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Moonstone Monitor - 3 August 2017 |
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Paul Kruger
Author/Editor |
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Don't throw away the old bucket until you know whether the new one holds
water – Swedish proverb |
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Distributed to 47 126 subscribers.
To advertise with us
click here |
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From the Crow's Nest |
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Binder Remuneration Update |
We reported last week on the publication of proposed amendments to the
Regulations made under the Long-term Insurance Act, 1998 (“LTIA”) and the
Short-term Insurance Act, 1998 (“STIA”) for public comment. This included
reforms to the Retail Distribution Review and the draft amendments to the Binder
Regulations.
Feedback to commentators notes that substantial input was received on amendments
relating to the introduction of binder fee caps for financial advisers. To this
end, the main commentators were asked to “…provide further substantive insight
into how activities are segmented and to make proposals on what would constitute
reasonable and commensurate remuneration for the performance of such activities
so as to mitigate any risk of the remuneration potentially resulting in
conflicted advice.“
Based on the comments received, the FSB is in the process of formulating
proposed revisions to the draft Regulations to be submitted to the National
Treasury for consideration.
A cover note with feedback to commentators summarised the discussion on
remuneration as follows:
Fees for Binder Functions
The draft Regulations gave effect to Proposal ZZ of the RDR, which proposed
binder fee caps for non-mandated intermediaries (“NMI”) authorised to render
“advice” as defined in the Financial Advisory and Intermediary Services Act of
2002 (“FAIS Act”) (“NMI advisers”) or their associates.
This elicited extensive stakeholder comments, particularly from players in the
short-term insurance sector. Most comments argued against capping and raised
concerns that a “one size fits all” cap is inflexible and would not cater for
the wide variations in the actual costs of binder services in different cases.
Concerns were also raised that the fee cap percentages proposed in the draft
Regulations were not adequately motivated, with some stakeholders arguing that
the proposed caps were unreasonably low.
The FSB remains of the view that the current principle-based approach to setting
binder fees has proven inadequate to address the significant conflicts of
interest that arise when an NMI that provides advice also performs binder
functions. Considerable evidence points to a wide range of interpretation of the
current principles among insurers that has led to persistent conflicts of
interest, resulting in business being placed by NMI advisers that also perform
binder functions in a way that is influenced more by conflicted incentives than
it is by the best interests of customers.
In order to give effect to the core principle that binder holders should not be
remunerated differently by different insurers for performing similar activities,
further engagement took place with the main industry commentators to explore a
solution that would achieve a common understanding across role players on what
would constitute a “reasonable and commensurate” fee for specific binder and
binder-related activities and detailed criteria that may be considered by the
FSB when determining whether remuneration meets these principles.
Following further industry proposals, the FSB believes that the introduction of
revised caps on binder fees will mitigate the inherent conflicts of interest for
binder holders who are NMI advisers. A robust analysis of substantive inputs
received from industry associations and the data received through Information
Request 3 of 2016 were performed and, based on the outcome of such analysis, the
FSB revised the proposal on binder caps for NMI advisers for both short-term and
long-term policies. This proposal is still subject to further technical work,
specifically in as far as it relates to:
Fees for policy data administration services
In response to industry input, the FSB is now proposing that the definition of
“services as intermediary” under both the LTIA and STIA Regulations should not
be aligned at this stage, as was the original intention. Further activity
segmentation work needs to be done during later RDR phases to ensure that a
holistic approach to remuneration is adopted.
Policy data administration services are explicitly included in the definition of
“services as intermediary” as it cannot be treated as outsourcing, as was
initially proposed in the draft Regulations. For purposes of remuneration,
Policy data administration services will now be carved out from the normal
commission regulations and an additional fee may be paid for PDAS if the
relevant operational requirements are met.
The majority of commentators raised concerns with the fee cap proposed, arguing
that the proposed cap is too low, does not adhere to the principle of
commensurate remuneration and was not informed by scientific evidence.
Transitional arrangements
To more appropriately accommodate some of the concerns that were raised and to
provide industry with an opportunity to transition into the new requirements,
specific transitional provisions are proposed in respect of the new requirements
that apply to binder functions.
These matters will be discussed in great detail at our
Regulatory Update
Workshops in September.
Be there. |
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GTC Medical Aid Survey 2017 reveals small medical aids also offer
good value |
Smaller medical schemes perform well by offering consumers value for
money, but they have not been as successful as some of the larger
schemes in attracting new members.
This is one of the significant conclusions from leading wealth and
financial advisory firm GTC in its seventh annual Medical Aid Survey
(MAS) for 2017.
The Medical Aid Survey analyses and rates medical aid schemes and
provides a standardised comparison and ranking of the choices available
to consumers.
This year’s survey reviewed 23 open medical aid providers, with a total
of 144 plans, which were categorised into 11 areas according to benefits
offered.
Click here to read
the article, or download the
2017 MAS
pdf. |
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Your Practice Made Perfect |
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Moonstone Regulatory Update Workshops 2017 |
Please note: this is NOT
regulatory examination training.
In the financial services industry in South Africa, the only certainty
is change. A number of regulatory changes with significant impact on the
industry are in the pipeline.
Moonstone Compliance is pleased to announce that we will hosting another
round of our very popular regulatory update workshops during
September 2017.
As our regular attendees have come to expect, we will once again share
what you need to know in a practical and understandable manner to allow
you to make informed decisions on how the proposed changes will impact
you and your business.
The presenters, Billy Seyffert and Alan Holton, will cover the
following:
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A brief update on the RDR
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The proposed changes to the Long- and Short-term Insurance Regulations
and the impact on remuneration
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The proposed changes to the Policy Holder Protection Rules with a
focus on replacement business
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The Financial Intelligence Centre Amendment Act and how it impacts
Accountable Institutions
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The future of Fit and Proper and what will be expected of
intermediaries
The workshops are scheduled as follows:
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Town |
Venue |
Date |
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Port
Elizabeth |
PE
Golf Club |
05/09/2017 |
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East
London |
EL Golf Club |
06/09/2017 |
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Cape
Town |
The River Club |
11/09/2017 |
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Johannesburg |
Houghton Golf Club |
19/09/2017 |
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Pretoria |
Diep in die Berg |
20/09/2017 |
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Durban |
Coastlands Hotel Umhlanga |
21/09/2017 |
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Bloemfontein |
Kopano Nokeng |
27/09/2017 |
Cost
Moonstone Compliance clients: R650 per person (excl VAT).
Other attendees: R1 000 per person (excl VAT).
Click here to register.
Please read the
Registration Guidelines if you need help.
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Justice Malala at the 2017 FPI Professionals
Convention |
Justice Malala is a renowned political commentator, newspaper columnist
and best-selling author. He is the resident political analyst for e.tv
and eNews Channel Africa. He also presents a weekly political talk show
(The Justice Factor on eNCA, Mondays at 9:30pm)
He will be at the
2017 FPI Professionals Convention to speak about the effects of
political uncertainty on our economy.
More at the convention
For those who wish to maximise their ROI, the FPI Convention 2017 is the
perfect place. Exhibitions, sponsorships as well as advertising
opportunities are available.
For more, visit
www.fpiconvention.co.za. |
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FSB Levy Reminder
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By now you should have received a letter from the FSB advising details
of the annual FSB and FAIS Ombud levies payable by the end of October.
If you did not, it could mean that your contact details at the Regulator
are incorrect.
The 2017 levy invoices will be mailed by 30 September 2017 and are
payable by 31 October 2017. Please note that all authorised FSPs, in
other words active FSPs on record at the Registrar’s office as at
31 August 2017, will be legally liable to pay levies.
Inform the FSB in writing if you have ceased to render financial
services or have merged with another company, and send an email request
to lapse your licence to
genevieve.vandermerwe@fsb.co.za.
If you wish to retain your licence despite no longer operating, you are
still liable to pay the annual levy.
It is also important to notify the Registrar in writing if you have a
licence as a sole proprietor and hold another FSP licence in the name of
a private company [(Pty) Ltd] and/or Close Corporation and you would
like the sole proprietor license to lapse before 31 August 2017.
No licence will be lapsed unless a request for a lapse is submitted to
the Registrar in writing.
Ensure that you have submitted the correct total value of investments
under management, should you be authorised as a discretionary financial
services provider (Category II FSP), hedge funds manager (Category IIA
FSP) or Linked Investment Service Provider (Category III FSP).
“The Registrar has observed the continued practice of the removal of
representatives by some FSPs from their respective registers before the
levy calculation date (31 August) and the update of those registers with
the same representatives after the said date. Such conduct, which is
aimed at reducing the levies payable to this office, is viewed in a
serious light by this Office, and will be monitored closely and can
jeopardise the license of an FSP.”
The letter contains details of how the levies are calculated. If you
feel an attack of masochism coming on, click here to use the Moonstone
levy calculator for
FSPs and
Sole Props.
On a more positive note, “SARS has informed us that the levy amount paid
by you to the FSB is a tax deductible expense.”
But wait, that’s not all – the FSB levy is 8% lower than last year.
See, and there you thought it was all bad news. |
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NCR Alert for Vehicle Financiers and Dealers
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On 2 August 2017, the National Credit Regulator (NCR) issued a media
statement to announce its intention to conduct a compliance monitoring
exercise on vehicle licence and registration fees payable by consumers
under credit agreements.
The purpose of the exercise is to determine whether credit providers do
not charge consumers more than the actual licence or registration fee.
Licence and registration fees may possibly be included in “on-the-road”
or “service and delivery” fees charged by motor vehicle dealers. Credit
providers need to ensure their compliance with section 102 of the
National Credit Act, Act 34 of 2005 (NCA) in relation to licence,
registration and the other fees listed in section 102(1), where such
fees are included in the principal debt deferred under the credit
agreement.
Please
click here to download a copy of the press release.
Moonstone recently employed a NCA Specialist to render NCA compliance
services (including NCR registrations) to its clients. 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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Regulatory Examinations
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Frequently Asked Regulatory Exam
Questions |
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What exam must I write?
Both the RE 5 and RE are Level One exams. RE 5 is for Representatives and
RE1 for Key Individuals. The RE 3 exam is for licence category II
candidates.
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How much does it cost?
The FSB determines the fee. Currently it costs R1163 per exam, also in
the case of a re-write.
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What preparation material is available?
Fully updated resources are available for those requiring access to the
legislation applicable to the regulatory examinations:
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Please make sure that you first read the
FSB’s Preparation Guide to
make sure you follow the right process in preparing. Page seven includes
a recent amendment to guide candidates in studying in the correct
manner. |
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Click on the following highlighted sections to download the relevant
updated Inseta learning material for key individuals,
RE 1, and
representatives,
RE 5. |
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LexisNexis provides a “Legislation Handbook” together with a
“Preparation Guide” containing the qualifying criteria, with a link to
the relevant legislation. |
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The
Juta FAIS Pocket Statutes also contains a CD with a comprehensive
list of updated supplementary legislative material for reference
purposes. Please click here to order this from our online shop. |
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The FSB’s telematics broadcast on the RE 1 and RE 5
provides a good introduction and overview, and can also be ordered
online in: |
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DVD format or on a
USB memory stick |
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Where can I write?
Go to:
http://www.faisexam.co.za/show_venues |
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What dates are available?
Go to:
http://www.faisexam.co.za/view_schedule |
| 6. |
What training is available?
As an Exam body we are not allowed to recommend companies that offer
face-to-face Regulatory exam classes. You can try Google for someone in
your area.
Bear in mind that this exam tests your knowledge about the laws
applicable to the provision of financial advice and intermediary
services. The questions are based on very specific qualifying criteria
set out in the FSB preparation guide. Any training that does not have
this as a basis will not prepare you properly for the exam. Do your own
research and don’t just accept what others say. |
| 7. |
Where can I buy old question papers?
There are no genuine “old question papers” available. Be very careful
when buying such preparation aids as some of those on offer are not in
line with the high standard prevailing in the actual exams and often
lead to a false sense of knowledge which is sadly exposed when
confronted by the actual exam. Follow the guidelines provided in the FSB
Preparation Guide and you are far more likely to achieve success. |
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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. |
| • |
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 Advisors:
Odinfin, Irene, Pretoria - We are looking for insurance sales agents
to join our successful team.
Read More
-
Wealth Management
Consultant:
Rockfin Wealth Management, Sandton - If you have the required
insurance sales experience for this client facing, sales and targets
driven profession, then
Read More
-
Senior Client Liaison Officer:
Vunani Fund Managers, Newlands, Cape Town - VFM is looking for a
suitably qualified EE candidate with an accounting diploma or degree.
Read More
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Short Term Insurance
Junior Underwriter:
JFA Shortterm Brokers CC, Milnerton -
We require a responsible
person with NQF4 and RE5 for all relevant tasks related to client
services in our short term insurance practice.
Read More
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In Lighter Wyn |
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Thinking out of the Box |
I was in the six item express lane at the store, quietly fuming.
Completely ignoring the sign, the woman ahead of me had slipped into
the check-out line pushing a cart piled high with groceries.
Imagine my delight when the cashier beckoned the woman to come
forward, looked into the cart and asked sweetly, "So which six items
would you like to buy?"
Because they had no reservations at a busy restaurant, my elderly
neighbour and his wife were told there would be a 45 minute wait for
a table.
"Young man, we're both 90 years old," the husband said. "We may not
have 45 minutes."
They were seated immediately.
(Apparently they were also billed as each course was served.)
All eyes were on the radiant bride as her father escorted her down
the aisle. They reached the altar and the waiting groom. The bride
kissed her father and placed something in his hand.
The guests in the front pews responded with ripples of laughter.
Even the priest smiled broadly.
As her father gave her away in marriage, the bride gave him back his
credit card.
Poor husband.
Three friends from the local congregation were asked, "When you're
in your casket, and friends and congregation members are mourning
over you, what would you like them to say?"
Artie said, "I would like them to say I was a wonderful husband, a
fine spiritual leader, and a great family man."
Eugene commented, "I would like them to say I was a wonderful
teacher who made a huge difference in people's lives."
Al said, "I'd like them to say, 'Look, he's moving!'"
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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. |
