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Moonstone Monitor - 29 March 2018 |
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Paul Kruger
Author/Editor |
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By the time a man realises that his father was right, he has a son who
thinks he’s wrong - Charles Wadsworth |
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Distributed to 51,100 subscribers.
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From the Crow's Nest |
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Working under Supervision Going Forward |
The recently published Determination of Fit and Proper requirements (BN 194 of 2017) will impact on the “Supervision” requirements published in BN 104
of 2008. We expect the publication of a discussion document on amendments to the
current “working under supervision” regulations any day now.
Background
Board Notice 104 of 2008 introduced the concept of an exemption from certain fit
and proper requirements while working under supervision. The year 2010 was a
watershed and marked the beginning of regulatory steps to upscale
professionalism in the industry. Prior to this, transitional arrangements for
instance absolved people who had obtained 30 or 60 credits from completing a
recognised qualification.
After 2009 it was a bit of a Catch-22 situation, really. You could not be
appointed without the required experience, for instance, but you could also not
acquire the experience without being appointed. This would have been a death
knell to the industry.
“The objective of this Exemption is to relieve the provider of the obligation
…as regards the competency requirements. This implies that a representative
will, with regards to the experience and qualification and regulatory
examination requirements, not have to comply with the standards set for the
provider at the date of appointment.”
Broadly speaking, new appointees had to write the RE 5 within two years of
appointment and obtain a recognised qualification within six years. Experience
was dependent on the licence categories in which you advised.
What has changed?
BN 194 of 2017 necessitates a number of changes to the above.
The “second level” regulatory exams, for instance, was intended to ensure proper
product knowledge. This has now been replaced by compulsory “Class of Business”
and “Product Specific” training for specified groups, while others are exempt
from it.
The requirements to write the level 1 regulatory examinations have also been
changed, exempting certain categories, and removing the unnecessary requirement
that sole proprietors and KIs, who do not also act as representatives, have to
write both the KI and rep exams.
Continuous professional development (CPD) has suddenly become a reality for the
pre-2010 brigade after being on the backburner for the past ten years.
Transitional arrangements
The so-called grandfathering clause very kindly exempts those who were duly
authorised at the date of publication of BN 194 of 2017 from the qualifications,
experience, product specific, class of business and regulatory exam obligations
provided they stick to what they are doing.
The
interim arrangements for those working under supervision, or appointed after
1 April, are outlined in BN 194.
Going forward
The update on BN 104 of 2008 mentioned above will very likely address some
current anomalies in much the same way as the original document did in 2008 in
respect of qualifications, experience and regulatory examinations. It will have
to address the new fit and proper requirements, and provide for similar
exemptions. Apart from the examples mentioned above, other new elements
introduced include good standing, financial soundness and competence registers.
It does not make business sense to appoint a new representative who is not
allowed to do business before complying with the new fit and proper
requirements, much in the same manner as when the original exemption BN was
published ten years ago.
We expect exemptions, with specific timelines, in much the same manner as
contained in the 2008 document, for those currently working under supervision as
well as new appointments. |
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Your Practice Made Perfect |
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Product Specific Training under Supervision |
Board Notice 194 of 2017 decrees that a representative working under
supervision on 1 April 2018 has three months from 1 May to comply with
the product specific training requirements set out in Part 5 of Chapter 3.
Part 5 of Chapter 3 lists no less than 19 requirements with which such
training have to comply.
Section 29 (1) states further that a FSP and representative must, prior
to the rendering of any financial service in respect of a particular
financial product, complete the class of business training and product
specific training relevant to that financial product and for which they
are authorised or appointed or in respect of which authorisation or
appointment is sought.
Whilst those working under supervision have 12 months in which to do the
Class of Business training, they only have three months to comply with
the Product Specific requirement.
The general consensus appears to be that product providers will be hard
pushed to provide all of the above on such short notice.
The fact of the matter is that there is NO obligation on product houses
in this regard.
Chapter 3, under the heading “Responsibilities of an FSP”, notes:
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(3) |
An FSP must be able to demonstrate and record that it has evaluated
and reviewed at regular and appropriate intervals - |
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(a) |
its representatives' and key individuals' competence and has taken
appropriate action to ensure that they remain competent for the
activities they perform; and |
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(b) |
the appropriateness of the training and CPD referred to in
subsection 1(d) and (e). |
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(4) |
The evaluation and review contemplated in subsection (3) must, inter
alia, take into account - |
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(a) |
technical knowledge and its application; |
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(b) |
skills and expertise; and |
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(c) |
changes in the market, to financial products, financial services and
legislation. |
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(5) |
An FSP must establish, maintain and update on a regular basis a
competence register in which all qualifications, successfully completed
regulatory examinations, product specific training, class of business
training and CPD of the FSP, its key individuals and representatives are
recorded. |
Just before you draft your resignation letter, please note that this
does not mean that all product specific training done up to now will be
disregarded. It simply means that the onus for ensuring compliance with
the guidelines rests with the key individual. No doubt the product
providers, too, will do their best to ensure that you and your personnel
comply with these requirements by reviewing their in-house training.
A question that arises is what will happen in instances where a product
provider does not offer product specific training? The onus will then be
even more squarely on the shoulders of the FSP.
We trust that the soon to be released revised Supervision discussion
document will provide further clarity on this matter. |
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High Court sets aside Validation of Gross Income methods
by Gerrit Viviers
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On 16 March 2018, the High Court in Cape Town provided its favourable
ruling on the matter brought by the retailers, Truworths Limited,
Foschini Group Limited and Mr Price Group Limited (the “Applicants”)
against the Minister of Trade and Industry and the National Credit
Regulator (the “Respondents”) in which the Applicants requested the
court to set aside regulation 23A(4) of the National Credit Act, 34 of
2005 (“NCA”) which deals with the steps required to be taken by credit
providers, to validate the gross income of prospective consumers during
its affordability assessment as part of a credit application.
Regulation 23A(4) provides that “A credit provider must take practicable
steps to validate gross income, in relation to:-
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(a) |
consumers that receive a salary from an employer: |
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(i) |
latest three(3) payslips; or |
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(ii) |
latest bank statements showing latest three(3) salary
deposits; |
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(b) |
consumers that do not receive a salary as contemplated
in (a) above by requiring: |
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(i) |
latest three(3) documented proof of income; or |
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(ii) |
latest three(3) months bank statements; |
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(c) |
consumers that are self-employed, informally employed or
employed in a way through which they do not receive a
payslip or proof of income as contemplated in (a) or (b)
above by requiring: |
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(i) |
latest three (3) months bank statements; or |
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(ii) |
latest financial statements.” |
The crux of the judgement can be summarised as follows:
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Regulation 23A(4) is set aside. Practically this means that credit
providers do not have to obtain the consumer’s payslips, bank statements
or financial statements to validate the consumer’s gross income;
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However, this did not discard the credit provider’s responsibility to
take practicable steps to determine (including validate) a prospective
consumer’s income to calculate the consumer’s discretionary income as
part of its affordability assessment. Credit providers may now, however,
determine its own practicable steps in this regard.
Credit providers are urged to consider retaining their current processes
and methods to validate a consumer’s gross income, including obtaining a
prospective consumer’s payslips and/or bank statements. They may,
however, also employ other methods to validate a prospective consumer’s
income. For example, where a consumer does not have a payslip, bank
account (bank statements) or financial statements, he or she can
possibly provide the credit provider with a letter or affidavit from his
or her employer, stating their gross income.
It is expected that the Respondents may appeal against this ruling. If
they are granted leave to appeal, it will mean that the setting aside of
regulation 23A(4) will be suspended until the outcome of the appeal.
Therefore, credit providers should consider this before making drastic
changes to their current processes and methods to validate the gross
income of a prospective consumer.
Please
click here
to download a copy of the ruling.
Moonstone employed an NCA Specialist to render NCA compliance services
to its clients and prospective 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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Gap Cover provides critical support in cases of accidents and
emergencies
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As another Easter holiday season approaches, our national roads will
fill up and the inevitable road accident statistics will make sickening
reading.
In 2017, fatalities from accidents surged approximately 51%
year-on-year, as thousands of South Africans were involved in collisions
and accidents.
It’s a stark reminder that even if we may be fortunate to be very
healthy, accidents can happen at any time.
Many people make the mistake of thinking that Gap Cover (which assists
with medical expense shortfalls that one’s Medical Aid doesn’t pay) is
only needed for people with illnesses or health risks.
Click here to read the
full article.
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Technologically Speaking
Moonstone Information Refinery
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Regulator focus now in place for fintech sector |
The South African Reserve Bank (SARB) recently established a Financial
Technology (fintech) Programme which aims to strategically assess
the emergence of technological innovations in the financial sector
and to consider its regulatory implications. Industry leaders agree
that South Africa is all set to be the “fintech centre of
excellence”.
In a
recent article by ITOnline, Dominique Collett, senior investment
executive at Rand Merchant Investment Holdings and head of AlphaCode,
a club for fintech entrepreneurs, stated that “the SARB initiative
is very important because of the changing face of financial services
driven by technology, the rise of social media and the change in
consumer demographics and behaviour particularly those of
millennials. The regulator needs to consider how to deal with this
evolving space. Fintech is an enabler and not a threat to making
financial services more relevant to a changing society. The SARB
initiative will help to bridge this gap.”
“We have an advanced banking and financial services system with a
sound regulatory regime. We have extremely competent regulators, top
entrepreneurial talent and innovative businesses that are attracting
considerable local and global investments. The missing puzzle piece
was a regulator focused on the fintech sector which has now been put
in place, so there is no reason why South Africa cannot follow the
UK and Singapore in becoming a fintech centre of excellence” says
Collett.
Are you embracing technology? Do you have any questions on fintech?
Send your comments or questions to
Janine Geldenhuys of Moonstone. We will investigate and report
on it in future editions.
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Regulatory Examinations
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Annual Regulatory Exam Deadline
Looming |
This year’s 30 June deadline could be even more stressful than normal,
given the amendments to the study material as a result of the new Fit
and Proper requirements.
Why do so many people put off the inevitable? Is it because they somehow
believe that there will be a last minute reprieve?
We experienced a 300% increase in registrations in March from people who
wanted to write before the changes mentioned above come into effect from
1 April. This happened despite us warning against the folly of leaving
writing to the last minute, and then failing the exam. Our registration
team went through a torrid time from unreasonable candidates who left it
to the last, and wanted to book after registrations closed.
There is every chance that the same will happen towards the end of June.
One can understand that candidates will first want to acquaint
themselves with the changes to the preparation material as outlined
below, but please do not leave it too late. There is just too much at
stake.
The following areas in the new Task and Criteria will be significantly
impacted by Board Notice 194 of 2017. Please note there may also be
individual questions in other specific areas that can be impacted, but
when all questions are reviewed this will be indicated in the prep
guide.
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Regulatory Examination |
Task |
Criteria |
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RE1 |
Task 3 |
Criteria 1 - 3 |
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Task 4 |
Criteria 1 – 15 |
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Task 5 |
Criteria 1 - 11 |
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Task 13 |
Criteria 1 - 2 |
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Task 15 |
Criteria 1 - 5 |
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RE5 |
Task 8 |
Criteria 3 & 8 |
We
received confirmation from Inseta that their adjusted study
material will be available before or on 1 April 2018.
When we checked on Tuesday, it was still not published on
its website.
Frequently asked Questions
Please
click here to access a list of questions and answers,
including information on what exams to write, the cost
thereof, study material, training and a lot more |
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2018 RE Schedules updated |
Please note: Registration cut-off is 11 working days before date of exam. |
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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 20 000 visits and approximately 39 000 page views per month. |
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Moonstone boasts an exclusive newsletter mailing list of over 51000
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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Personal Lines
Sales/Underwriter:
Venshaw Insurance Administrators, Bellville, Western Cape - We are
looking for a candidate with 2 years' experience, RE5 and NQF4 (150
credits).
Read More
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Short Term Insurance
Representative: External Marketer/Service:
Venshaw Insurance Administrators, Bellville, Western Cape - The
candidate should be Xhosa speaking, and have completed RE5 and NQF4 (150
credits).
Read More
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Short Term Insurance
Representative: Claims Consultant:
Venshaw Insurance Administrators, Bellville, Western Cape - The
candidate should be Xhosa speaking, and have completed RE5 and NQF4 (150
credits).
Read More
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Broker Consultant:
CIA - Commercial & Industrial Acceptances Pty Ltd, Gauteng, East Rand
and Vaal Triangle - We are looking for an excellent communicator to
represent CIA to our brokers.
Read More
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In Lighter Wyn |
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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. |
