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Investment Indicators - 9 October 2017 |
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Paul Kruger
Author/Editor |
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I'll be more enthusiastic about encouraging thinking outside the box when
there's evidence of any thinking going on inside it - Terry Pratchett |
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Distributed to 49450 subscribers.
To advertise with us
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What if you could focus on doing what you love - looking after your
clients?
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e. info@gtc.co.za
w. www.gtc.co.za
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) |
6.840% |
6.730% |
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2 |
Absa (L) |
6.715% |
6.597% |
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3 |
Assupol (G) |
6.190% |
6.000% |
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Company |
This Week |
Last Week |
| 1 |
1Life (L) |
6.840% |
6.730% |
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2 |
Absa (L) |
6.715% |
6.597% |
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3 |
Assupol (G) |
6.630% |
6.430% |
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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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Qualifications and Execution of Sales |
The new Fit and Proper (F&P) requirements due for publication any day
now contains reference to a new concept which aims to address a
thorny issue, namely the different levels of complexity of products
sold to the public.
As pointed out last week, a major problem for the Regulator in terms
of FAIS was to establish rules and regulations that could be applied
equally to both complex and simpler products.
The first step was to differentiate between what eventually became
known as Tier 1 and Tier 2 products. This was achieved by involving
the industry to arrive at an acceptable agreement on where complex
and less complex products should resort.
The next challenge was to determine the levels of competence
required by representatives who advise on the various products.
The initial response was the proposed introduction of “execution of
sales only”, which can be defined as an intermediary service
performed by a person on the instruction of a client that results in
the conclusion of an agreement to buy, sell, deal, invest or
disinvest in, replace or vary one or more financial products.
The latest draft proposed outlines new requirements regarding
qualifications applicable to all, except the following:
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(i) |
a Category I FSP, its key individuals and representatives that
are authorised, approved or appointed to render financial services
only in respect of the financial products: Long-term Insurance
subcategory A and/or Friendly Society Benefits; and
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(ii) |
a representative of a Category I FSP that is appointed to
perform only the execution of sales in respect of a financial
product provided that -
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(aa) |
the representative has a Grade 12 National Certificate
or an equivalent qualification;
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(bb) |
the execution of sales is performed –
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(aA) |
in accordance with a script approved by a key individual and
the relevant governance structure of the FSP; and |
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(aB) |
under the direct oversight of a key individual who meets the
competence requirements for the furnishing of advice in relation to
the relevant financial product and whose normal place of work is at
the same premises where the execution of sales are performed;
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(cc) |
where the execution of sales is performed by telephone, all
conversations with clients are recorded and the recordings are
stored and retrievable;
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(dd) |
the FSP has sufficient and adequate controls in place to ensure
and to monitor that -
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(aA) |
the representative does not furnish clients with advice; and |
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(aB) |
the sales practices and techniques employed by the
representative are not misleading, false, inappropriate to the
expected target clients or will not result in unfair outcomes for
clients; and
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(ee) |
the FSP on a regular basis –
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(aA) |
reviews the recordings referred to in (cc) and/or monitors the
representatives, to ensure that they do not deviate from the script
or supplement the script with content not approved as contemplated
in (bb); |
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(aB) |
reviews and monitors the adequacy and efficiency of its
controls and quality assurance processes in relation to the
execution of sales; and |
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(aC) |
reviews the script for appropriateness and compliance with
applicable legislation. |
Training exemptions
In addition to the above, the “Scripturers” will also be exempt from
writing the regulatory exams as well as the new Class of Business
and Product Specific training.
In practice, this means that, if you are, for instance, a
representative of a FSP that sells derivatives, or collective
investment schemes, or retail pension benefits, you are not really
required to be knowledgeable about such products, as the script will
guide the client to make a decision in which you had no hand in,
other than reading it to him. This is construed as NOT providing
advice, hence you do not need any of this other knowledge that those
electing to provide advice has to have.
Those advising only in respect of Tier 2 products qualify for the
same exemption.
At this stage, this crucial document, the “Script”, must be
“…approved by a key individual and the relevant governance structure
of the FSP” and should be used “…under the direct oversight of a key
individual who meets the competence requirements for the furnishing
of advice in relation to the relevant financial product and whose
normal place of work is at the same premises where the execution of
sales are performed.”
This of course sets the table for a feast of “after the event”
calamities which flies in the face of the Regulator’s stated
intention of being forward-looking, pre-emptive, proactive,
outcomes-based etc.
Product providers who consider using this as gap to side-step
current qualification requirements should bear in mind that, under
the new dispensation, they will be accountable for all unintended
consequences following from the actions of their representatives. |
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| Your Practice Made Perfect |
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Stick to the script |
We receive many enquiries from readers about debarments, like this one
last week:
The reason why I was debarred was that I helped a customer with a loan
application over the phone. I told the customer not to disclose too many
expenses as the loan would be declined. That was picked up by the quality
control department and led to my debarment.
Production targets is seen as one of the biggest reasons for
miss-selling, and most direct marketers, despite blaming commission as
the greatest sin on earth, actually do pay “success bonuses” to better
producers, which obviously lead to unfair pressure and conflicts of
interest, as indicated in the example above.
No doubt, representatives sitting with an “execution of sales only” text
in front of them are highly unlikely to stick purely to the script. What
do they do when a client asks a question?
“Sorry, I cannot answer that, it is not in the script. Let me refer you
to my key individual.”
This is akin to expecting a tied agent (“product supplier agent” in the
new parlance) to say to a client: “Sorry, my employer’s product is not
as good as that of our main competitor. I suggest you rather approach
them.”
What would the average man or woman, whose income is reliant on
successful sales, do in such a situation? Obviously, attempt to salvage
the sale.
But does it lead to fair outcomes for clients, which is the foundation
of market conduct regulation?
Methinks there is still some serious consideration required on whether
the implementation of “Execution of Sales only” will bring anything new
to the table, or actually contribute to fairer treatment of clients.
It merely perpetuates regulation by exemption, and is anything but
pre-emptive. |
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NCR smacks BMW
Views ‘on-the-road-costs’ as not being in line with prescriptions
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On 3 August, we published an article on the National Credit Regulator’s
(NCR) media statement, warning vehicle financiers (being registered
credit providers) that they will be conducting a compliance monitoring
exercise on vehicle licence and registrations fees payable under credit
agreements. As part of this compliance monitoring exercise, the NCR
obtained credit agreements from various vehicle financiers and reviewed
the costs stated in the quotations.
The NCR, in a media statement dated 5 October, announced that they
issued a compliance notice to BMW Financial Services (BMW), a registered
credit provider, instructing them, amongst others, to refund all
consumers whom they charged ‘on-the-road’ costs. According to a Business
Day report, BMW intends to challenge the compliance notice by applying
to the National Consumer Tribunal for a review.
It may very well be that BMW was chosen to send a message to the
industry.
Our understanding of ‘on-the-road’ costs is that it often consists of
many different components ranging from ‘licence and registration’ fees
to ‘fuelling and delivery’ costs, if not provided for separately.
Therefore, the possibility exists that at least a portion of the
‘on-the-road’ costs may be costs that are permitted by the National
Credit Act, Act 34 of 2005 (NCA). However, it is important that motor
vehicle dealers and financiers ensure that they specify these costs in
accordance with the NCA.
This matter is one to follow, as was the ‘club fees’ charged by Edcon,
as it emphasises the NCR’s commitment to ensuring that only permitted
costs are included in the cost of credit to consumers.
Please
click here to download a copy of the media release.
Moonstone employed an NCA Specialist to render NCA compliance services
to its clients. As part of these services, we are able to assist you in
reviewing your ‘on-the-road-costs’ for compliance with the NCA. Should
you have any queries, please contact Gerrit Viviers on 021 883 8000 or
by email to
gviviers@moonstonecompliance.co.za. |
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CMS Annual Report 2016/17
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The Council for Medical Schemes (CMS), regulator of the medical schemes
industry, released its Annual Report for 2016-2017 on 5 October,
providing a comprehensive report on the status of the private medical
schemes industry in South Africa.
Some of the interesting statistics in the report include:
Number of medical schemes and beneficiaries
The total number of medical schemes registered as at 31 December 2016
was 82, down from 83, as a result of the amalgamation of LMS Medical
Fund and Bonitas Medical Scheme on 1 October 2016. This figure included
a total of 22 open schemes and 60 restricted schemes.
Altogether the 82 schemes had a total subscription of 8.879 million
members as at 31 December 2016. The industry experienced a year-on-year
increase of 0.78 % in the total number of medical scheme beneficiaries,
up from 8.809 million in December 2015. The total number of
beneficiaries of restricted schemes increased by 1.39% compared to a
0.30% increase in the beneficiaries of open schemes.
Broker costs
Commissions, service fees and other distribution costs increased by
10.0% from R1.8 billion in 2015 to R2.0 billion in 2016, compared to
5.8% in 2015. Broker costs represented 14.1% of total non-healthcare
expenditure in 2016, a slight increase from 13.9% in 2015.
Administration expenditure was the main component of non-healthcare
expenditure in 2016, at 84.2%, down from 84.6% in 2015. It accounted for
7.3% of GCI in 2016 (unchanged from 2015).
Net healthcare results and impact on reserves
The net healthcare result for all medical schemes combined reflected a
deficit of R2 390.8 million in 2016 (2015: R1 208.5 million deficit).
Open schemes incurred a total deficit of R955.7 million (2015: R539.6 million deficit), and restricted schemes generated a combined deficit of
R1 435.1 million (2015: R668.9 million deficit). This deterioration is
mainly due to the worsening claims ratios of all schemes from 91.4% in
2015 to 92.1% in 2016.
The industry average solvency ratio decreased to 31.6% in 2016 from
32.6% in 2015. The solvency ratio of open schemes decreased by 2.1% to
28.6% in 2016 (2015: 29.2%). Restricted schemes experienced a decrease
of 4.5% in their solvency ratio, 35.8% from 37.5% in 2015.
The full Annual Report of the CMS, along with Excel and Pdf Annexures
which contains detailed information on medical schemes can be accessed
on http://www.medicalschemes.com. |
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Regulatory Examinations |
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Self-Help Guidelines to make a
booking, download your certificate or view results |
Candidates who wrote with Moonstone can now view their results,
make a new booking or update their information on our website:
www.faisexam.co.za
Here is what you do:
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Click on the
Moonstone FAIS Exam website (www.faisexam.co.za)
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Click on the
second heading: “Update Your Booking/Personal Details/Get
results”.
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Key in your ID or
Passport Number used to register for the exam: click on Send
password.
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The system will
send a password to the e-mail address you provided at
registration.
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Use this password
to log in on the same address as above:
Type in the password – do not copy and paste.
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Click login.
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You will then be able to make a booking, download your
certificate or view results.
Frequently Asked RE Questions
– Answers to questions on REs and preparation material
Email enquiries should be addressed to
faisexam@moonstoneinfo.co.za. You can phone us on
021 883 8000 - select option 2 to speak to one of our
consultants. |
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Careers Platform
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Are you hiring? Advertise your position on Moonstone’s Career Platform
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The Moonstone website -
www.moonstone.co.za
- enjoys an average of 15 000 visits and approximately 39 000 page views per month. |
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Moonstone boasts an exclusive newsletter mailing list of over 49000
dedicated financial decision makers who receive 2 newsletters per week. |
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Our audience is relevant and industry specific: individual and corporate advisors and brokers in the following financial sectors:
iInvestment, Risk, Healthcare, Banking, Retirement, and Insurance. |
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Featured Positions |
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Wealth Management
Consultant:
Rockfin, Cape Town - As an independent Financial Advisor your role
will be to work closely with clients in their medium- to long-term
personal financial planning. This is a client facing, sales and targets
driven profession. Please only apply if you have the required insurance
sales experience.
Read More
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Wealth Management
Consultant:
Rockfin, Sandton - We are looking for Financial Advisors to provide
private wealth management and financial planning services to individual
& corporate clients.
Read More
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Business Development
Manager:
Sovereign Group, Johannesburg - If you are a Graduate or admitted
attorney, a confident public speaker with general company, commercial
and trust law and happy to spend 50% of your time out of the office in
meetings, selling Sovereign Trust’s services, then
Read More
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Marketing & Events
Coordinator:
Sovereign Group, Cape Town - The applicant must be a fluent and
articulate English and Afrikaans speaker holding an undergraduate degree
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Sovereign Group, Cape Town - The successful applicant will assist
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Origin Financial, Cape Town - The core function of the successful
candidate is to look for new business and maintain relationships with
clients. Must have own car & driver’s licence as well as RE certificate.
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In Lighter Wyn |
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So you think you are getting old? |
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Jeanne Louise Calment had the longest confirmed human
Lifespan on record: 122 years and 164 days. It seems that fate
strongly approved of the way Madame Calment lived her life.
Jeanne was born in Arles, France, on 21st February 1875.
When the Eiffel Tower was built, she was 14 year old.
It was at this time that she met Vincent van Gogh. "He was dirty,
badly dressed and disagreeable," she recalled in an interview given
in 1988.
When she was 85, she took up fencing, and she was still riding her
bicycle when she reached 100.
When Jeanne was 114, she starred in a film about her life; at 115
she had an operation on her hip, and at 117 she gave up smoking
(having started at the age of 21 in 1896). Apparently, she didn't
give it up for health reasons, but because she didn't like having to
ask someone to help her light a cigarette once she was becoming
almost blind.
In 1965, Jeanne was 90 years old and had no heirs. She signed a deal
to sell her apartment to a 47-year-old lawyer called André-François
Raffray. He agreed to pay her a monthly sum of 2,500 francs on the
condition that he would inherit her apartment after she died.
However, Raffray not only ended up paying Jeanne for 30 years, but
died before she did at the age of 77. His widow was legally obliged
to continue paying Madam Calment until the end of her days.
Jeanne retained sharp mental faculties.
When she was asked on her 120th birthday what kind of future she
expected to have, she replied: "A very short one."
Quotes and rules of life from Jeanne Calment:
"Being young is a state of mind, it doesn't depend on one's body,
I'm actually still a young girl; it's just that I haven't looked so
good for the past 70 years."
"All babies are beautiful."
"I'm in love with wine."
"Always keep your smile. That's how I explain my long life."
"If you can't change something, don't worry about it."
"I have a huge desire to live and a big appetite, especially for
sweets."
"I never wear mascara; I laugh until I cry too often."
"I see badly, I hear badly, and I feel bad, but everything's fine."
"I think I will die of laughter."
"I have legs of iron, but to tell you the truth, they're starting to
rust and buckle a bit."
"I took pleasure when I could. I acted clearly and morally and
without regret. I'm very lucky."
(At the end of one interview, in response to a journalist who said
he hoped they would meet again the following year):
"Why not? You're not that old; you'll still be here."
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Tel: +27 21 883 8000 | Fax: +27 21 883 8005
info@moonstoneinfo.com
www.moonstone.co.za
P.O. Box 12662, Die Boord, Stellenbosch, 7613, Republic of South Africa
Disclaimer:
Services and products advertised by external product suppliers in
this newsletter are paid for by the respective suppliers. Moonstone
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liability in respect of the unauthorised use of its e-mail facility
or the sending of e-mail communications for other than strictly
business purposes.
The complete disclaimer can be accessed
here. |
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