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Moonstone Monitor - 12 October 2017 |
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Paul Kruger
Author/Editor |
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Age is mind over matter. If you don't mind, it doesn't matter
- Satchel Paige (Wonder if my wife will believe this one?) |
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Distributed to 49,650 subscribers.
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click here |
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From the Crow's Nest |
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Remorse and Forgiveness |
Reviews of decisions by the Registrar and the FAIS Ombud tend to take a
slightly more formal and legalistic approach. In the case of the FSB,
particularly, it also provides insight into cases that are not published, as is
the case with those of the Ombud.
Jessie Tsusi and the Registrar
The appellant approached the Appeal Board after being debarred for two years by
the Registrar for contravening the honesty and integrity
requirements.
The appellant was employed as a representative by Old Mutual. Following
complaints, the employer instituted a forensic audit. It found that Tsusi had
misled clients into thinking that they were investing in Kruger Rands via Old
Mutual. The clients were also convinced to deposit the money in the
representative’s account, rather than that of her employer. The forensic audit
was followed by a disciplinary hearing, which she did not attend, claiming that
she was ill. She also did not respond to the Registrar’s notification of its
intention to debar her.
She did however pay back the money to the two complainants from her own
accounts.
At the appeal hearing, she also indicated that she “resigned as she knew it was
inevitable that she would lose her job.”
The core issues for consideration by the Board were whether she had contravened
the fit and proper requirements, and whether the debarment period was justified.
On the first, the Board ruled that the findings of the forensic audit were
“overwhelming.”
Honesty and integrity
“The test to ascertain whether a financial service provider has met the fit and
proper requirements is a moral judgment and goes beyond his/her business
dealings.”
The Board then refers to the generally accepted dictionary meaning of the word
“integrity” which reads: soundness of moral principles; the character of
uncorrupted virtue, especially in relation to the truth and fair dealing,
honesty and sincerity.
In her appeal, the appellant put forward information regarding steps she took to
rectify her transgressions, including explaining that they could not invest in
Kruger Rands via Old Mutual, and referring them to “…the advisor from the Kruger
Rand company…”
Concerning the advisor referred to above she stated: “I was not aware of the
intention of the advisor’s intention (sic) when he asked that the deposits must
be made into the personal banking account then I was supposed to give the money
to him later in cash.”
The Board responded: “Such explanation cannot be sustained if one has regard for
the facts before us.”
It then notes: “Even though the panel acknowledges the appellant’s personal and
financial challenges, it may only interfere if the decision of the Registrar was
irregular or fatally flawed in law or on the facts. The discretionary power to
determine periods of debarment is entrusted to the Registrar in terms of the
FAIS Act. In this instance, we do not find such irregularity.”
Remorse as mitigation
This was the title of an
article published last year in which we reviewed three
Appeal Board cases concerning debarments.
It is interesting to note that, in two of the cases, the appellants were
debarred for five years after submitting fictitious business which, in my view,
is not nearly as serious as duping clients to pay money into one’s personal
account. A likely reason for a mere two year debarment could have been the fact
that the money was repaid before she was instructed to do so. The question that
remains is whether this was done as a result of remorse, or whether it stemmed
from the fact that she was found out.
In the last case in our article, we quoted the following from the Appeal Board
finding:
Although the appellant was remorseful, the broken trust after such impeccable
service for almost two decades, though noble, cannot simply be restored by an
admission. Honesty and integrity are values which inform the choices an FSP
makes at the point when faced with dire circumstances. That is the point when
the standard of her or his moral judgment is tested.
An apology based on a guilty conscience, though a virtue, does not by itself
restore the honesty and integrity lost through an act of deception. More may
need to be done to meet the onerous standards of compliance required in the FAIS
Act and the Code of Conduct.
In another case, The Appeal Board also referred to the decision in Swartzberq v
Law Society, Northern Provinces 2008 (5) SA 322 (SCA) at p. 330 B-C. These
authorities emphasize the importance of the transgressor’s appreciation of his
or her wrongdoing:
“…it is for the appellant himself to first properly and correctly identify the
defect of character or attitude involved and thereafter to 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 …” |
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Your Practice Made Perfect |
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News from the FAIS Ombud |
A second bite at the apple
The Groenewald determination, which just came to hand, indicates a more
democratic approach by the Ombud.
In the past, a determination was made, signed, sealed and delivered.
This case saw the Ombud make a
recommendation to the respondent, with a
deadline to respond to certain questions. On receipt of the response, a
final determination was made.
In our view, this is a big improvement on the old system, and could
possibly lead to a reduction in the number of appeals against Ombud
determinations. It is, in fact, almost a mini appeal forum.
Delayed Syndication Determinations
The Groenewald determination also explains why there was a lull in
syndication determinations.
“…in 2013, following the Siegrist and Bekker determinations and the
relevant appeal, a decision was taken by the Office to halt processing
property syndication related complaints. The decision was not taken
lightly, but was a necessary precautionary risk management step as the
Office sought to hold the directors of property syndication schemes
liable for complainants’ losses. The said appeal was finally decided in
April 2015, after which the Office resumed (with due regard to the
decision) processing complaints involving property syndications.
As many as 2000 (mainly property syndication related) complaints had to
be shelved pending the decision of the Appeals Board.”
The Groenewald investment was made in 2006, and the determination has
only now been made. This is not good news for those who still have
unresolved complaints. It also means that we are likely to see a huge
increase in such determinations over the next few months. |
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Sasria and Santam to Empower Municipalities
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Sometimes, desperate times call for innovative ideas, rather than
desperate measures.
Sasria has signed an agreement with Santam to join their “Partnership
for Risk and Resilience” (P4RR) programme to facilitate increased
collaboration between provincial and district disaster management
centres, to enhance the capacity of local government with fire and flood
risk management.
Sasria, a state-owned entity, provides insurance cover against risks
such as civil commotion, public disorder, strikes, riots and terrorism.
Starting with the Ehlanzeni district municipality in KwaZulu-Natal they
will set out to work in their business’ specific areas of concern; civil
and labour unrest, and student protest that in many instances result in
fire risk in municipalities.
“Through our involvement we will set out to understand the drivers of
potential community unhappiness, and then address it proactively to
prevent any unrest or protest action,” says Cedric Masondo, Sasria
Managing Director.
“We have greatly improved the provision of disaster management services
across several municipalities, and more than five million people in a
total of ten district municipalities and 53 local municipalities will
benefit from the expanded programme over the next five years,” says John
Lomberg, Stakeholder and CSI manager at Santam.
“We place enormous importance on our accountability to fulfil the role
of a responsible corporate citizen through forging partnerships,
building capacity, and creating sustainable solutions and practices to
enhance the resilience of communities to manage and reduce risk. We’re
looking forward to more insurers reaching out and joining the project”
says John.
Santam’s collaboration with the municipalities via P4RR has resulted in
several contributions being made by the insurer in order to help
mitigate ‘on the ground’ insurable risks, including the resourcing of
local fire stations with equipment such as fire hoses and protective
gear, and the enabling of geographical information systems aimed at
improving emergency response and disaster management capabilities. |
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Technologically Speaking
Moonstone Information Refinery |
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Automated advice and Fit and Proper |
During the recent Moonstone Regulatory Update Workshops, Billy
Seyffert, COO of Moonstone Compliance and Risk Management alluded to
rather stringent requirements for those who plan to go this route.
The FPI recently conducted a Robo-Advice Survey. Interestingly,
close to 50% of the respondents indicated that they believe that
regulators should monitor the progress and standards around robo-advice.
The proposed new Fit and Proper requirements already contain
guidelines as to what will be required to be able to operate in this
space.
Automated advice is defined as the furnishing of advice
through an electronic medium that uses algorithms and technology
without the direct involvement of a natural person.
An FSP who wishes to provide automated advice must have at least one
key individual who -
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meets the competence requirements applicable to a key
individual of a Category I FSP; and |
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b. |
has technological knowledge, skills and experience to - |
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understand the technology and algorithms used to provide
the automated advice; |
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(ii) |
understand the methodological approaches and assumptions
embedded in the algorithms and the rules underpinning
the algorithms; |
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(iii) |
identify the risks to customers arising from the
automated advice; and |
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monitor and review the automated advice generated by
algorithms to ensure quality and suitability of the
advice and compliance with the Act. |
This very relevant topic will be discussed in detail at the
FPI Professionals Convention at the Century City
Conference Centre in Cape Town on 19 – 20 October 2017.
Suitebox Media contact
Neil Summers, Sales Manager, Moonstone Business Services
Mobile: +27729088994
Email:
neil@suitebox.com
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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
MP4 direct download - 2 Gb |
| 4. |
Where can I write?
Go to:
http://www.faisexam.co.za/show_venues |
| 5. |
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. |
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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:
Investment, Risk, Healthcare, Banking, Retirement, and Insurance. |
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In Lighter Wyn |
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Selling it like it is |
In my army days, Thys Lourens, the Noord-Transvaal flank and
captain, was a top Sanlam salesman. I suspect he employed a similar
approach to the one below.
Airman Jones was assigned to the induction centre where he was to
advise new recruits about their government benefits, especially
their GI insurance.
It wasn't long before Captain Smith noticed that Airman Jones had
almost a 100% record for insurance sales, which had never happened
before.
Rather than ask about this, the Captain stood in the back of the
room and listened to Jones's sales pitch. Jones explained the basics
of the GI Insurance to the new recruits, and then said:
“If you have GI Insurance and go into battle and are killed, the
government has to pay $200,000 to your beneficiaries. If you don't
have GI insurance, and you go into battle and get killed, the
government has to pay only a maximum of $6000."
"Now," he concluded, "Which bunch do you think they are going to
send into battle first?"
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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
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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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©2015 Moonstone. All rights reserved. |
