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Moonstone Monitor - 5 April 2018 |
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Paul Kruger
Author/Editor |
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If you really want to do something you will find a way. If you don’t, you’ll
find an excuse - Jim Rohn |
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Distributed to 51,032 subscribers.
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From the Crow's Nest |
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Draft Amendments on Premium Collection Part 1 |
Alan Holton reports on a number of significant changes which will
affect a far bigger section of the industry than before.
The demise of IGF and other changes
On Friday, 23 March 2018, the Minister of Finance
published a number of amendments to the Regulations of both the Long-Term
Insurance Act (LTIA) and the Short-Term Insurance Act (STIA).
Comment is invited and must be submitted before 23 April 2018.
These amendments, once finalised, are expected to become effective on
1 July 2018.
Regulation 4 of the STIA, which regulates the authorisation of, and requirements
for collection of premiums by intermediaries, has been extensively amended. In
particular, the requirement that any intermediary who collects premiums on short
term insurance policies on behalf of an insurer must provide security – usually
by way of an Intermediary Guarantee Facility (IGF) policy – has been deleted.
There is no longer any requirement that collecting intermediaries need provide
any form of security.
The decision by Treasury, and hence the Minister, to remove the requirement for
security in the form of a guarantee policy from the Regulations is based on the
principle that it is the responsibility of insurers to ensure that those
intermediaries it authorises to collect premiums on its behalf have the
necessary governance and resources to do so, and to mitigate risks associated
with allowing an intermediary to collect premiums on its behalf.
There is however, no reason that insurers will not still require some form of
guarantee or fidelity insurance cover from an intermediary when allowing it to
collect premiums on its behalf and will do so in the interest of good governance
rather than as a consequence of a regulatory requirement. (See comments at the
second paragraph on page 5 of
Annexure E).
Long-Term Insurance Premiums
What has not been commented on as yet in any media read by this writer, is the
fact that the provisions relating to the authorisation of an intermediary to
collect premiums and the handling of premiums so collected, will also apply in
respect of long-term insurance premiums – including assistance business
(funeral) premiums.
Schedule 1 of the Insurance Act inserted section 47A into the LTIA. The
requirement in section 47A is equivalent to the requirement in section 45 of the
STIA. This amendment is intended to provide greater protection to policyholders
and to align the legislative framework governing premium collection across the
LTIA and the STIA. To further align the legislative framework governing premium
collection across the LTIA and STIA, it has been proposed that the LTIA
Regulations be amended to include equivalent requirements to those in
Regulation 4 under the STIA.
It must be noted that the effective date of the Insurance Act has still to be
proclaimed. Accordingly, S 47A of the LTIA will thus only become effective once
the Insurance Act becomes effective. This is expected to be 1 July 2018 and
coincides with the expected effective date of the amended Regulation 8 that will
govern the collection of long-term policy premiums.
Requirements for authorisation
In terms of the amended Regulations, both LTIA and STIA, any authorisation
provided by an insurer to an independent intermediary to receive, hold or in any
other manner deal with a premium payable under a policy of that insurer must be
in writing and must, amongst other things -
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specify the level and standard of services that must be rendered in terms of
the authorisation;
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specify the operational requirements that the intermediary must meet at all
times to render services under the authorisation;
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provide for the type and frequency of reporting by the intermediary on the
services rendered under the authorisation; and
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provide for the manner in and the means by which an insurer will monitor the
intermediary's performance under and compliance with the authorisation.
In addition, an insurer must be satisfied that the intermediary has the
necessary operational ability to satisfactorily perform the functions or
activities contemplated in the authorisation and, on an ongoing basis, must
monitor whether the intermediary holds or in any other manner deals with
premiums in accordance with the authorisation.
The balance of this article will be published on Monday. It discusses how
premiums held by intermediaries are to be managed, the RDR views on premium
collection and, very importantly, what we can expect in the form of conduct
standards regarding operational ability requirements.
Alan Holton is an independent compliance officer and regular consultant to
Moonstone. |
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Your Practice Made Perfect |
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Financial Sector Conduct Authority clarifies its approach |
Effective 1 April 2018, the Financial Services Board was transformed
into the Financial Sector Conduct Authority (FSCA) - a dedicated market
conduct regulator for the South African financial services sector. This
marks the formal implementation of the Twin Peaks model of financial
sector regulation.
In a letter to stakeholders, the FSCA outlined its approach under its
new mandate to:
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protect financial customers by promoting their fair treatment by
financial institutions, providing financial education programs, and
promoting financial literacy
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enhance and support the efficiency and integrity of financial markets
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assist in maintaining financial stability.
Importantly, the FSCA is also required to support overall policy
objectives of financial inclusion and transformation of the financial
sector.
What will change on 1 April 2018?
There will not be a "big bang" approach to the implementation of the
FSCA mandate, but rather gradual changes over the course of the current
year, as sections of the FSR Act come into operation in a phased manner.
In the main, financial institutions can expect their interactions with
the FSCA to be “business as usual” in the short term. There are however
a few immediate changes as from 1 April:
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The interim leadership structure described above has taken charge —
with an immediate focus on managing the transition from the FSB to the
FSCA with minimal disruption.
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All communications, regulatory actions and decisions is now in the
name of the FSCA - no longer the FSB - using our new e-mail addresses,
stationery, branding and logo.
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Our new website
www.fsca.co.za is live — but with all the key information that was
previously available on the FSB website still accessible.
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A Financial Sector Tribunal is established, which any entity aggrieved
by an FSCA decision can approach to request reconsideration of the
decision. The Tribunal replaces the former FSB Appeal Board. The
Minister has published regulations to manage the transition from the
Appeal Board to the Tribunal.
We will report back on this last point as it is important to know how
complaints relating to the FSB and the FAIS Ombud will be handled by the
new Tribunal. |
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Class of business training – Short-term Insurance – Commercial Lines
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The Moonstone Business School of Excellence is an accredited provider
with the Council for Higher Education as well as the Quality Council for
Trades and Occupations and meets the requirements to provide Class of
Business Training as intended by the new fit and proper determination.
We offer training on all classes of business and
enrolment opened on 3 April 2018.
In terms of Board Notice 194 of 2017, class of business (CoB) training
forms a compulsory part of the competence requirements for FSPs, Key
Individuals and Representatives.
The product categories that an FSP can be licensed for are divided into
9 broad classes, each with its own subclasses.
Short-term Insurance Commercial Lines is one such class of business with
subclasses that include: Accident and health- ; Engineering- ;
Guarantee- ; Liability- ; Miscellaneous- ; Motor- ; Property- ;
Transportation and Short-term reinsurance policies.
What will the Moonstone training cover?
Learners will be provided with core knowledge and understanding of
characteristics, terms and features of products for commercial
(business) clients in the short-term insurance commercial lines class of
business. This will include typical fee structures, charges and other
costs and risks associated with investing, purchasing or transacting in
these products.
In addition to this, the module provides knowledge of legislation
impacting on short-term insurance commercial lines products.
Lastly, the module will provide learners with the skill to assess the
appropriateness of products within the short-term insurance class of
business for specific commercial client needs.
More information
If you require more information please contact Veronica Grobler via
email or on 087 702 6429.
For information on Corporate Packages, please contact Sheila Olckers via
email or on 021 883 8000.
Register today!
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Updating of RE study material
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There appears to be a perception that the two examination bodies,
Moonstone and the FPI, are responsible for providing study material. Our
mandate from the FSB only entails presentation of the exams, NOT
provision of study material.
Placement of study material on our website is essentially a courtesy to
assist easy access for learners. We expected the updated Inseta study
material to be available on its website from 1 April 2018. At the time
of publication of this newsletter, this has not yet materialised.
Please follow
this link to check whether the Inseta study material has
been updated. If the wording on the website still reads “INSETA is
pleased to present its updated learning material FAIS RE support,
aligning to updates to the legislation which became effective in
April 2014” then it has not yet been done.
Please address all enquiries in respect of study material to Inseta, not
Moonstone. |
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Technologically Speaking
Moonstone Information Refinery
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Financial Sector Conduct Authority and Fintech |
Fast paced development of Fintech is likely to spark greater
regulatory scrutiny in South Africa
The wind of change in the financial services sector is gaining
traction as financial technology (fintech) is transforming how,
where and when investments and payments are made.
We already saw the introduction of special requirements in the
December 2017 Determination of Fit and Proper requirements.
Without doubt the era of fintech is starting to spread through the
financial sector, disrupting the traditional way that this industry
delivers product and services to the consumer.
These innovations have the potential to broaden access to financial
products and services for all in our society and represent both a
competitive threat and an opportunity for operators. The financial
services industry is adopting fintech strategies by either
establishing their own capabilities or collaborating with technology
companies to serve their own customers better, improve risk
management systems, and grow market share.
The fintech innovation is placing the spotlight on regulators and
what role they can play in this new, sometimes unregulated domain of
financial services. With the launch of the Financial Sector Conduct
Authority (FSCA), fintech will become a key focus area.
Jurgen Boyd, Deputy Executive Officer for Collective Investment
Schemes at the Financial Services Board (FSB) and Chairperson of the
Regulatory Steering Committee, says one of the future strategies is
to focus on fintech developments, and to understand the impact it
will have on the conduct and inclusion mandate of the FSCA.
“Research will need to be conducted in this regard, to inform the
FSCA’s policy direction with regards to fintech. Consideration is
currently being given to our approach to innovation hubs,
acceleration hubs and sandboxes where financial institutions can
approach the conduct authority for direction on how regulation
impacts on new innovative developments and to test new innovations
in a safe environment,” explains Boyd.
“Whether new or amended regulatory requirements are needed will be
dependent on the outcome of the above mentioned initiatives,” he
said.
Compared to traditional financial services providers, fintech firms
have generally demonstrated nimbleness and the ability to innovate
in more creative ways. Regulators, especially in emerging economies
like South Africa, are more often reactive to these technological
innovations, but in line with our new mandate as the conduct
authority we need to adopt a more proactive approach. . Boyd says
that it is also important that we co-ordinate our approach to
Fintech with other financial regulators and in this regard an
inter-governmental committee on fintech has been established to
ensure a harmonised approach which will include engaging with the
fintech sector.
He adds that a dedicated structure will be established in the FSCA
which will be appropriately resourced for fintech. “We have
identified where there will be a need for different skills within
the FSCA ensuring that the regulator does not lag behind in skills
and expertise vis a vis the industry it regulates,” he says.
The FSCA will pay attention to all aspects of fintech insofar as it
impacts the services being offered to the customer, the channel
through which the service is offered, the entity providing the
service as well as any after sales barriers a customer may
encounter.
EY’s Africa Financial Services Risk Management Leader Abigail
Viljoen says globally, the emergence of new technologies in
financial services is a challenge for all regulators immaterial of
the regulatory regime under which they operate. Where regulators are
actively promoting and supporting disruptive innovation and
competition by both fintech and more traditional financial services
firms, such as in the UK, Australia and Singapore, there are several
common themes and approaches that these regulators have taken.
“They are dynamic in their approach, keeping an open mind and
engaging closely with innovators,” says Viljoen.
Examples of this include the introduction of an internal Innovation
Hub by the Financial Conduct Authority in the UK and regulatory
sandboxes for the development of new products and services in all
three jurisdictions, as well as dedicated fintech teams.
They are proactively working with all market participants, including
new entrants and incumbent firms, to drive efficiency and
collaboration across different parts of the ecosystem.
This topic was also covered at the last FSB FAIS conference. Click
here for a copy of the
Powerpoint presentation.
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Regulatory Examinations
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Exemption from the Regulatory
Examination Requirements |
Two FAIS Notices, relating to exemptions that were available to UMAs and
Private Equity Funds from regulatory requirements contained in Board
Notice 102 of 2012, came into operation on 1 April 2018.
FAIS Notice 23 of 2018 provides for the exemption of FSPs and Key
Individuals/Representatives who render financial services to or for or
on behalf of private equity funds only.
FAIS Notice 24 of 2018 similarly provides for the exemption of
Underwriting Managers.
These notices provide for an exemption from Section 26 of Board Notice
194 on RE requirements, but they will need to complete the RE by a date
determined by the Registrar which is yet to determined.
Persons who applied under Board Notice 102 are deemed to comply with the
registration conditions, but those who want to make use of the exemption
need to notify the Registrar as indicated in the notice.
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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Key Individual:
Destinata Capital Ltd, Faerie Glen, Pretoria & Somerset West - We
have a position for a key individual who is licensed for at least
category 1.8.
Read More
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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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Breaking News: Trump works out a Trade Deal with Kim Jong-Un |
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Ever Heard of Sniglets?
In the 1980's a comedian named Rich Hall regularly featured what he
called Sniglets as part of his routine. He said a sniglet is "any
word that doesn't appear in the dictionary, but should.” Below are a
few examples.
Aeroma - n. The odor emanating from an exercise room after an
aerobics workout.
Aquadextrous - adj. Possessing the ability to turn the bathtub
faucet on and off with your toes.
Beelzebug (n.): Satan in the form of a mosquito that gets into your
bedroom at 3 in the morning and cannot be cast out.
Carperpetuation - n. The act, when vacuuming, of running over a
string at least a dozen times, reaching over and picking it up,
examining it, then putting it back down to give the vacuum one more
chance.
Caterpallor (n.): The colour you turn after finding half a grub in
the fruit you're eating.
Combiloops - n. The two or three unsuccessful passes before finally
opening a combination locker.
Crummox (noun): The amount of cereal leftover in the box that is too
little to eat and too much to throw away
Deodorend - n. The last 1/2 inch of stick deodorant that won't turn
up out of the tube, and thus cannot be used without inducing
lacerations.
Doork - n. A person who always pushes on a door marked "pull" or
vice versa.
Elbonics - n. The actions of two people maneuvering for one armrest
in a movie theater or auditorium.
Ellacelleration: The mistaken belief that repeatedly pressing the
elevator button will make it go faster
Eufirstics - n. Two people waiting on the phone for the other to
hang up first.
Furbling - v. Having to wander through a maze of ropes at an airport
or bank even when you are the only person in line.
Giraffiti: Vandalism spray-painted very, very high.
Idiolocator n.- The symbol on a mall or amusement park map
representing "You Are Here"
Negatile - n. An area of the bathroom floor where, somehow, the
scale registers you five pounds lighter.
Oopzama - n. Sudden scratching of scalp or face upon realization
that the person you were waving at isn't who you thought it was.
Rignition - n. The embarrassing action of trying to start one's car
with the engine already running.
Waftic - adj. Describes any person in whose direction campfire or
barbeque smoke always blows.
Yardribbons - n. The unmowed patches of grass discovered after one
has put away the mower.
Zipcuffed - v. To be trapped in one's trousers by a faulty zipper.
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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. |
