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Moonstone Monitor - 8 June 2017 |
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Paul Kruger
Author/Editor |
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I am not afraid of storms, for I am learning how to sail my ship
– Louisa May Alcott |
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Distributed to 46 963 subscribers.
To advertise with us
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From the Crow's Nest |
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Too many cooks |
The phrase “Friends, Romans, Countrymen, lend me your ear” was not
uttered by Vincent van Gogh after the painful self-inflicted loss of his hearing
appendage.
A recent FAIS Ombud determination reminded me of this speech by Marc Anthony in
Julius Caesar, another of the Bard’s classic plays. From the Ombud case, it is
evident that lending your ear should carry the same warning as that other phrase
by Shakespeare: Neither a borrower nor a lender be.
In essence, a client’s retirement annuity matured. Rather than approach his
financial adviser, he phoned the product provider’s call centre to enquire about
his options, and was duly sent the documentation, including the form on which he
had to indicate which option he chose.
He then saw fit to discuss this with his adviser, who informed him that, as his
lump sum was below the minimum, he could have the full amount paid out to him,
subject to the Receiver’s share of the spoils. The adviser also suggested that
he personally submit the relevant documents at respondent's offices.
A financial advisor in the employ of respondent, Mr. Singh, advised the
complainant that he was not permitted to withdraw the full amount, but only one
third of the fund value, and obliged to purchase a compulsory annuity with the
remaining two thirds. The complainant says he reluctantly agreed to the advice
of withdrawing only one third (R70 000) because he had an urgent need for
liquidity. Of this, he received R48 000, while the Receiver took R17 000 and the
product provider R5 000, presumably as an early termination penalty. (These sums
in the determination do not quite make sense, but that is not relevant to this
article).
A few days later, the complainant mentioned the issue again to his financial
advisor who was adamant that respondent had failed to appropriately advise
complainant given the prevailing income tax laws at the time, which stipulated
that full commutation was allowed where the entire value of the fund does not
exceed R247 500.
The complainant then wrote to the product provider’s area manager.
“For a full month, complainant says he was not given any straight answers, with
respondent merely advising that the matter was under investigation. On 5 July,
complainant telephoned the area manager who conceded that the respondent had
made a mistake but that the problem was with SARS who were unwilling to assist
respondents. According to the complainant, the area manager advised him that
respondent at that stage had eight such cases where mistakes had been made by
its employees in advising respondent's customers.”
“…despite respondent's concession that it had made the mistake in advising
complainant, including its inability to resolve the problem, respondent can
provide no evidence that it referred its client to this Office (the Ombud’s).”
On 9 September 2016, the complainant wrote to the respondent's internal
arbitrator who responded by advising that SARS had refused to assist them in
reversing the transaction. Respondents offered complainant an amount of R10 000
as compensation for the inconvenience, which the complainant rejected.
“On 30 September 2016, respondent replied stating that it was unable to reverse
the transaction without SARS' approval. Respondent further argued that if it
were to pay the full commutation value, complainant would be unjustly enriched.”
In a subsequent letter, the provider’s internal arbitrator informed the
complainant that the obligation is on the member to ensure that he is
aware of the income tax implications flowing from his election before an
instruction is submitted to the Fund. “Ignorance of the law is not an excuse for
not making the correct election.”
The Ombud’s response to this reads:
“Properly construed in context of the entire e-mail and the circumstances of
this case, the line conveys that complainant is the author of his own
misfortune. Nothing could be further from the truth. Respondents' conduct makes
a mockery of the FAIS Act and the ‘Treating Customers Fairly’ principles.”
In addition, the Ombud quotes from the Income Tax Act:
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The obligation is on the fund to ensure that a member is aware of the Income
Tax implications flowing from his or her election before applying for a tax
directive, and
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The cancellation of a tax directive application will only be permitted in
circumstances where a bona fide mistake was made.
When approached by the FAIS Ombud, the respondent admitted failure to resolve
the complaint and sought the Ombud’d guidance on how to proceed.
The response from the Ombud is scathing, to say the least. This sentence
essentially sums it up:
“Respondent must be condemned for the self-serving manner in which it has dealt
with the complaint. Respondent's conduct breached the provisions of the Act and
Code and is anathema to the TCF principles.”
This resonates with the second line in the Marc Anthony speech: I come to bury
Caesar, not to praise him.
The Ombud upheld the complaint and ordered the respondent to take the steps
necessary to reverse the transaction, recalculate the tax and pay the
complainant what is due to him, less permissible deductions.
One wonders how things may have turned out, had the client elected to work
through his personal financial adviser who would probably have done the job
without any financial gain.
Click here to download the full
determination. |
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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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Extension of submission of Financial Statements |
On Monday we reminded subscribers of the 30 June deadline for the
submission of financial statements where their financial
year ended on 28 February.
Subsequently, we received a number of enquiries about applying for an
extension of this deadline.
The FSB website states the following:
1. Extensions
An application for an extension to submit financial statements can be
submitted to the Registrar in terms of section 4(1) of the FAIS Act by:
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1.1 |
Preferred method - a request submitted electronically
via the FSB’s FAIS Online system. To submit a request for
extension, log onto the FAIS Online system on the FSB’s website
and apply for extension online. |
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1.2 |
Send a facsimile to (012) 422 2973. Specify the FSP number
and the word "Extension" on the front page of the fax. Please do
not use any other fax number. |
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1.3 |
Send an email to
faisfins1@fsb.co.za. It is important that you include the
word "Extension" as well as the FSP number in the subject line
in order to expedite the request. |
A request for extension must be done 15 days prior to the
submission date. Please note that extension will not be granted if any
financial statements or compliance reports are outstanding.
The FSB finance department has confirmed that they use the same account
details that are used for Levy payments.
The current fee for requesting an extension is R574.00.
NB: Moonstone Protector clients can contact
Craig Barends for assistance. |
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Backdating of dividend withholding tax questioned
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Legalbrief Today reports:
Government’s decision to increase the rate of a dividend withholding tax
and apply it from 22 February 2017 when the Budget Speech took place
creates tax uncertainty, Parliament was told yesterday (6 June),
according to a Fin24 report. The Standing Committee on Finance
hosted public hearing on the Rates and Monetary Amounts and Amendment of
the Revenue Laws Bill, which will enable tax rates changes announced
during the 2017 Budget. In submissions made on the tax proposals both
the SA Institute of Tax Professionals (Sait) and the SA Institute of
Chartered Accountants (Saica) challenged the date on which the increased
dividend withholding tax will come into effect.
In the 2017 Budget, it was announced that dividend withholding tax would
increase from 15% to 20%. The increased rate would apply to all
dividends paid from 22 February (when the Budget Speech was delivered).
Erica de Villiers, head of tax policy at Sait, pointed out that the
increased rate would also apply to dividends declared before the 2017
Budget, but paid after this date. ‘Dividends declared before the Budget
should not be caught, as this undermines tax certainty,’ De Villiers
said.
Saica’s Tracy Brophy and Pieter Faber also argued against backdating the
increase and questioned whether the Finance Minister has the legal
mandate to change dividend taxes specifically before the new tax
legislation is enacted by Parliament. Saica argued that a dividend tax
rate can only be enacted once passed by Parliament and by implementing a
rate change before the law applies undermines legal certainty.
Full Fin24 report. |
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Whose savings account is it any way?
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“Your” money in a medical scheme savings account actually belongs to the
medical scheme.
So said the Constitutional Court, after matter was tested first in the
high court, the Appeal Court and finally in the Constitutional Court, as
appears to be the way everything legal is contested these days. Or
should that read “con tested” in the light of the Guptagate leaks?”
An article by Nellie Brand-Jonker in Sake Burger notes that this
determination means that the funds in medical scheme savings accounts
must in future be treated as assets of the scheme.
The Medical Schemes Council said that this will have major implications
for scheme members, including the fact that they will not be entitled to
earn interest on these funds as it belongs to the scheme as soon as it
is paid over.
I have long held the theory that a medical schemes savings account was
one of the best con jobs ever pulled in the industry. This finding makes
things even worse for those who are allowed to borrow their own money in
advance over 12 months.
I was unable to find a media release on the CMS website, but will
publish it here if and when it does finally materialise. |
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Technologically Speaking |
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The Goldilocks Theory of Fintech |
A recent article in Thinkadvisor, an American publication
for financial advisors, discusses what I believe is a critical
concern for us: When is enough too much, or too little? Below are
some excerpts from the article.
“Remember the Goldilocks fable? The infamous invader came across
porridge that was too hot, porridge that was too cold, and porridge
that was just right.
The same dynamic occurs today among
advisors and their financial technology. On one hand, many
advisors refuse to adapt and adopt even basic digital
infrastructure. This kind of advisor won’t be around for long.
On the other hand, many advisors over-tech their businesses hoping
they can coast alongside the robots as they do all the work. This
overreliance on technology may be sabotaging client relationships
without the advisor even knowing it.
A conversation about overreliance on technology started after
Tesla’s Autopilot system caused the unfortunate death of a man in
Florida last summer. Joshua Brown was driving on a highway at high
speed with the Autopilot system deployed and failed to notice the
giant semi-truck careening towards him.
For advisors, an overreliance on tech may not be fatal, but may be
dangerous to your client relationships. Assuming your tech can do
the work of advising your clients is about as smart as assuming all
of your prospects want to connect with you on Snapchat.
But, what about the other side of the equation —
when the autopilot works better than the pilot?
Here’s a story about another Joshua. Joshua Neally, a 37-year-old
attorney, headed home from work early in his Tesla Model X to
celebrate his daughter’s fourth birthday. While on the freeway he
suffered a pulmonary embolism, an often fatal obstruction of a blood
vessel in his lungs, a feeling he described in an interview for
Slate as “a steel pole through my chest.” He doesn’t remember much
of the drive after that, but his vehicle successfully got him to the
closest emergency room, about 20 minutes away. Neally’s car most
likely saved his life.
I don’t think most advisors are in the overreliance category. A
recent study by PwC found that while 40% of high-net-worth
individuals in all markets and age groups use self-directed
investment services, only 25% of wealth managers offer digital
channels beyond email. That’s staggering.
The 20th annual World Wealth Report (WWR) by Capgemini
found that more than half of wealth managers (55%) aren’t fully
satisfied with their firm’s digital capabilities. The report
revealed that 81% of wealth managers want better digital tools with
richer functionality, including increased collaboration with clients
(86%), the ability to better leverage client data to identify growth
opportunities (82%) and even time savings through reduced paperwork
time (82%).
The report also notes that HNW investors’ demand for robo services
has shot up nearly 20 percentage points, from 49% in 2015 to 67% in
2016. If that’s true, then the big question is this – are HNW
investors going to find client-facing robo technology through you as
an advisor, or are they going to find it elsewhere?
Hopefully, they’re looking for a particular kind of self-service
opportunity. I’m willing to bet that high-net-worth investors are
quite unlikely to put everything in the hands of a robot. They need
a human to have their back. What they want is great technology,
paired with an efficient advisor giving them intelligent advice.
As for the man whose life was saved by Tesla’s Autopilot, “I’m not a
daredevil,” Neally told Slate. “I promised my wife I’d always be
paying attention.” Maybe that’s the key. Advisors are at their best
when they’re simply paying attention. Advisors can utilize
technology to put some of the hassles of their business on
“autopilot” without becoming ignorant. If an advisor’s tool belt
helps them maximize their business and remain focused on their
clients, maybe that’s the amount of technology that’s just right.
Please click here to read this and other related articles on the
Thinkadvisor website. You will be required to subscribe,
something which I can recommend.
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Regulatory Examinations
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Legislation Handbook and
Preparation Guide for REs |
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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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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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
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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Our audience is relevant and industry specific: individual and corporate advisors and brokers in the following financial sectors:
Investment, Risk, Healthcare, Banking, Retirement, and Insurance. |
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Featured Positions |
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Financial Planners:
Risk Free Solutions, Port Elizabeth & Kimberley - We are looking for
established, well balanced Financial Planners striving for financial
freedom. If you have matric, your own transport, driver’s licence and RE
qualificaton, then
Read More
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Short Term Insurance
Underwriter:
The Insurance Centre, Westville - We require a commercial and
personal lines short term insurance underwriter / administrator.
Read More
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In Lighter Wyn |
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In vino veritas |
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MY DOKTER het gesê as ek ’n lang, gesonde lewe wil lei, moet
ek drank uitsny.
Ek het nou al amper twee plakboeke vol prentjies van drank.
As jy ook wil drank uitsny – die pamflette van Makro het lekker baie
prente van alle soorte drank in!
My dokter sê ook vir my hy kan nie presies sê wat is fout met my nie,
dis moontlik al die drinkery.
Ek sal maar teruggaan as hy nugter is.
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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
does not endorse any opinions, conclusions, data, products, services
or other information contained in this e-mail which is unrelated to
the official business of Moonstone and furthermore accepts no
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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©2015 Moonstone. All rights reserved. |
