The world continues to battle the COVID-19 pandemic, and the spotlight is now on the capabilities and mettle of our government as it tries to meet its obligation to distribute vaccines.
Many of our clients, colleagues, and families have contracted the virus. Most have recovered, but I’m sure we all know someone who has succumbed to this deadly virus. Those who have contracted the virus have moved from ‘numbers’ to ‘names’, or even to ourselves. The media constantly reminds us to not become complacent, and we feel it important to remember this as we get into the swing of 2021. For everyone’s safety, we’ll continue to conduct online meetings as much as possible.
The year is now properly up and running – let’s make the best of it!
THE FINANCIAL SECTOR CONDUCT AUTHORITY (THE FSCA)
Submission of Annual Financial Statements
A reminder that the extended period granted by the FSCA during 2020 for submission of financials is nearing its end. For financial service providers (FSPs) with financial year-ends on or after 31 July 2020, the normal four-month submission period will apply, and all FSPs will fall back into the ‘normal’ cycle.
We recommend that you remind your auditors and accountants, and ensure that the relevant information is prepared in good time.
Draft FSCA FAIS Notice on Licence Category Exemptions
The FSCA released a draft exemption to the Fit & Proper conditions on 10 February. Simply put, when the FAIS licence categories were amended to align with the Insurance Act categories, this resulted in FSPs, Key Individuals, and Representatives that were conducting credit life business under a short-term category to no longer meet the conditions. This means that they were not able to provide these products unless they were licensed to provide them under the correct long-term sub-categories (long-term B1 if only risk benefits and B2 if there is a guaranteed investment equivalent value).
Similarly, before the change, funeral policies with benefits between R30,000 and R100,000 were written as long-term sub-category B1 products. However, now all such products with benefits below R100,000 are classified as funeral benefits products. FSPs, Key Individuals, and Representatives that weren’t already approved for long-term sub-category A were no longer able to deal with the products.
The FSCA has realised the unintended effect of the changes, and is proposing a temporary dispensation to affected FSPs and individuals to ensure a fair transition to the new classification. The proposal, if passed, will apply retrospectively to 1 July 2020.
The draft regulations exempt those affected from the class of business, experience, and qualification requirements of long-term sub-category A, provided they’re not under supervision, and Key Individuals currently registered for long-term sub-category B1 from the class of business and qualification requirements of long-term sub-category A.
Should an FSP want to make use of the exemption, they will be required to notify the FSCA of such, and apply for the category they now require as well as approval of the Key Individuals responsible for them. No fees will be required for the changes.
Representatives under supervision under the original categories will be deemed to meet the requirements of the ‘new’ category upon completion of their supervision requirements of the ‘old’ category.
Comments are due by 10 March 2021. The draft exemption and comment framework are available here.
The FSCA’s Current Position on Contingent Business Interruption Insurance
The FSCA reiterated its position on the Business Interruption claims on 11 February. It has confirmed with insurers that the legal certainty that it was looking for has been obtained, and as such should make good on valid claims.
You can read the full press release here.
In subsequent discussions with the FSCA, its comments revealed that some blame is attributable to and lies at the feet of the short-term industry, from intermediaries through to re-insurers (which assumes the industry could have predicted the pandemic – Ed.). This has also spurred the FSCA to start developing “thematic reviews” of the industry based on its perceptions of the fairness of the various policy wordings. We should learn more about this plan by 1 April 2021.
The FSCA is also considering amending the Policyholder Protection Rules given they offered no protection to most policyholders in these instances, and the FSCA has realised the gap in such protection that exists for commercial policyholders.
Conduct of Business Reports
The FSCA exempted FSPs from report submissions in 2019 and 2020. Our understanding was that this was done as the intention was to launch the Conduct of Business Reports specifically for FSPs. Note that these are not the same as the Conduct of Business Returns completed by Product Providers, but will follow a similar model.
In the information we have been provided, the FSCA intends to launch these reports for FSPs this year, but is still in the process of a harmonisation project in which common themes across the financial services industry will be identified, which will then be used to apply standards.
Given the numerous hurdles and potential disruptions we face this year, we hope that the FSCA has the capacity to achieve these goals.
How Suptech can Empower Regulators
On 3 February 2020, the FSCA released a document detailing its ideas on how technology will be harnessed to assist the regulators to perform its oversight and market stability responsibilities.
Supervisory technology (Suptech) entails the use of technology by supervisory agencies to support supervision activities.
The FSCA’s impressions of the key benefits of Suptech are that its use will bring about enhanced effectiveness, reduced costs, improved consumer outcomes, and increased scope of inclusion of supervised entities. Suptech would clearly allow regulators to actively investigate and prevent unsanctioned actions.
The FSCA is to be commend for realising that it needs to look at this technology objectively as it has listed challenges including finding the suitably capable staff, funding, data quality issues, and operational risks. In our opinion, data quality will always be the biggest problem, and the FSCA needs to be prepared to do some hard work with industry in this regard to make this project work.
Given the increased attention cryptocurrencies and trading are currently attracting, and the heightened rate of online activity due to lockdown restrictions, it seems inevitable that regulators will take a similar approach to their duties.
Read the full report here.
MINISTRY OF FINANCE
The Independent Regulatory Board for Auditors (IRBA) Board of Directors Dissolved
On 26 January 2021, the board of directors of IRBA was dissolved during a meeting with the Minister of Finance, Mr Tito Mboweni. The meeting was intended to discuss the board’s position on its Chief Executive Officer as well as numerous board resignations.
Upon hearing from the board members, the Minister decided to dissolve the board.
Ms Nonkululeko Gobodo and Major General Roy Andersen will be appointed to act as caretakers until a new board is appointed within the next three months.
Read the press release here.
INFORMATION REGULATOR – POPIA (PROTECTION OF PERSONAL INFORMATION ACT)
As of 16 February 2021, we were advised that Guidelines on Drafting Codes of Conduct of POPIA were to be published shortly. The Guidelines’ primary purpose is to assist bodies such as the South African Insurance Association (SAIA), Financial Intermediaries Association of Southern Africa (FIA), Direct Selling Association of South Africa (DSA), and Credit Bureau Association to develop or apply codes in order to promote transparency on how personal information will be processed by members of the associations.
It’s important to note that the codes will not replace the relevant provisions in POPIA, but will support its requirements. A breach of an approved code will be deemed to be a breach of the lawful processing of personal information conditions.
If you’re a member of one of the above bodies, you should check whether they have applied for their code to be approved by the Information Regulator.
We’ve been advised that the final guidelines for registration of information officers should be published before the end of March 2021. As a result, the registration of information officers will only commence after publication of the final guidelines. We were also advised that the Information Regulator is in the process of developing an online registration portal.
CYBER CRIMES BILL
In December 2018, there were debates and workshops on the final draft of the Cyber Crimes Bill which raised concerns over the regular use of the word “intentionally”. The terminology would affect all people who make use of computer programmes, computer data, computer storage mediums, and computer systems on a daily basis to alter, modify or delete data, copy or move data to a different location in the computer storage medium or any other computer data storage medium, obtain its output, or otherwise use the data for legitimate reasons as part of their job.
The provisions have been amended to make it clear that the action needs to be both unlawful and intentional.
The Cyber Crimes Bill is awaiting assent by the President.
For a copy of the amended Bill, click here.
FINANCIAL INTELLIGENCE CENTRE (FIC)
FICA Standalone Report
The FSCA, as the body responsible for the oversight of FICA, has issued a Directive to Accountable Institutions to complete a standalone FICA report. This is to be done through the FSCA’s E-portal from 1 March 2021. Compliance Officers that have been linked to FSPs will be able to assist in the completion of these reports by the 31 March 2021 deadline.
The notice has been made available by the Compliance Institute of Southern Africa.
Where possible, we will complete as much of the report as possible for FSPs where we are linked. Should we not be linked, and you need some help, please get in touch.
Consultation Note on Draft Public Compliance Communication No. 112
The FIC invited comments on the draft PCC by 10 March 2021.
The draft PCC lays out the Client Due Diligence requirements that will become applicable to the stockbroking industry due to the removal of that part of the financial services industry’s exemptions for this activity.
The new requirements are similar in form and function to those in place for the other parties affected by FICA.
Read the draft PCC and find the comment submission link here.
Intergovernmental Fintech Working Group (IFWG) launch Project Khokha 2
On 11 February 2021, the FSCA and the IFWG announced the launch of Project Khokha 2 which aims to explore the regulatory implications in financial markets of distributed ledger technology (DLT).
Project Khokha 2 will issue, clear, and settle debentures on DLT using tokenised money in a minimum viable product (MVP). The debentures can be purchased with a wholesale central bank-issued digital currency (wCBDC) and a wholesale digital settlement token (wToken) which would act as a privately issued stablecoin for interbank settlement.
The intention is to run the system to be able to provide information that will then be used to develop suitable regulations.
The IFWG has tasked Accenture with developing the wCBDC; Block Markets Africa (BMA) to produce the DLT-based debentures as well as the wToken; and Deloitte to document the insights in a public report.
Project Khokha 2 will allow the regulators to gain practical experience through experimental trials with industry.
Read the press release here.
FROM A-PROOFED
Are you using too many words?
Do you find yourself writing sentences that are far too long?
Have you ever re-read a sentence and struggled to finish it in one breath?
If so, you may be suffering from something called prolixity, or in layman’s terms, wordiness. Wordiness is one of the most common writing mistakes and happens when you, either intentionally or unintentionally, use far too many words or unnecessarily complex or abstract words.
Wordiness is taking more words than necessary to make your point. It may take the form of redundant expressions or phrases. While it’s true that longer expressions may be appropriate at times as a matter of style or to avoid ambiguity, some people clutter their sentences and paragraphs with words, phrases, and expressions that needlessly distract the reader.
Here’s an example of too many words being used to deliver a simple message.
Welcome to the new [company name] website. We have worked on improving the design and overall user experience, so you can navigate the site much more easily and get quick access to what you are looking for. We welcome your feedback, so please email us at xxxx if you see a broken link, or feel that something should be reviewed or enhanced. We will do our best to refine your user experience.
How about…?
We’ve improved our website design so it’s easier and quicker for you to discover what you need. If you find any errors, or have any suggestions, please email us.
Consistent elimination of wordiness results in a stronger, more concise writing style that’s easier to read and provides fewer opportunities for misinterpretation. In contrast, a wordy style makes reading laborious and will encourage skimming. This will lead to inattention. Do you want the reader to consider your message? If so, reduce wordiness to a minimum.
Tips to help you avoid wordiness in your writing
Fillers
One way to control wordiness is to limit (or eliminate) the use of filler words. These words sneak in between relevant words and though they may sound good, they serve no purpose.
If you took out the word commonly in the phrase “It is commonly believed that…,” the meaning wouldn’t change, and it would actually improve the sentence.
Redundancies
This tends to happen when writers try to describe something and overuse synonyms.
Take this sentence: “Mark is a funny, hilarious, and comical person.” Here, three words that basically mean the same thing are used to describe Mark.
The second form of redundancy is where writers say the same thing many times, but in different ways.
Qualifiers
Qualifiers come directly before an adjective or adverb, and are used to increase or decrease the quality of the modified word. When every adjective or adverb is preceded by very, extremely, barely, or hardly, the qualifiers begin to lose their meaning. The use of one good word rather than two or three mediocre ones will instantly improve your writing.
For example, in the phrase “David is very cool,” very is the qualifier. The overuse of such qualifiers can distract readers.
Qualified words can often be replaced by a single, more potent word. For example, “Kim is extremely angry” could be shortened to “Kim is furious”.
Logorrhoea
This form of wordiness can be the most frustrating. Logorrhoea is the intentional use of long sentences or overly abstract wording. A little like verbal diarrhoea (it even sounds the same)!
“Prior to my becoming a writer, I knew wordiness was an issue in writing, but it was only during the course of writing my articles that I realised the extent of the problem. At that point in time I began to see examples everywhere. In due course, I noticed certain patterns, and subsequent to my realising this, I compiled a list.”
Could become…
“Before I became a writer, I knew wordiness was an issue, but only when I started writing did I realise how bad it was. I started to see examples everywhere and noticed patterns, and it helped me to write a list of these patterns.”
If you’re guilty of this, you may want to put down the thesaurus and remember that writing is about conveying a message.
If your readers can’t understand what you’re saying, you should consider making your writing more reader-friendly.
Total Word Count: 712
Could I have written this article with fewer words?
You tell me… Or, better still, please do not hesitate to make use of my services to assist you in eliminating the scourge of prolixity in business writing. (Only kidding… but please do email me!)
Kim Hatchuel
083 657 3377 | kim@a-proofed.co.za
www.a-proofed.co.za
