Legislative avalanche warning for FSPs
If you have just returned from a visit to Mars, you may want to take cognisance of some of the legislative changes that are currently taking place. It is a daunting task just trying to keep up with what it entails, never mind what will be required in terms of implementation.
The information below is contained in the February edition of the ASISA Dispatches.
The Standing Committee on Finance (SCoF) put out a request for comments on the Insurance Bill and held public hearings on 7 February 2017. The Committee has indicated that consideration of the Bill will likely only resume in April.
SUBMISSIONS TO NATIONAL TREASURY
Draft Financial Sector Levies Bill
Setting up the Prudential and Conduct Authorities under the twin peaks structure provided by the Financial Sector Regulation Bill will require more funds than the current levies provide. The Bill seeks to introduce a two-year implementation levy for this purpose and also sets out regular levies for the funding of these authorities as well as for the Tribunal, Ombuds Council and Statutory Ombuds Schemes. The Bill was published on 21 November 2016 for comment by 31 January 2017.
Draft Pension Funds Default Regulations
National Treasury issued the second draft of the regulations in December 2016. An ASISA working group held a workshop during February 2017 and written comments were collated and submitted to National Treasury by 28 February 2017.
SUBMISSIONS TO THE FSB
FAIS Fit and Proper Requirements
ASISA submitted comments to the FSB on the second draft of the Fit and Proper Requirements in terms of the Financial Advisory and Intermediary Services (FAIS) Act on 15 December 2016. These comments highlighted:
- Services under supervision should also form part of the requirements
- Experience should not automatically lapse after five years
- Class of business training and Continuous Professional Development (CPD) requirements for categories II, IIA and III should be excluded in order to allow for further consultation
- Concerns regarding a requirement that CPD must be accredited and tracked by a professional body recognised by the South African Qualification Authority
- Concerns that the implementation date of 1 March 2017 was not reasonable or feasible.
Draft FAIS Conduct of Business Report
The report was published for comment on 7 December 2016. The ASISA submission to the FSB raises the following concerns:
- The combination of Conduct of Business and Compliance Reports is unlikely to enable pro-active supervision due to the significant volume of information to be submitted.
- The duplication of requirements for FSPs who are insurers.
- Regulatory objectives and/or purposes must be identified to enable consistent interpretation and quality of responses.
- Engagement required in respect of submission date and implementation date and requirements relating to management information.
- Collective Investment Schemes Control Act (CISCA) Draft Requirements of the Delegation of Administration Functions
ASISA submitted comments on 31 January 2017, requesting clarification of a number of matters and raising concerns related to trustee consent for the delegation of functions and quarterly disaster recovery testing, also included proposals for transitional arrangements.
DRAFT REGULATIONS RELEASED FOR COMMENT
Long Term Insurance Regulations and PPR
In December last year, National Treasury and the Financial Services Board (FSB) published changes to the regulations under the Long Term Insurance Act and a replacement of the Policyholder Protection Rules (PPR) for comment.
ASISA held industry workshops in Cape Town and Pretoria during February where the FSB provided an overview of the changes and addressed any questions. ASISA submitted comments on the regulations on 22 February 2017. An extension for comment on the PPR was granted until 15 March 2017.
Regulation 28 Draft Notice on Hedge Funds
The notice was published on 17 February.
TRANSFER OF TAX FREE PRODUCTS
National Treasury has postponed the effective date for transfers of tax free savings and investment products to 1 March 2018. The final Tax Free Investments Regulations, which will include requirements for transfers and other matters, will be gazetted soon.
HEALTH INSURANCE DEMARCATION REGULATIONS
Regulations demarcating health insurance policies from medical schemes were gazetted on 23 December 2016 and will come into effect from 1 April 2017. (The industry may apply for a two-year exemption, but has to do so before 31 March 2107. Click here to read Moonstone article which also contains a link to the exemption guidelines.)
INSURANCE CONDUCT OF BUSINESS RETURNS
The FSB published the final template and requirements for the Conduct of Business Returns (CBR) for insurers on their website in mid-December last year.
ASISA’s participation in the consultation process saw a number of positive changes to the draft returns and timelines, as well as certain types of businesses being excluded from the first round of reporting. The first CBR for the period from January to June 2016 must be submitted to the FSB by 30 April 2017.
FINANCIAL INTELLIGENCE CENTRE (FIC) AMENDMENT BILL
After the President referred the Bill back to Parliament due to a concern about the constitutionality of a provision regarding warrantless searches, the Standing Committee on Finance held public hearings on this provision on 25 January 2017. Parliament subsequently approved the Bill on 28 February. The Bill is now back with the President for his signature.
Paul Kruger: Moonstone Compliance (Pty) Ltd
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