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Moonstone Monitor - 25 May 2017 |
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Paul Kruger
Author/Editor |
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Bureaucracy defends the status quo long past the time when the quo has lost
its status – Laurence J. Peter |
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Distributed to 46 517 subscribers.
To advertise with us
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From the Crow's Nest |
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Appeal Board and powers of the Registrar to debar |
The decision in the Hlumbane case by the Appeal Board of the FSB
provides very interesting information about the Board’s powers in terms of
decisions made by the Registrar of Financial Services Providers, particularly
its discretionary powers.
The appeal stems from a decision by the Registrar to debar the appellant for
three years. The appellant was found guilty of having paid a former employee of
the examination authority an amount of R1 000 in return for a pass result for
the RE1 and RE5 examinations after the appellant had repeatedly failed. The
Registrar ruled that the transgressor no longer met the requisite character
qualities of honesty and integrity.
(See article on RE fraud below).
In the initial appeal, the appellant sought to have the Registrar’s decision
overturned in its entirety, but changed tack and only appealed against the three
year debarment.
Registrar’s discretion
The Appeal Board makes it very clear that the FAIS Act entitles the Registrar to
debar a contravening FSP and that the period of debarment is “…clearly a matter
for the Registrar’s discretion.”
It does note that the Regulator must act judiciously in this regard, and that
the appropriateness of the sanction will be determined by facts applicable to
each case. The severity of the contravention will determine the period of
debarment.
“When exercising this discretion, the Registrar must take into account, inter
alia, public interest and the severity of the transgression, while also bearing
in mind mitigating circumstances.”
“The Board will not interfere with such discretion lightly.”
Other interesting points from this case
In the Appeal Board matter of
Nomvuzo
Nkalitshana v Registrar of FSPs it was held that: "...the debarment
provisions of the FAIS Act aim to protect the interest of clients requiring
financial services. The intention is to remove unscrupulous persons from the
industry and serve as a deterrent to wrongdoers".
“In simple terms, the Registrar's decision was a statement announcing that the
Appellant can no longer be viewed as fit or competent to assist the public to
make investment decisions. See
Financial
Services Board and Barthram and Another. The Registrar therefore put up a
fence to protect members of the public from the Appellant who has conducted
himself improperly. Debarment is the fence.
The Board also notes that the FAIS Act provides for neither maximum nor minimum
periods of debarment. This aspect also falls within the Registrar's discretion.
Remorse as mitigating factor
In the Hlumbane case, the Board took cognisance of the principle that persons
who have had a lapse in their life are capable of mending their ways. The
principle speaks to the prospects of rehabilitation of a person who had been
found to not meet the requisite standard of character. Therefore the Board had
to consider whether the Appellant appreciated the error of his ways. Such
appreciation would often show itself in expressions of remorse.
The Board quotes from the
Swartzberg v
Law Society, Northern Provinces 2008 (5) SA 322 (SCA) at p 330 B-C:
"It is thus crucial for a court confronted with an application of this kind
to determine what the particular defect of character or attitude was. More
importantly it is for the appellant himself to first properly and correctly
identify the defect of character or attitude involved and thereafter act in
accordance with that appreciation. For, until and unless there is such a
cognitive appreciation on the part of the appellant, it is difficult to see how
the defect can be cured or corrected. It seems to me that any true and lasting
reformation of necessity depends upon such appreciation".
When the Appeal Board did deviate
The Mondisa Cindi decision also considered the discretionary powers of the
Registrar, amongst others, and actually found grounds for reducing the period of
debarment from 5 to 3 years. The Board found that time considerations should
have played a bigger role, and noted: “The primary consideration which remains
is fairness to all.”
Appeal Board finding in the Hlumbane case
“Having considered all the evidence before us, it appears that the Appellant has
not raised any matters to satisfy the Appeal Board that the Registrar erred in
the exercise of her discretion when setting the period of debarment. In fact, it
appears to us that it could have been argued that the Appellant should be
debarred for a period longer than three years, particularly given the nature of
the conduct that led to the Appellant's debarment. However, as has been stated
the power to decide on the appropriate sanction rested with the Registrar.”
Click here to download the
Hlumbane
decision. |
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Specialist protection is essential to guard against
cyber crime
South Africa ranks as one of the most vulnerable countries in the world
for cyber attacks, yet local businesses are largely discounting this
risk and not protecting themselves adequately in this regard.
Roy Wright, Head: Risk Solutions at leading financial advisory group GTC
believes small, medium and micro enterprises (SMEs) are especially
exposed to the dangers of cyber crime.
“Many companies mistakenly believe that their general insurance will
protect their business against the risks of cyber crime,” says Wright.
In light of this, GTC urges companies to pay careful attention to their
specific cover and policy wording.
Contact
Roy Wright, or
click here to read more. |
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Your Practice Made Perfect |
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Support Services for Internal COs |
The main business of Moonstone Compliance is to provide an outsourced
compliance service to FSPs in terms of Sec 17 of the FAIS Act. In
addition, we render support to internal COs from a variety of registered
entities, both local and abroad.
Many FSPs with internal compliance structures have fairly limited
resources and especially those with a wider geographically distributed
operation benefit from our national footprint.
Board Notice 127/2010 specifically allows for outsourcing of monitoring
by internal COs to external COs.
We provide consultancy services on a retainer or ad-hoc basis to
internal compliance officers from small FSPs to large corporates. This
includes:
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Assistance with monitoring of branches
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Provision of policies and procedures
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External audits for quality assurance purposes
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Legal advice and compliance opinions on technical matters
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Assistance in drawing up Risk Management Plans
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Licensing and profile change matters
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Representative register maintenance
Moonstone Compliance also offers the following services to a number of
prominent insurer and asset management clients:
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Assistance with the drafting of risk management plans
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Development of risk rating methodology
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Oversight of binder holders
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Auditing of binder agreements
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Legal advice and compliance opinions on technical matters
What we offer is not a one-size-fits-all solution. We design tailor-made
solutions to satisfy specific client needs.
For a detailed description of our services, please visit the dedicated
Moonstone Compliance website.
You can address a more specific enquiry by
clicking here. |
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Banking’s role in inclusive growth |
WEF Africa 2017 has officially drawn to a close and over the past 3 days
it has been very encouraging to see how many global stakeholders in
Africa have a genuine interest in pushing the continent forward be it
for private, social or political reasons.
One of the biggest advantages the continent has is the ability to learn
from the success and failure of more developed continents. Of particular
focus this week has been that growth without the inclusion of all is
dangerous. Africa’s greatest asset, the youth dividend, could be its
downfall if not nurtured and mentored. It's also worth noting how the
continent is much more powerful as a whole than each African country
individually.
Read more about banking's role here. |
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Regulating social media abuse in the workplace
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This article is published with the kind consent of
Van der Spuy & Partners. Dit is ook in
Afrikaans beskikbaar.
“I have a growing concern, not only about the time my employees are
spending on social media sites, but also about the risks for my business
if employees should not conduct themselves appropriately whilst online.
How do I strike a fair balance as an employer between allowing social
media use and protecting my business interests?”
Your concerns are not unfounded as social media (ab)use can negatively
impact on employee productivity and inappropriate employee social media
conduct can pose a business risk for an employer.
Internet usage via an employer’s infrastructure can be regulated by the
employer. This will require a consent clause in the employee’s
employment contract, or an internet usage policy by the employer that
sets out the what, when and by whom the employer’s internet can be
accessed and used. Additionally, the employer can also monitor internet
usage to determine violations of the policy. When it comes to internet
usage monitoring, it is important that such monitoring be within the
prescripts of the law and does not amount to a violation of employee
privacy and be done with a specific focus in mind, namely to identify
incorrect usage.
But, irrespective of monitoring, employees can still access the internet
at home and via their own devices and thereby pose a risk for the
employer, whether through embarrassment or the loss of a key client or
though careless social media conduct or even liability for harassment or
the defamatory conduct of an employee on social media.
To protect itself against such conduct an employer must therefore also
consider implementing a social media policy which regulates if and when
employees may use social media during work hours, what they are allowed
to do or not do on social media and clearly setting out the consequences
of a breach of this policy by employees.
By clearly regulating not only internet usage but also acceptable social
media conduct by its employees, an employer can go a considerable
distance towards protecting itself from the risks of inappropriate
employee social media conduct.
Such policies should however be clearly defined and understandable to
employees and it is advisable that you obtain the assistance of a
specialist to help correct word your policies for your business. |
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Legislation Handbook and Preparation Guide for REs
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The Legislation Handbook for Level 1 Regulatory Exams provides the
legislation specified as relevant to the regulatory exams RE 1 and 5.
The Preparation guide includes the qualifying criteria provided by the
FSB for these exams.
The qualifying criteria are cross-referenced in the Preparation Guide to
the relevant sections to be studied in the Legislation Handbook.
Shaded tabs enable the user to easily identify the four sections of the
work and the information is then grouped by subject matter area in order
to assist you to find the relevant items quickly and easily.
The 4th edition reflects the law as at 15 April 2015.
Click here to order these
LexisNexis
books from our Advisor Store. |
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Technologically Speaking |
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Fintech and proposed reguIatory changes |
At a recent presentation, Seshree Govender, an associate in the
financial regulatory practice at Webber Wentzel, commented on how
fintech companies may be affected by regulatory changes in the
financial services industry.
Based on the services they provide, Govender explained that some
firms do not have a clear understanding of which laws are applicable
to them.
“A lot of companies, not just fintech companies, say:
‘I’m providing a financial service and the Consumer Protection Act
(CPA) expressly excludes financial services, therefore I’m excluded
from the CPA, the CPA is not applicable to me so I don’t have to
open the CPA book’.
That’s right. [But] while the financial service is excluded, the
[mobile] app that you are providing is not. The app is a consumer
product and that is not excluded,” she said.
As the nature of fintech offerings are not necessarily confined to
specific sectors, there is also said to be growing cooperation among
different regulators to manage overlapping interests.
“Until we get the Financial Sector Regulation (FSR) Bill here, we
don’t know which regulator is doing what and the extent to which
they collaborate with each other. This lacuna or uncertain space is
inversely the best time for fintech companies to engage with the
regulator,” she said.
Click here to read the rest of the article.
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Regulatory Examinations
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RE Fraud |
We encounter a variety of attempts by a limited number of candidates to
cheat the system. As evidenced by the example in a recent Appeal Board
case, crime really does not pay.
The transgressor appealed against a three-year debarment. The Appeal
Board found that the person should actually have been debarred for much
longer.
There are a number of security measures built into various systems to
detect fraudulent actions. For obvious reasons, we cannot elaborate on
this, safe to say that it is virtually fool proof.
It is, however, not only the penalty for the transgression that will
affect you. I receive many requests for assistance from people who
sincerely regret their actions, but now find it virtually impossible to
get reappointed in the industry after expiry of their debarment period.
To re-enter the industry, you need a “sponsor” to vouch for your future
conduct. Finding someone willing to do that is very, very difficult.
Don’t commit fraud, however big the temptation. It is simply not worth
it.
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RE Schedule updated |
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Our venues are filling up fast as we approach 30 June 2017.
Candidates who are obliged to write and pass by the end of June
must please register in time.
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RE Self-Help Guidelines and Frequently Asked Questions |
Self-Help Guidelines
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
You can click on
this link to see the answers to the most common
questions we receive.
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 46000
dedicated financial decision makers who receive 2 newsletters per week. |
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Featured Positions |
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other general financial duties.
Read More
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In Lighter Wyn |
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The flying goat |
Two Tennessee rednecks are out hunting, and come upon a huge hole in
the ground.
They approach it and are amazed at the size of it.
The first hunter says, "Wow, that's some hole; I can't even see the
bottom. I wonder how deep it is?"
The second hunter says, "I don't know. Let's throw something down
there, listen and see how long it takes to hit the bottom."
The first hunter says, "Hey, there's an old automobile transmission
over there. Give me a hand, we'll throw it in and see."
So they pick it up and carry it over and count one, two, three, and
heave it in the hole. They are standing there listening, looking
over the edge, when they hear a rustling behind them. As they turn
around, they see a goat come crashing through the underbrush, run up
to the hole and, without hesitation, jump in headfirst.
While they are standing there staring at each other in amazement,
peering into the hole, trying to figure out what that was all about,
an old farmer saunters up.
"Say there," says the farmer, "You fellers didn't happen to see my
goat around here anywhere, did you?"
The first hunter says, "Funny you should ask, but we were just
standing here and a goat came running by at a hundred miles an hour!
"That's impossible,” said the farmer, “I had him chained to a
transmission."
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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
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or the sending of e-mail communications for other than strictly
business purposes.
The complete disclaimer can be accessed
here.
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