|
To Subscribe please click
here |
 |
|
Moonstone Monitor - 2 November 2017 |
|
|
.jpg) |
|
Paul Kruger
Author/Editor |
| |
|
|
| |
|
|
 |
|
|
|
So this is how liberty dies. With thunderous applause – George Lucas
(Senator Amidala in Star Wars: Episode III: Revenge of the Sith, 2005) |
| |
|
|
Distributed to 49,204 subscribers.
To advertise with us
click here |
|
| |
|
From the Crow's Nest |
|
|
FSB on Execution of Sales |
The FSB responded as follows to two articles we recently published on
these topics.
In your articles,
"Sticking to the script?" and
"FSB Fit and Proper
Requirements: Qualifications and execution of Sales", published in the media on
11 October 2017, you express concern regarding the effectiveness of our new FAIS
Fit and Proper requirements for intermediaries performing "execution of sales"
in accordance with a script. It seems some of your concerns may be based on a
misunderstanding of our proposals, and I would like to clear up a few aspects:
|
1. |
You have commented that the concept of 'execution of sales' was introduced in
response to the challenge of determining "the levels of competence required by
representatives who advise on the various products". That is not quite correct.
The competency requirements for the activity of 'execution of sales' (being a
non-advice distribution model) are distinct from those for providing advice.
The new competency requirements for advice, and the differentiation based on
Tier 1 and Tier 2 product complexity, are therefore not applicable to execution
of sales.
|
|
2. |
You have commented that "Scripturers" (your term for persons performing the
execution of sales in accordance with a script) and persons advising on Tier 2
financial products are "exempt" from the product specific training. That is a
misreading of the requirements.
All persons performing the execution of sales must meet the competency
requirements relating to product specific training. In fact, all Category I FSPs,
their key individuals and representatives, irrespective of the financial service
being rendered and irrespective of whether or not it is a Tier 1 or a Tier 2
financial product, must comply with the product specific training requirements.
You may have confused the requirements for product specific training with those
for line of business training. Persons performing execution of sales using a
script will not be required to undergo the more holistic line of business
training, focused on broad general aspects of various product classes, but will
still need to understand the specific products the script relates to.
|
|
3. |
You also seem to suggest that a script that "guides the client to make a
decision" will not be construed as advice. That is not the case.
Advice is defined to include any recommendation, guidance or proposal of a
financial nature furnished, by any means or medium, to any client in respect of,
inter alia, the purchase or investment in a financial product. Therefore, if a
script provides "guidance" to a client regarding the purchase of a financial
product it would constitute the furnishing of advice and would not be regarded
as the execution of sales. All the competency requirements relating to advice
would apply to a person using such a script.
|
|
4. |
Some background to the rationale underpinning the new requirements:
The current fit and proper requirements adopt a largely one-size-fits-all
approach. Although there are elements of proportionality, on very a high level,
the current framework does not fully recognise the nature, scale and complexity
of the different types of financial services being rendered or that of the
financial products in respect of which those services are rendered. As a result,
we have had to implement a range of exemptions. The proposed new requirements
seek to set requirements that are proportionate and appropriate to the risks
inherent in the activities and (for advice) the products concerned, but without
compromising on good outcomes for customers. So for example, in the case of
non-advice, scripted sales models it makes more sense to focus our regulatory
requirements on the specific operational, governance and content of the sales
process, than on the generic technical competencies of the telesales operators.
Conversely, in advice models, it makes more sense to focus on the overall
competency of the adviser, and less on being prescriptive about operational
business processes. In determining these requirements, the FSB was guided by the
objectives of our broader market conduct regulatory reforms, such as TCF and RDR.
It is therefore important to view our new FAIS Fit & Proper requirements in the
context of these broader reforms. In particular, some of the risks identified in
your articles are being addressed through the additional RDR requirements that
will be imposed on FSPs and product suppliers in respect of distribution
relationships and intermediary remuneration models that contribute to poor
outcomes and mis-selling. |
I hope that this puts our 'execution of sales' requirements in perspective, but
please don't hesitate to contact me if you would like to discuss these or other
regulatory proposals in more detail.
We certainly welcome this clarification from the
Regulator and will gladly take up the offer to discuss this
important matter further. |
|
|
|
| |
.jpg) |
What if you could focus on doing what you love - looking after your
clients?
Leading Independent Financial Advisory (IFA) practices are using GTC’s
Strategic Partner solution to:
- increase time with clients
- increase earnings
- reduce costs
Shouldn’t you too?
Our staff and systems deliver exceptional service, increasing revenues
and saving costs and time for you, enabling you to build value for
succession.
With offices nationally, we are well-placed to help you.
Call us to discuss a strategic partnership.
t. +27 (0) 10 597 6831
e. info@gtc.co.za
w. www.gtc.co.za
An authorised Financial Services Provider FSP no. 731 |
|
|
Your Practice Made Perfect |
|
|
Case studies from the Short-term Ombud |
The October edition of the OSTI Briefcase contains some interesting
insights on two complaints, in particular.
Promissary warranty
The issue for determination in this matter was whether the insurer was
entitled to reject a claim for the loss of a tennis bracelet, worth
nearly R120 000, on any one of the following four grounds set out in the
insurer’s letter of rejection:
-
late notification of the claim;
-
the failure to take reasonable precautions and care to prevent or
minimise the loss;
-
the item not being in a safe; or
-
the failure to have the condition of the jewellery checked and a
valuation certificate obtained within 24 months.
The insurer argued that the endorsement on the schedule requiring
jewellery to be secured in a safe when not being worn was a promissory
warranty and absolute in nature. The insurer asserted that, as there was
a breach of the warranty, there was no obligation on the insurer to
accept liability for the loss.
The reasoning by the Ombud in arriving at her decision is very clearly
set out in the relevant article, and we suggest readers take time to
read it. A link is provided below to also allow you to share it with
clients.
Driving on a non-public road
Ms. Z submitted a claim to her insurer following a motor vehicle
accident. The accident occurred whilst Ms. Z was driving in her
residential complex. Ms. Z claim was rejected on the basis that she was
driving on a non-public road and therefore did not enjoy cover under the
policy for the loss. In support of its rejection, the insurer relied on
two provisions of the policy, including one that reads:
“The maximum repair contribution available at the time of a claim will
be reduced by 50% where the motor vehicle accident or loss takes place
on a road that is not cemented or tarred. No benefits shall apply whilst
the vehicle is being driven where there is no formally registered road.”
The Ombud held that it would still not be in a position to justify a
finding in favour of the insurer based on the Insurer’s failure to draw
Ms. Z’s attention at sales stage to the specific exclusion on which it
sought to rely. This is an unusual term in an insurance policy and as
such, more should have been done to bring it to the insured’s attention.
It is not sufficient to merely to refer to the terms and conditions
contained in the policy documents sent to the insured after the contract
has been concluded. There must be full and proper compliance with the
Policyholder Protection Rules prior to the contract being concluded and
which will then enable the insured to exercise an informed choice as to
whether or not she/he wishes to agree to the terms offered by the
Insurer.
Click here to download the Ombud Briefcase. |
|
|
|
|
|
 |
| |
|
New Fit & Proper and the REs
|
Market indications are that the final Fit and Proper Regulations are due
for publication any day now.
These regulations form an important part of the knowledge tested in the
Regulatory exams. Changes to the legislation will result in changes to
the study material and the questions in all the exams.
Normally, those responsible for maintaining the question data bank are
given a time limit of six weeks to two months within which to amend all
affected questions. During this time, the study material also has to be
amended.
Given the vast number of changes to the Fit & Proper requirements, this
will be no easy task.
Those who are of the opinion that they are nearly ready to write the
regulatory exams should seriously consider writing before the new
regulations affect the exams and study material.
The final date for writing in 2017 is 11 December, with registration
closing on 23 November, three weeks from today. |
|
|
|
| |
|
| |
|
Getting SA back on the right track
|
Fin24 recently published
Magda Wierzycka's 10-point plan to get SA
back on track.
-
Fix state-owned enterprises by appointing strong boards of
directors to restore corporate governance and sound financial
management.
-
Appoint a competent minister of finance who has international
credibility to stave of credit rating agencies and attract foreign
investment.
-
Rein in public sector wages, which are out of control and way
above inflation. Wierzycka said it’s astounding that wages accounted
for 57% of the defence budget in the 2016/17 financial year, up from
38% in the 200/09 budget.
-
Restore law and order in South Africa by replacing the heads of
the Hawks, the National Prosecuting Authority and the South African
Police Service.
-
Restore business and consumer confidence by taking strong action
against corruption and state capture.
-
Design a growth plan for South Africa that makes sense. “In a
time when the rest of the world is growing at a rapid pace, our
growth forecast has been cut to 0.7% this year, with 27.7%
unemployment.”
-
Eliminate the use of scary slogans such as “land appropriation
without compensation” and “radical economic transformation” with
“…investor-friendly policies such as tax cuts, labour market reforms
and clarity on land issues and mining rights.”
-
Provide quick, free, skills-based education to create plumbers,
builders and electricians and to absorb the generation of
unemployable youth.
-
Bring trade unions, business and government together to thrash
out how to solve South Africa’s greatest problem of inequality and
poverty. “The days of black economic empowerment benefiting
oligarchs are over – it is time for inclusive growth policies.”
-
Get energy supply back on track, focusing on renewable energy
rather than unaffordable nuclear energy.
“All this is not rocket science,” Wierzycka said. “It is the basics
of what makes a democracy work and that will impact on our
investment markets and ultimately the livelihoods of all.”
So what stops us from adopting these ideas?
|
|
|
|
| |
|
Technologically Speaking
Moonstone Information Refinery
|
|
The Biggest Cyberattack Threat Comes From Within |
This
article, published in ThinkAdvisor.com, states: “According to the
2017 Threat Monitoring, Detection & Response Report, inadvertent
breaches prompted by internal users (employees, vendors, etc.)
accounted for 61% of cyberattack incidents.”
It then goes on to list advice on prevention, and what to do if
attacked. I found this section particularly interesting, given my
uncanny knack for creating and forgetting passwords:
Invest in Password Manager Software
This one’s a no-brainer. As much as we hear about password breaches
and the need to come up with unique, complex passwords for each of
our online accounts and systems, the
statistics paint a grim picture
of how most people actually manage their passwords, with more than
50% using “five or fewer passwords across their entire online life”
and the five most popular passwords (in 2014) proving to be “123456,
password, 12345, 12345678 and qwerty.” I won’t delve deeply into how
password managers work (Consumer Reports has a quick primer here)
other than to say that they make it very easy to guard against risky
password management practices.
Does your staff manage login credentials across a wide range of
cloud-based and local technologies? The answer is almost assuredly
yes. To protect yourself against the human tendency to use the same
password across multiple platforms or weak passwords that are more
memorable, your safest bet is to purchase and mandate staff usage of
password management software. They are inexpensive and for those of
you who use one password for everything (and many people do), this
allows you to carry on with that practice in a sense, as you only
have to remember one (for the password manager itself) — just create
one that's going to be hard to crack!
Qwerty? Now why did I never think of that?
|
|
|
|
|
Regulatory Examinations
|
|
|
|
| |
|
Frequently Asked Regulatory Exam
Questions |
| 1. |
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.
|
| 2. |
How much does it cost?
The FSB determines the fee. Currently it costs R1163 per exam, also in
the case of a re-write.
|
| 3. |
What preparation material is available?
Fully updated resources are available for those requiring access to the
legislation applicable to the regulatory examinations:
|
| |
● |
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. |
| |
● |
Click on the following highlighted sections to download the relevant
updated Inseta learning material for key individuals,
RE 1, and
representatives,
RE 5. |
| |
● |
LexisNexis provides a “Legislation Handbook” together with a
“Preparation Guide” containing the qualifying criteria, with a link to
the relevant legislation. |
| |
● |
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. |
| |
● |
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: |
| |
|
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. |
|
|
|
|
|
Careers Platform
|
|
Are you hiring? Advertise your position on Moonstone’s Career Platform
|
| • |
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 49000
dedicated financial decision makers who receive 2 newsletters per week. |
| • |
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. |
|
|
|
|
| |
|
Featured Positions |
-
Insurance Sales
Counsellor:
Brip Africa, Cape Town - If you are FAIS compliant, experienced in
Outbound Call Centre sales, or have at least 2 years’ face to face sales
experience, then
Read More
-
Financial Advisor:
Anton Koch Financial Planning, Berea, Durban - Suitable candidates
must have a Certified Financial Planning Diploma or working towards a
CFP and completed the RE5 exam with at least 6 months working
experience.
Read More
-
Broker Assistant:
Ohmni Power Financial Solutions, Broadacres in Fourways - Candidate
must have matric, life insurance industry experience and RE5 would be an
advantage.
Read More
-
Senior Commercial
Short Term Broker:
CC&A, Johannesburg - Do you have a minimum of 10 years experience
and happy to travel nationally to market our niche products?
Read More
-
Internal Broker:
Picara, Dunkeld, Johannesburg - If you are fully FAIS compliant and
registered with the FSB for a minimum of 3 years with professional
endemnity insurance experience, then
Read More
-
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
-
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
|
|
|
|
|
In Lighter Wyn |
 |
|
Give that man a Bells |
This is a true story.
FSB fines James George Witheridge Gubb R100 000 for contravening
the Financial Markets Act
The Directorate of Market Abuse (DMA) referred the case against
Mr Gubb to the Enforcement Committee after investigations revealed
that he had, on 31 March 2017, contravened section 80(1)(a) of the
FMA in that he traded with himself in Oakbay Resources and Energy
Limited (Oakbay) shares which resulted in no change in the
beneficial ownership of the shares. These transactions created a
false and deceptive appearance of the trading activity of the Oakbay
share and also created an artificial price for the Oakbay share.
The DMA would like to emphasise that Mr Gubb is unrelated to Oakbay.
The Enforcement Committee took several mitigating circumstances into
account, including that Mr Gubb fully co-operated during the
enforcement process. As aggravating factors the Enforcement
committee took into account, amongst others, that Mr Gubb’s
transactions created an artificial price for the Oakbay share and
the transactions undermined the integrity of the South African
Financial Market.
In a subsequent article in Die Burger, Gubb pointed out that this
was a form of protest art. Through manipulation, he created a
proverbial “middle finger” in response to Pravin Gordhan’s request
for people to stand up against corruption. He did this on 31 March,
the day on which Pravin Gordhan was fired as Minister of Finance, by
manipulating Oakbay shares.
This was apparently not considered in mitigation.
We should really start a fund to help him pay the fine, methinks. He
deserves far more than just a Bells.
|
|
|
|
|
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.
|
|
|
©2015 Moonstone. All rights reserved. |
