
An urgent tax amendment bill was tabled in parliament to postpone the annuitisation requirement for provident funds for two years, until 1 March 2018. Cabinet has noted the concerns that have been raised in respect of the retirement reforms relating to the requirement to purchase an annuity at retirement (i.e. to receive a regular monthly … Continued
Posted on 11 Mar 2016
The Ombud expresses that she is unimpressed by the respondent in that they failed to respond fully and failed to take any responsibility by unfairly trying to blame a financial advisor and orders them to pay the complainant R85 500. The complaint relates to the failure of a financial services provider (FSP) to provide short … Continued
Posted on 23 Feb 2016
On 10 February 2016, the Association for Savings and Investment South Africa (ASISA) published a media release informing its members of a new Standard regarding cost disclosures which will have to be adopted from 1 June 2016. From 1 June 2016, all members of the Association for Savings and Investment South Africa (ASISA) will be … Continued
Posted on 23 Feb 2016
The Ombud for Short-Term Insurance agrees with Budget Insurance as to why they repudiated a client’s claim. A homeowner who wanted to permanently remove his carpets did so by using certain chemicals. He however did not realise that the chemicals created fumes which subsequently caused his household contents to rust and discolour. His household contents … Continued
Posted on 23 Feb 2016
The FAIS Act prescribes that the financial statements of an authorised financial services provider (FSP) must be submitted to the Registrar no later than four months after the FSP’s financial year end. This is a reminder to all FSPs whose financial year end was 31 December 2015, to ensure that their financial statements are submitted … Continued
Posted on 23 Feb 2016
As a financial advisor, keeping a record of advice is a vital part of the job. It’s just as important to keep a record of all your correspondence and communication with clients – not only because it’s a legal requirement, but because it stands your business in good stead in the event of a client … Continued
Posted on 11 Feb 2016
On 21 January 2016, after finding that a 58 year old unemployed woman with no other income had lost all of her invested capital, the FAIS Ombud made a ruling that the advisor’s failure to comply with the general and specific duties set out in the General Code of Conduct was the direct cause of … Continued
Posted on 11 Feb 2016
On 25 January 2016 the Minister of Health issued a Government Notice announcing that the maximum amount payable to brokers in terms of Section 65 of the Medical Schemes Act, as amended, has increased to R80.00 plus VAT with effect from 1 January 2016. This is an increase of 6.7% which is slightly ahead of … Continued
Posted on 11 Feb 2016
The Financial Intelligence Centre (FIC) calls upon all accountable institutions to test their new FIC Registration and Reporting System which will go live in April 2016. On 4 December 2015 the Director of FIC issued an invitation to reporting and accountable institutions to test the new system. The new system is called “goAML” and has … Continued
Posted on 19 Jan 2016
On 17 December 2015, the Registrar published the proposed amendments to the fit and proper requirements applicable to the different categories of FSPs, key individuals and representatives. Interested parties are to submit their comments on the proposed amendments to the FSB by 15 March 2016. In December 2015, the Registrar of Financial Services Providers published … Continued
Posted on 19 Jan 2016
On 30 November 2015, the Chairperson of the FSB Appeal Board issued guidelines on what an appeal entails and how to submit an appeal to the Appeal Board. These Practice Directions and Guidelines replace the previously issued ‘Guidelines on Proceedings of the Appeal Board’ of 14 June 2011. The guidelines provide clarity on the following; … Continued
Posted on 19 Jan 2016
In December 2015 the Registrar published an invitation to comment on the proposed amendments which will be made to the current Professional Indemnity Requirements. The deadline date for submissions on the proposed amendments is set at 28 February 2016. The Registrar of the FSB has published proposed amendments to the Professional Indemnity (PI) requirements … Continued
Posted on 19 Jan 2016
In December 2015, the FSB released a document called the ‘General Status Update: Retail Distribution Review’. This document provides a general status update on the FSB’s strategy of implementing the RDR proposals and clarifies the steps and processes that will be followed during the implementation process. It is only for information purposes and should be … Continued
Posted on 19 Jan 2016
2015 Taxation Laws Amendment Act The National Treasury released a statement on 12 January 2016 informing the public that the President has signed into law the Tax Administration Laws Amendment Act and Taxation Laws Amendment Act of 2015 that were passed by Parliament in 2015. All the changes relating to retirement reforms will take effect … Continued
Posted on 24 Nov 2015
Draft amendments were published earlier this year. These amendments focus on a more risk-based approach regarding the monitoring and verification of clients and have been proposed in order to meet international standards. This approach will simplify the current system of compliance by providing financial institutions with flexibility to determine how they verify their clients’ identity, taking into account the particular circumstances of each client. On Tuesday, 27 October 2015, the Minister of Finance, Nhlanhla Nene, tabled the Financial Intelligence Centre Amendment Bill in Parliament.
Posted on 24 Nov 2015
On 5 November 2015 the FSB Enforcement Committee imposed a penalty of R100,000.00 against Discovery Insure (Discovery) after this matter was referred to the Committee by the Registrar of Short-Term Insurance (the Registrar). During the period of September 2014 to January 2015, Discovery offered a premium waiver to members of the public who used the … Continued
Posted on 24 Nov 2015
On 13 November 2015 the Department of Trade and Industry released a notice as invitation for public comment on the draft Credit Life Insurance regulations. The draft regulations aim to propose maximum limits which credit providers may charge for fees, commission or expenses relating to credit life insurance. Interested parties may submit their written comments … Continued
Posted on 11 Nov 2015
A debarment in terms of section 14(1) of the FAIS Act, means that the provider prohibits a representative who no longer complies with the fit and proper requirements from rendering financial services and removes his/her name from the register of representatives. The debarment prevents the representative from functioning as a representative of any provider, not only for the provider who brought about the debarment. However, if the representative is subsequently of the view that he/she is fit and proper, he/she may request a financial services provider to reappoint him/her.
Posted on 11 Nov 2015
On 27 October 2015 the Minister of Finance presented the Financial Sector Regulation (FSR) Bill to Parliament after taking into consideration, comments received on the Bill. This comes after government’s decision in 2011 to shift to a Twin Peaks Model of financial sector regulation. The objective of the Bill is to split the regulating authorities of the financial services sector into two centres. The first centre will be a Prudential Authority, which will falls within the Reserve Bank and will supervise the safety and soundness of financial institutions. The second centre will be the Financial Sector Conduct Authority (FSCA), which will replace the FSB, and will supervise financial institutions on how they conduct business and treat their customers.
Posted on 11 Nov 2015
On 19 October 2015 the FSB announced the discontinuation of Afrikaans RE examinations. This comes after studies were conducted into the uptake and pass rates of the Afrikaans RE exams. The studies show that the demand for Afrikaans examinations has declined considerably since these exams were first introduced. The study showed that writing the exam … Continued
Posted on 1 Nov 2015
The latest case from the appeal board deals with the debarment of an employee. The Registrar debarred an employee for a period of three years, preventing her from rendering any financial services to clients on behalf of a financial services provider in terms of S14A of the FAIS Act. S14A of the Act allows the … Continued
Posted on 1 Nov 2015
Professional Indemnity (PI) claims have been increasing in recent years, however, there are steps that you as an independent financial advisor can take to avoid claiming from your PI scheme. One of the reasons that there are more claims being submitted, is that there is greater client awareness due to FAIS and the Consumer Protection … Continued
Posted on 1 Nov 2015
In our issue of 23 June 2015, we referred to Board Notice 113 of 2015 issued by the Deputy Registrar of Short and Long-Term Insurance which called for public comment on the proposed fit and proper requirements. The Registrar released the Board Notice on Fit and Proper requirements on 14 August 2015. This Notice sets … Continued
Posted on 1 Nov 2015
The deceased worked for a Municipality for 40 years and through his employment he was a member of the first respondent, the Pietermaritzburg Corporation Provident Fund (“Fund”). The deceased left the employment of the Municipality and a withdrawal benefit therefore became due and payable and shortly thereafter he passed away. His withdrawal benefit should have … Continued
Posted on 27 Oct 2015
Cybercrime is generally defined as any form of criminal activity involving the use of computers and the internet. Without a legal definition of cybercrime, it is difficult to accurately and completely quantify the impact on South Africa. However, the SA Fraud Prevention Association estimates that the economic cost of cybercrime to South Africa is R1 billion per year. The Center for Strategic & International Studies suggest that the cost is actually close to R5.8 billion annually. Generally, smaller organisations do not have sufficient technology and security systems to protect them from cyber criminals. A 2013 report places South Africa as the third highest country affected by cybercrime, stating that 73% of South Africans were victims of cybercrime in 2013.
Posted on 13 Oct 2015
Enacted in November 2013, the Protection of Personal Information Act (POPI) aims to bring South Africa in line with international data protection laws. However, currently only a few sections of POPI have already commenced (most notably the formation of the Information Regulator), with the balance to only commence at a later date (to be proclaimed by the President). It is anticipated that POPI shall commence during the course of 2016, however, it should be noted that there is a one year period to show compliance once the commencement date is announced (it is anticipated that this may be extended to a maximum of three years).
Posted on 13 Oct 2015
The FSB has published its Newsletter Volume 18 on 7 October 2015. The latest publication clarifies and explains the exemption from audited financial statements as per FAIS Notice 82 of 2015. In our previous issue of Mastering Compliance, dated 5 August 2015, Masthead provided a guideline of what this FAIS Notice entails. The latest FAIS … Continued
Posted on 1 Oct 2015
FAIS Notice on Exemption of Eligible FSPs from submitting audited Financial Statements On 21 July 2015 the Deputy Registrar of Financial Services Providers issued FAIS Notice 82 of 2015 which exempts eligible FSPs and eligible FSPs limited by product from submitting audited financial statements unless they are required to do so in terms of any … Continued
Posted on 1 Oct 2015
This case was taken on appeal with regards to motor vehicle insurance by the motorist after his claim was dismissed in the amount of R608 772.20 against the insurer, Outsurance. The appeal deals with the consequences of an insured who failed to disclose to the insurer an incident which may give rise to a claim, … Continued
Posted on 1 Oct 2015
National Treasury released the Draft Regulations of the Retirement Reform: Lowering charges and Improving Market Conduct in July 2015. This is a step by the National Treasury towards implementing proposals that aim to lower charges and improve market conduct in the retirement industry. Submissions are invited on the form and content of this regulation. Please … Continued
Posted on 1 Oct 2015
Authorised financial services providers are required to pay a levy to the Financial Services Board (FSB) to cover the cost of the FSB’s supervision and a levy for funding the Office of the FAIS Ombud. Risk of non-payment of levies If the FSP fails to pay the levies imposed, they run the risk of licence … Continued
Posted on 1 Oct 2015
Case Study One: Insufficient Evidence Cannot Justify the Rejection of a Claim by an Insurer The matter dealt with an Insured, Mr R, whose insured car was stolen from the police parking lot while he was in police custody. The Insurer, Budget Insurance, rejected his claim based on the policy exclusion that they do not … Continued
Posted on 29 Sep 2015
We unpack what it means for a Key Individual to manage and oversee the statutory obligations of an FSP and to monitor the activities of those rendering financial services on behalf of the FSP to ensure that they comply with the legislation and treat customers fairly. We also briefly set out the Key Individual’s duty to manage the risks of the business and to ensure that the operational ability of the FSP is maintained. We emphasise how the fiduciary duty of a Key Individual goes far beyond just ticking the compliance boxes.
Posted on 28 Sep 2015
In February this year the Minister of Finance declared that all hedge funds would operate under the Collective Investment Schemes Controls Act (CISCA) with effect from 1 April 2015. The declaration required hedge fund operators to lodge applications with the Registrar of CIS to register as a CIS manager by 30 September 2015. The effect … Continued
Posted on 28 Sep 2015
This case was heard by the North Gauteng High Court where the applicant holds the respondents in contempt of court for not abiding by a determination made by the Pension Funds Adjudicator (PFA). The background The PFA received a complaint from the Ombudsman for Long-Term Insurance in 2013. The crux of the complaint was that … Continued
Posted on 15 Sep 2015
On 7 September 2015 the Registrar of Financial Services Providers published FAIS Information Circular 4 of 2015.
The purpose of this information circular is to;
(a) reflect the way in which the FSB will apply section 13(1)(c) of the FAIS Act, on agreements in which representatives are cited; and
(b) clarify that section 13(1)(c) does not impact on the requirement in section 7(3) of the Act that provides that a financial services provider (FSP) may only conduct financial services related business with a person rendering financial services if that person is authorised to render those services or is a representative.
Posted on 2 Sep 2015
“A person may not render financial services or contract in respect of financial services other than in the name of the financial services provider of which such person is a representative.” The reasons for the insertion of the requirement in section 13(1)(c) are: To ensure that consumers of financial services know with whom they are … Continued
Posted on 1 Sep 2015
South Africa has a commitment to combating money laundering and the financing of terrorism, having ratified the United Nations Convention Against Corruption (UNCAC) in 2004, and joining the multi-lateral Financial Action Task Force (FATF) in 2003. As a result, South Africa enacted the Financial Intelligence Centre Act, No 38 of 2001 (FIC Act), and other … Continued
Posted on 1 Sep 2015
The Review phase is the final phase and forms the last issue of the ‘Preparing for POPI’ series. This is a recap of the series to summarise the process. Review should not be seen as a last step, but should be a continuing process to ensure that compliance is regularly monitored. Being POPI Compliant will … Continued
Posted on 1 Sep 2015
Category II and IIA financial services providers (FSPs) are required to submit Bi-Annual Compliance Reports to the Financial Services Board (FSB). The bi-annual reporting period ended on 30 June 2015 and the Bi-Annual Compliance Report must be submitted to the FSB on or before 31 August 2015. In the case where an FSP is authorised … Continued
Posted on 1 Sep 2015
The Ombudsman for Short Term Insurance deals with a case where the terms and conditions of a policy were clearly understood by the insurer, but not necessarily by the client. The insurer was instructed to pay the client’s claim.
Posted on 1 Sep 2015
In order for a financial institution to become POPI compliant it will not be a once-off project; but will require continuous activity and ongoing commitment. It must be mandated from the Board (or equivalent), implemented by senior management and supported by all levels of management and risk owners in order for it to be sustainable. … Continued
Posted on 1 Sep 2015
In terms of the FAIS Act, all financial services providers (FSPs) must submit their financials within four months of their year-end. Most independent financial advisors (IFAs) have February year-ends and must therefore submit these by the end of June each year. Many FSPs find it challenging to submit their financials within the time frame because … Continued
Posted on 18 Aug 2015
This information is based on the findings and learnings from the first six months of 2015. We provide you with recommendations to ensure that your business is not exposed to these high risk areas.
Posted on 4 Aug 2015
We have seen an increased focus by the FSB on the activity of replacing one financial product with another, particularly in relation to long-term insurance products where the FSP is also a registered long-term insurer. The Retail Distribution Review also proposes a ban of commission on replacements of life risk products. Replacements, however, are not confined to this product type and have consequences for customers across all financial products.
Posted on 22 Jul 2015
In a case study written by Ian Middleton, Managing Director of Masthead, the FSB noted that an FSP did transactions in terms of s8(4)(a) of the General Code of Conduct where no analysis was conducted and asked the FSP for steps which will be taken to reduce or stop these transactions. We take a look at the FSB’s approach, what the law says and some of the issues around single need sales.
Posted on 22 Jul 2015
In the June FAIS newsletter, Adv Matome Thulare, who is the Head of Department of FAIS Enforcement, wrote about the debarment of representatives and the difficulties it places on the FSP.
The FAIS Act became the first piece of legislation to regulate the rendering of advice and intermediary services in South Africa. It introduced “fit and proper” requirements to test the competence and fitness of principals and their representatives when rendering financial services.
Section 14(1) of the FAIS Act permits FSPs to act against representatives who are seen to be incompetent or unfit to render financial services. This part of the Act does however not allow the FSP to exercise its own discretion on deciding whether to debar such a representative as the provision makes it compulsory for FSPs to take action.
Posted on 30 Jun 2015
The second draft of the Financial Sector Regulation Bill takes into account comments and engagement with various stakeholders in regard to the first draft. The revised third version of the Bill is expected to be published for tabling in Parliament before the end of June 2015. Read more
Posted on 23 Jun 2015
The Deputy Registrar of Short and Long Term Insurance has issued a board notice for public comment on the proposed fit and proper requirements to be prescribed pursuant to the definition of “fit and proper” in sections 1 of the Short-Term and Long-Term Insurance Acts. It is envisaged that the final requirements will be published … Continued
Posted on 23 Jun 2015
On 5 June 2015 the National Treasury released new exemptions on Regulations of the FIC Act. Particulars to be obtained from South Africa citizens and residents, and foreign nationals The exemptions from compliance relate to certain provisions on particulars to be obtained and verified for South Africa citizens and residents. As well as provisions on … Continued
Posted on 23 Jun 2015
The Planning phase is to ensure that everybody in the business is prepared for the developments which the Protection of Personal Information Act (POPI) will bring. The first phase of Awareness which was discussed in the previous issue, highlighted the steps to be taken to make the responsible parties aware of their role. The Planning … Continued
Posted on 9 Jun 2015
In our issue of 14 April 2015 we spoke about the requirement to submit annual financial statements to the FSB four months after the FSP’s financial year end. If your FSP’s year end was 28 February 2015 then the due date for submission of your annual financial statements to the FSB will be 30 June … Continued
Posted on 9 Jun 2015
ITO Sections 6A and 8A of FAIS- all FSPs who are sole proprietors, key individuals and representatives must meet the experience requirements and continue to meet those requirements. The purpose of the five year requirement is to ensure that a person’s practical experience remains appropriate, applicable and relevant for the category of FSP and subcategory … Continued
Posted on 9 Jun 2015
Board Notice (BN) 92 of 2014 deals with advertising, marketing and information disclosure requirements for Collective Invest Schemes (CIS). Although it is primarily aimed at the managers of CIS (managers), it also has implications for advisors who distribute CIS funds to their customers. This Board Notice will help to ensure that advisors provide their customers … Continued
Posted on 9 Jun 2015
At the recent Discovery Financial Planning Summit Jonathan Dixon from the FSB shared some initial feedback after the industry submitted input/commentary on the RDR discussion paper. The FSB received close on 70 written submissions in response to the RDR paper and have already started to analyse the inputs received. Given that the proposals are the … Continued
Posted on 9 Jun 2015
In order to create awareness on POPI, it is important to start by understanding why your business should protect personal information. Processing of personal information should be approached with a choice of either protecting processing of personal information or the free flow of such information. Who are your data subjects? The data subject is the … Continued
Posted on 26 May 2015
In article one we dealt with implementing Business Planning and an Operations Plan in the business in order to embed TCF Outcomes 1, 4 and 6 in the business. In this article we deal with implementing a Marketing and Communications plan and the financial planning process which embeds TCF principles 2, 3, 4 and 5. … Continued
Posted on 26 May 2015
On 15 May 2015 the FSB released the FAIS Information Circular 3/2015. The Circular sets outs the new process to assist Key Individuals (KIs) with an application if they have already been approved as KIs by the FSB. Click here for more information.
Posted on 26 May 2015
Board Notice 101 of 2015 sets out the levies to be paid by each type and category of financial institution. Section 19 of the Notice deals with levies on authorised financial services providers. Section 19 (1) deals with levies of Category I or IV FSPs. Section 19 (2) deals with levies to be paid by … Continued
Posted on 26 May 2015
Professional Indemnity (PI) cover is a “mandatory” requirement in terms of the Financial Advisory and Intermediary Services act of 2002 (FAIS Act) for all Financial Services Providers (FSPs). Generally, the things that are “mandatory” in life are usually the things one wants the least. Unfortunately, this same principle can follow one in life and also … Continued
Posted on 12 May 2015
The FSB has published the 2015 Compliance Reports. The FAIS Notices set out the format of the various Reports and the date by which these must be submitted to the FSB. Your Masthead Compliance Officer will prepare and discuss your Compliance Report with you during the reporting period in order to ensure that it is … Continued
Posted on 12 May 2015
The goal of the implementation plan is that it should maximise the regulatory effect while minimising disruption in the market. Chapter 9 of the Framework focuses on the implementation plan of the framework into the market. The implementation plan is that of a phased plan bringing the framework into the market in the following phases: … Continued
Posted on 12 May 2015
The Market Conduct Policy Framework and the new Regulators aim to incorporate the TCF principles into its regulatory and supervisory frameworks – the aim being giving effect to a new market conduct regulator (the Financial Sector Conduct Authority (FSCA)). From a practical perspective this requires FSPs to implement TCF principles within their businesses to such … Continued
Posted on 28 Apr 2015
The National Treasury and the Financial Intelligence Centre (FIC) published the draft Financial Intelligence Centre Amendment Bill, 2015 (the Bill) as approved by Cabinet at its meeting on 15 April 2015. The Bill seeks to enhance South Africa’s ability to combat financial crimes by proposing measures to address threats to the stability of South Africa’s … Continued
Posted on 28 Apr 2015
The directors of Sharemax appealed against a determination made against them in terms of the FAIS Act by the FAIS Ombud in January 2013. The initial case found that the directors were liable for the losses suffered by two retirees who brought independent complaints to the Ombud on related complaints. The Ombud, Noluntu Bam, found … Continued
Posted on 28 Apr 2015
In December 2014, the National Treasury published the discussion paper entitled, ‘Treating Customers Fairly in the Financial Sector: A Draft Market Conduct Policy Framework in South Africa’ (the Market Conduct paper), together with the second draft Financial Sector Regulation Bill (FSR Bill). The new regulatory environment will give effect to the Twin Peaks model of … Continued
Posted on 28 Apr 2015
The complainants are a retired couple who invested into Bondcare Trust (Trust) upon the financial advice of the respondents. The first respondent, Alesio, was the sole Key Individual of the second respondent, Introvest CC and rendered financial advice to the couple. Based on the advice the couple were led to believe that their investments were … Continued
Posted on 14 Apr 2015
In terms of section 19(2) of the FAIS Act, all FSPs are required to submit financial statements to enable the FSB to determine if a FSP complies with the financial soundness requirement in terms of the Fit and Proper Requirements (BN 106 of 2008). These financial statements must be signed by the relevant person(s) before … Continued
Posted on 14 Apr 2015
A new notice has been issued on Determination of Fees payable to the Registrar of Financial Services Providers. The new fees will come into operation from 25 April 2015. Click here to see the notice for the new fees of respective services.
Posted on 14 Apr 2015
A new notice has been issued regarding Commission payable by medical schemes to brokers. As from 1 March 2015 the maximum amount payable to a broker by a medical scheme was increased to R75,00 plus VAT per month. Click here for further information.
Posted on 14 Apr 2015
ASISA has issued a new Standard on Replacement policies of financial products. The Standard will come into effect on 1 October 2015. Click here for more information.
Posted on 14 Apr 2015
Gaining a proper understanding of the Act will assist with implementing the correct systems and procedures to handling personal information. The aim of the Act is to promote transparency about information collected and its processing. It is essential for you to understand the spirit and purpose of the Act in order to know how to … Continued
Posted on 14 Apr 2015
In this matter the Registrar of Financial Services Providers was the Applicant against the Respondent which is a registered FSP regulated in terms of the FAIS Act. Talksure conducted business as a sales and marketing company relating to financial products. Talksure concluded an agreement with Miway Insurance Limited (Miway) to provide them with real time … Continued
Posted on 31 Mar 2015
The right of access to information is entrenched under section 32 of the Constitution of the Republic of South Africa. Section 32 provides that everyone has the right of access to any information held by state; or held by any other person that is to be used for the protection or exercise of any right. … Continued
Posted on 31 Mar 2015
The complainant, the Trustees of the Johnnie Pringle Investment Trust (customer), invested money upon the advice of the financial advisor into the now obsolete Relative Value Arbitrage Fund (RVAF). The RVAF is in liquidation and initial reports indicate that most, if not all, investments will be lost. This complaint is based on the claim that … Continued
Posted on 17 Mar 2015
An FSB press release on Friday, 13 March 2015 signals the first steps to be taken by the Regulator since sign-on bonuses were prohibited at the end of 2014. Click here to read more.
Posted on 17 Mar 2015
This matter dealt with a retired couple who suffered financial loss due to inappropriate advice given by their financial advisor. The respondents were the key individuals of R&S Walsh Investment Consultants CC, an authorised FSP. The advice given was deemed as inappropriate as it did not suit the complainant’s personal needs and circumstances. Complainants had … Continued
Posted on 17 Mar 2015
Also released is a discussion document “Treating Customers Fairly in the Financial Sector: A Market Conduct Policy Framework for South Africa” which seeks to develop a comprehensive framework for how the market conduct regulator will operate, and measure if financial institutions treat their customers fairly. Comments on the market conduct discussion document will be accepted … Continued
Posted on 17 Mar 2015
The Financial Sector Regulation Bill gives effect to the government decision in 2011 to shift to a “Twin Peaks” model of financial sector regulation for South Africa and will be one of the most important financial regulatory reforms in the industry. The “Twin Peaks” model has two main objectives: to strengthen South Africa’s approach to … Continued
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