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:
To view the Insurance Conduct of Business presentation slides, click here.
To view the Insurance Prudential presentation slides, click here.
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 FSB undertook a comprehensive review of all comments received.
The FSB has responded to comments received from the second round of public consultation on the Policyholder Protection Rules.
Click on the links below to read the documents:
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:
Feedback can be submitted via email to HduPreez@justice.gov.za and must be received no later than 15 January 2018.
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 rationale is to ensure that, while recognising that the contractual relationship between an insurer and its representatives should allow for a degree of flexibility in remuneration arrangement, this should not result in representatives earning remuneration significantly more than the corresponding quantum of commission payable to an independent intermediary for rendering similar services.
The Draft indicates that the effective date will be 1 January 2018.
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 Registrar to impose consequences to combat and prevent bribery and corrupt conduct by administrators, service providers to a retirement fund, auditors, principal officers or board members.
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 the complainant’s version.
In this case, MUA Insurance Acceptances insured the complainant’s vehicle, and the policy was underwritten by Compass Insurance. Two years later, the complainant lodged a claim after an accident and found out to his surprise that his insurer had changed the underwriter to Auto & General. The complainant had not been made aware of the change.
Auto & General repudiated the claim, as the vehicle was not in a roadworthy condition as contemplated in the policy wording and prescribed by the National Road Traffic Act. The complaint was dismissed, as the tyres were worn and were “material to the cause of the loss”.
Arguments presented to the Appeal Board tried to justify that the complainant was not informed of the relevant changes to his policy. These arguments touched on the Policyholder Protection Rules (PRR), which permit the unilateral termination of binder agreements.
The Appeal Board pointed out that while unilateral termination may be permitted, this cannot automatically result in a new binder agreement without a client’s knowledge. Further, in terms of the PPR, a client is entitled to be notified of a change of underwriter, and that giving due notice is important to properly serve an insured’s interests. The advisor had failed to inform the complainant of the termination and creation of his policy contracts and related binder agreements.
The PPR requires an insurer to present evidence showing that a change in policy terms and conditions was communicated to a policyholder at least 30 days before an amendment comes into effect. An insurer must also demonstrate that a policyholder is furnished with an explanation of the principles of the relevant contract and information that enables a policyholder to make an informed decision on whether or not to continue with the cover.
It was held that the importance to inform a client is not simply to serve the purpose to notify, but rather to provide an opportunity for a client to exercise the choice to accept, refuse or alter a policy contract. This is in keeping not only with the PPR, but the Short Term Insurance Act the FAIS General Code of Conduct and the principles of Treating Customers Fairly.