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Investment Indicators - 18 September 2017 |
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Paul Kruger
Author/Editor |
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When the government fears the people, there is liberty.
When the people fear the government, there is tyranny
– Thomas Jefferson |
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Distributed to 48,600 subscribers.
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An authorised Financial Services Provider FSP no. 731. |
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| Rates Review |
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1. Secured Investment Rates |
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Please note that (G) indicates a Guaranteed and (L) a Linked product. In order to understand the difference between guaranteed and linked rates,
kindly click here for an explanation. |
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Company |
This Week |
Last Week |
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1Life (L) |
6.490% |
6.490% |
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2 |
Absa (L) |
6.346% |
6.111% |
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3 |
Assupol (G) |
5.890% |
5.940% |
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Company |
This Week |
Last Week |
| 1 |
1Life (L) |
6.490% |
6.490% |
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2 |
Absa (L) |
6.346% |
6.111% |
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3 |
Assupol (G) |
6.320% |
6.370% |
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2. Money Market Funds |
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Please bear in mind that our figures, though based on the actual quotations that you also use, are for information purposes only,
and can never replace the official quotation from the product house. In terms of the guarantees, you are requested
to clarify the exact extent of such guarantees with the product house prior to advising clients. |
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From the Crow's Nest |
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FAIS Ombud Actions Queried |
Two issues in the recent Phoshera appeal again saw the Appeal Board
ask questions about the FAIS Ombud’s decisions.
“This appeal is filled with procedural anomalies. First, there is
the question of condonation for the late filing of the application
for leave to appeal which had been granted by the Ombud, the late
joinder of Auto & General subsequent to the Ombud's determination,
the non-joinder of Compass as respondent and what now appears to be
the non-filing of a cross-appeal by all respondents in respect of
the condonation which they argue had been granted unprocedurally.”
Condonation of late filing
The appellant applied for leave to appeal on 29 August 2016, more
than three months after the Ombud’s determination on 11 May 2016. An
application for leave to appeal the Ombud's determination must be
submitted within 30 days of becoming aware of the notice of the
determination.
Counsel for the respondents argued that the Ombud is a creature of
statute and all the powers and authority of the office derive from
the relevant legislation. With regard to the power and authority to
grant condonation for the late filing of an application for leave to
appeal, the Ombud therefore has no discretion to exercise. Thus, if
an applicant for leave to appeal is non-compliant with the statutory
time-limits it must fail. For that reason, the condonation granted
by the Ombud is a nullity.
However, although all respondents opposed the Ombud's exercise of
discretion to grant leave and in fact granted the leave despite the
lateness of the notice, none of them filed an application for leave
to appeal the Ombud's action and decision.
The Board pointed out that such a challenge should have preceded
the actual hearing, and could therefore not be entertained.
Late joinder of Auto & General
The respondents in this matter raised two further matters regarding
the Ombud’s granting of leave to appeal:
Auto & General was cited for the first time when the appeal was
noted, not in the initial complaint. Thus Auto & General was not
part of the determination of the Ombud and should therefore not be
part of the appeal.
The FAIS Ombud, in her determination, made findings of
non-compliance with statutory duties of underwriters. However,
neither Auto & General, who is the underwriter in the new policy
contract nor its agent Compass, had been parties in the proceedings
before the FAIS Ombud. In the application for leave to appeal
itself, Auto & General had not even received the papers. Claiming
loss or damages, whether individually or severally, for a breach
against parties, who are properly not before this Appeal Board would
therefore be wholly prejudicial to them. For that reason, it is
argued by the respondents, this appeal was fatally flawed.
Appeal Board finding
In its judgment, the Appeal Board agreed with the Ombud that the
basis for the rejection of the claim was valid.
In the Siegrist/Bekker case, the Appeal Board expressed concerns
about the way in which the Ombud conducted affairs, granting
herself powers outside of her mandate.
“The Ombud, importantly, performs the same function which a court of
law would perform, had such court been seized of the matter; and the
Ombud does not possess a general equitable jurisdiction, meaning
that the Ombud cannot give a complainant more than that person’s
legal entitlement. It is therefore somewhat disturbing to note that
the Ombud expressed the view that common-law principles have no
place in proceedings before her.”
In a recent decision concerning a Sharemax investment, the Appeal
Board again referred to section 20(3) of the FAIS Act which requires
the FAIS Ombud to consider complaints in a procedurally fair,
informal, economical and expeditious manner, and by what is
equitable in all circumstances. Failure to afford a party an
opportunity to respond was “inequitable”.
This view was repeated in the Mogadima case which was published on 2 August 2017. The Appeal Board disagreed with the Ombud’s finding
which was based on a document signed five months after the event
which led to the complaint, and could not possibly link the
appellant to the misdemeanour.
In the Prigge appeal, the Board said: “Matters like this (there are
other instances) add fuel to the allegation that the Ombud is biased
against financial service providers and sees her role as champion of
disappointed clients. The Act requires her to deal with complaints
impartially (section 20(4)) and whether or not she does so, depends
on the facts of each case.”
To the best of my knowledge, no request for leave to appeal from a
product or financial adviser was ever granted by the Ombud, and they
had to approach the Appeal Board to have the determination reviewed. |
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| Your Practice Made Perfect |
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RVAF Update |
A recent article in “Die Burger” reports on the first liquidation and
distribution accounts in respect of the Herman Pretorius/Relative Value
Arbitrage Fund matter.
In total, the RVAF handled investments totalling R2.2 billion, and
there are 2 862 claimants.
It appears that investors will only receive 5 cents for R1 invested. The
total sum available from funds recovered amount to R63 million, while
expenses in respect of legal, collection and advertising thus far amount
to R43 million.
The liquidators confirmed that it was an extremely difficult matter,
unravelling the complex manner in which the funds were constructed,
entailing lots of physical man hours and legal challenges.
The distribution account contains a detailed report on the actual
expenses. |
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R458 billion in benefit payments from life insurers
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ASISA reports that, despite strong economic headwinds, South African
life insurers honoured claims by policyholders and beneficiaries worth
R458 billion in the year ended 30 June 2017. This represents a 9%
increase in benefits paid, compared to the previous 12-month period. At
the same time life insurers managed to grow assets by 2% to R2.7 trillion.
In addition, industry assets continue to exceed liabilities by more than
four times the legal reserve buffer required.
There was a significant increase of 21% in claims against individual
disability policies in the 12 months to June 2017. Hennie de Villiers,
deputy chair of the ASISA Life and Risk Board Committee, comments:
“An unusually high increase in disability claims is usually indicative
of consumers under severe strain. Financial stress leads to both mental
and physical illness, which invariably results in higher disability
claims.”
According to Statistics South Africa, there was a decline of 48 000
formal jobs in the first quarter of this year alone combined with a R19 billion drop in total earnings paid to employees over the same period.
De Villiers says fragile consumer confidence due to low economic growth,
political turmoil and the risk of credit rating downgrades also
reflected in the new premium income for the year ended 30 June 2017.
Total new premium income for recurring and single premium business
increased by only 2% while the number of total policies sold decreased
by 12%.
De Villiers says surprisingly, recurring premium savings policies and
retirement annuities showed the most resilience and actually achieved
growth in policy numbers.
He says the 11% increase in the number of recurring premium savings
policies sold is most likely driven by consumer demand for the tax-free
savings and investment products launched in March 2015.
The number of recurring premium retirement annuities sold over the 12 months period to the end of June 2017 increased by only 2%.
De Villiers says the lapse rate experience for first year policies is
interesting in that lapses of risk policies and retirement annuities
showed a strong decline of 12% and 34% respectively. First year savings
policies, on the other hand, experienced an increase in lapses of 16%.
Click here to read the full article on the ASISA website. |
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Regulatory Examinations |
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Self-Help Guidelines to make a
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Click on the
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Key in your ID or
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In Lighter Wyn |
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