We’re sure you’ve completed your continuous professional development (CPD) within good time this year. Remember that you can get hours for reading this Legislative Update if you sign up at AC Develop! (https://www.acdevelop.training/App/ACDLogin.html)
The most important reminder this month is for financial service providers that have a February year-end to ensure that their financial statements are submitted to the Financial Sector Conduct Authority (the FSCA) by 30 June. We will submit for our retainer clients (provided we have them), so please send them to us as soon as possible. If your accountants or auditors are not going to be finished in time, it is possible to apply for an extension, but this must be done before 15 June.
As winter and loadshedding take a grip, we can only hope that you manage to stay warm this month.
THE FSCA
Crypto Asset Service Provider licensing
Remember that licence applications for Crypto Asset Service Providers (CASPs) can be submitted to the FSCA from 1 June.
Get in contact if you need assistance with the CASP licensing.
Exemptions in terms of crypto assets
The FSCA issued a broad set of exemptions for CASPs.
In summary, the following exemptions apply:
- CASPs are exempt from the requirement to hold Professional Indemnity and Fidelity Guarantee insurances.
- CASPs and their Key Individuals are exempt from the requirement to have completed the Regulatory Exams for 18 months (i.e. until 11 November 2024).
- CASP Representatives who were never registered before are exempted from the requirement to complete the RE5 Exam at the moment, but subject to the requirement that they complete it within two years of being appointed as Representatives from their date of appointment.
- If a Representative was appointed for Tier 2 products or to perform execution of sales prior to 11 May 2023, they must complete the Regulatory Exam within 24 months of their date of appointment.
- CASP Key Individuals and Representatives must complete six hours of CPD (related to crypto assets) in the CPD cycle (1 June of one year to 31 May of the next). This applies in addition to any CPD requirements should Key Individuals or Representatives be appointed for other categories.
It is worth noting that this means Key Individuals and Representatives will still need to meet the Class of Business and Product Specific training requirements, as well as the qualification requirements where applicable.
The FSCA also released amended FAIS licence application forms to allow for the additional licence category.
Additionally, the FSCA adjusted the approved qualification list to allow for CASPs.
Sustainable finance and insurance
The FSCA issued a statement on Sustainable Finance and its planned Programme of Work in this regard. The aim is to support sustainable economic growth in South Africa.
It also issued a press release that stresses the need for the insurance industry to assist in building a sustainable environment.
It’s still early days for these initiatives, but we expect them to gather momentum as part of the solution to South Africa’s energy crisis.
Demarcation regulations – escalation of policy benefits
The annual escalation of the premium and policy benefits of accident and health policies under Section 70(2A)(a) of the Short-term Insurance Act and Section 72(2A)(a) of the Long-term Insurance Act was released on 16 May.
The regulations specify which types of contracts are regulated under the Long-term Insurance Act and the Short-term Insurance Act as health policies, and accident and health policies, respectively, and accordingly are excluded from the Medical Schemes Act, No. 131 of 1998.
The escalation of the policy benefits takes place each year for as long as Regulation 7.2(2) provides for automatic escalation. National Treasury publishes these amounts annually to maintain clarity on escalated policy benefits.
The escalations take effect from 1 April 2023.
FINANCIAL INTELLIGENCE CENTRE (FIC)
Case studies and indicators
The FIC released a collection of case studies and indicators during May.
The purpose of the collection is to help government, relevant business sectors, and other stakeholders to better understand and identify the risks they face, and to assist with developing effective strategies to address those threats.
It is an essential document for Accountable Institutions and their staff to read and to develop an understanding of specific events that may affect their operations.
SOUTH AFRICAN RESERVE BANK (SARB)
SARB opens Johannesburg teller facility
The SARB announced that it will be opening a walk-in teller facility at its Johannesburg Cash Centre for members of the public who do not have a bank account to exchange mutilated banknotes as well as old series banknotes that have been withdrawn from circulation. This has been initiated due to the renovations of the SARB Head Office in Pretoria.
Members of the public who have a bank account can still exchange their mutilated and old series banknotes at their commercial bank.
The teller service will be offered every Tuesday and Thursday from 09:00 to 13:00.
(Given the price of fuel and that the offices are in Newtown, it might end up costing more to exchange the notes than you’ll get back! Ed.)
NATIONAL CREDIT REGULATOR (NCR)
Change in NCR contact details
The NCR released the contact details of its various departments.
It has said that the personal email addresses are to be used for escalation rather than direct contact.
SASRIA
Sasria limits cover in the event of grid failure, and then retracts it
Following instruction from its reinsurers, Sasria released circular 526 to industry to notify brokers, underwriting managers, and non-life insurers that Sasria policies do not provide cover for grid failure.
The change was to be effective from 1 June 2023, which then caused industry to say that it was far too little time to notify policyholders, and that they needed clarity on the effects in terms of consequential loss. Sasria subsequently retracted the statement.
The original notification requested that it be distributed; so there is likely to be some confusion given its retraction.
INFORMATION REGULATOR (IR)
Request for information
The IR issued a request for public and private entities to submit their Annual Reports for the 2022/2023 financial year by 30 June 2023.
Reports are to be submitted by the Information Officers via the IR’s web portal.
It is the first of such requests, so it is still quite simple, but a guideline of how to register and submit is available here .
IR issues Enforcement Notice to the Department of Justice and Constitutional Development
The IR confirmed that it had issued an Enforcement Notice to the Department of Justice and Constitutional Development (DoJ&CD) on 9 May. This followed the finding of the contravention of various sections of the Protection of Personal Information Act by the DoJ&CD.
In September 2021, the DoJ&CD suffered a security compromise on its IT systems. This led to the department’s systems being unavailable to its employees, and subsequently affecting services to the public.
It was found that the department had failed to put in place adequate technical measures to monitor and detect unauthorised exfiltration of data from their environment, resulting in the loss of approximately 1,204 files. This occurred as a result of the DoJ&CD’s failure to renew the Security Incident and Event Monitoring (SIEM) licence.
The DoJ&CD also failed to renew the Intrusion Detection System licence, which had also expired in 2020. The IR also found that the DoJ&CD had failed to take reasonable measures to identify reasonably foreseeable internal and external risks to the protection of personal information in its possession or under its control, and establish and maintain appropriate safeguards.
The IR issued the DoJ&CD with an Enforcement Notice in which it ordered the department to take the following rectifying steps: the DoJ&CD must submit proof to the Regulator within 31 days of receipt of the Notice that the Trend Anti-Virus licence, the SIEM licence, and the Intrusion Detection System licence have been renewed. It must also institute disciplinary proceedings against the official/s who failed to renew the licences which are necessary to safeguard the department against security compromises.
IR to conduct reviews on political parties
The IR released a statement noting that it will be conducting assessments of registered political parties’ and independent candidates’ compliance with the Promotion of Access to Information Act (PAIA), 2 of 2000.
PAIA obliges political parties and independent candidates to record, preserve, and make available information on their private funding.
Any person can request access to information held by a political party if they require this information to exercise any of their rights, particularly their right to vote. If access to information is denied or such information is not disclosed, a complaint may be lodged with the Regulator.
The assessments will include reviews of the registration of Information Officers and Deputy Information Officers, the development and availability of PAIA manuals, and creation and keeping of information relating to donations. The Regulator will also conduct onsite inspections at the offices of the political parties.
