“Spring has sprung, the grass is ris,
I wonder where the birdies is,
The bird is on the wing,
But that’s absurd,
The wing is on the bird!”
– Anon
We trust you’re enjoying the glorious weather, and also hope that you manage to get some work done during the Rugby World Cup tournament!
THE FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)
Financial Customer Behaviour and Sentiment Study
The FSCA published the results of its inaugural study on financial customer behaviour and sentiment. The study established how customers engage with and view the financial sector in South Africa, and whether their use of financial products and services indicates that financial institutions are upholding the Treating Customers Fairly (TCF) outcomes.
As was to be expected, there were positives and negatives to the study, but in the main consumers were satisfied. The full report demonstrates that there is still work to be done in making financial products simple to understand and in building trust with consumers. It seems the TCF principles are beginning to take effect.
Trustee Training Toolkit
The FSCA announced that it will be releasing a revamped e-learning platform for retirement fund trustees.
Section 7A(3) of the Pension Funds Act requires board members of retirement funds to attain prescribed levels of skills and training within six months after being appointed or elected, and to retain such prescribed levels throughout their term of appointment. The e-learning platform is the official minimum training requirement for all trustees of retirement funds in South Africa, and must be completed within six months of appointment.
There is no date noted as to when the platform will go live.
Consumer warnings
The FSCA had its hands full and released a series of warnings to the public during the month.
The first notes a Telegram group unlawfully using the name of Fairtree Asset Management (Pty) Ltd to defraud prospective clients into investing in cryptocurrency by offering unrealistic high returns.
Along the same lines, another WhatsApp group is impersonating Emperor Asset Management (Pty) Ltd and is soliciting investments from the public and promising grossly inflated returns across various investment plans.
Another case is of a party impersonating Aluma Capital (Pty) Ltd on WhatsApp; another is impersonating Anchor Capital (Pty) Ltd; and yet one more is claiming to be Julius Baer South Africa (Pty) Ltd.
A slightly different warning about MyWealthinvestment.com which has cloned the www.mywealthinvestments.co.za site and is offering impossible returns.
The FSCA has also warned the public about false emails from its offices claiming the Protrades and Phyllis Raphulu are authorised financial service providers (FSPs).
In every instance, the FSCA reminds consumers to verify the credentials of the parties and to act with circumspection when considering the offering. In practical terms; it’s highly unlikely (i.e. impossible – Ed.) that anyone would discover lucrative investment strategies without anyone else noticing, much less marketing it via these platforms.
From painful personal experience we can confirm how these scam artists lure their victims in and prey on their good nature and eventual desperation. The further appalling scenario is that it is almost impossible for the victims to extricate themselves and will never retrieve their money.
FINANCIAL INTELLIGENCE CENTRE (FIC)
Targeted Financial Sanctions Delisting
On 28 July the FIC released an advisory document explaining how affected persons can go about being removed from the sanctions list. Given the importance attributed to the list, it will not be a simple exercise of sending an email, despite the simplicity of the document!
Guidance on Trusts
Public Compliance Communication 6A (PCC6a) was released on 18 August.
The guidance provides examples of the money laundering and terrorist financing risks facing the sector, as well as guidance on the interpretation of the activities and responsible persons.
A trust and company service provider (TCSP) is any person in the ordinary course of business who assists their client in the creation, operation, and management of a company, or of an external company, a foreign company, a close corporation, or a trust. This includes attending to the registration of the business entity with the relevant authority.
Of particular importance is that the PCC notes the requirement that entities registered with the FIC as accountable institutions in another capacity (for example as attorneys), but which also perform the functions of a TCSP, are required to register with the FIC in this capacity as well.
Public Compliance Communication 5D of December 2022 explains how to go about completing dual registration.
Penalty imposed by the FIC upheld
The Appeal Board of the FIC upheld a decision to impose a penalty against Jannie Parsons Future Financials (Pty) Ltd (JPFF).
The FSCA (in its capacity as the regulatory authority) imposed a penalty of R870,000 on JPFF in December 2022 with R470,000 suspended for three years.
JPFF was found to not have verified the identity of 24 of 33 of the clients sampled, failed to screen the 33 clients against the Targeted Financial Sanctions List, had not developed and implemented a Risk Management and Compliance Plan (RMCP), and had failed to identify, assess, monitor, mitigate, and manage the risks that the provision of its products or services may involve or facilitate money laundering, terrorist financing, and related activities.
It is particularly important to note that JPFF argued that its clients were “low risk” and as such the RMCP was not necessary. That’s a little like arguing “I know how to drive, so I don’t need to obey the rules of the road”. If the FSP had taken the time to develop and implement the RMCP and the practical steps it requires, it would have avoided a very costly penalty and stressful encounter.
It’s all too easy to fall into the trap of thinking that the regulators will never review your FSP and that the requirements are an irritation rather than a legal requirement.
Failure to submit returns to the FIC
The FIC issued a document on 25 August noting that institutions that have not submitted their returns under Directive 6 by the 31 May deadline are now in breach and may be sanctioned.
The institutions that were required to submit the returns are: legal practitioners, trust and company service providers, estate agents, and gambling institutions.
PRUDENTIAL AUTHORITY (PA)
Proposed amended liquidity risk return for non-life insurers
The PA released a proposed amendment to Prudential Standard FSI 6 (Liquidity Risk Management). The standard applies to non-life insurers.
Comments can be submitted to PA-Standards@resbank.co.za via the commentary form by 1 September 2023 (so no time to waste!).
Directive regarding reporting requirements of banks
The PA amended Regulation 46 pertaining to banks on 20 July. The new Directive (D5 of 2023) incorporates the changes brought about as a result of the finalisation of the large exposures framework, the total loss absorbing capacity (TLAC) holdings standards requirements, as well as the finalisation of the regulations on interest rate risk in the banking book into the year-end Banks Act annual risk, and daily market risk returns.
The revised reporting requirements are available here.
As usual banks’ CEOs and auditors are required to acknowledge receipt of the Directive.
Clarification regarding appointment of responsible persons at banks
The PA released a circular to clarify the completion and submission requirements of the BA 020 form when appointing people to certain roles.
The PA notes that each employee who is in charge of a risk management function is deemed to be ultimately responsible for such function and is therefore required to complete and submit a BA 020 form to the PA and not only the Chief Risk Officer of the bank. This includes where the role of any individual changes.
Again, banks’ CEOs and auditors are required to acknowledge receipt of the Directive.
Climate Guidance Risks
The PA released draft guidance notes to insurers and banks regarding their climate-related risk practices.
The intention is to have insurers and banks adopt and oversee implementation of governance policies that identify, monitor, report, and mitigate climate-related risks.
In addition, banks will be required to disclose the current and anticipated impacts of climate-related risks and opportunities on the institution’s business, strategy, and financial planning.
Comments are to be submitted by 13 September.
NATIONAL TREASURY
New National Treasury Director-General
Cabinet has approved the appointment of Dr Duncan Pieterse for a period of five years as the Director-General of National Treasury.
He takes on the role from the end of September 2023.
COUNCIL FOR MEDICAL SCHEMES (CMS)
Medical aid contribution increase guidance
The CMS released an explanation of its expectation of medical aids when they process their contribution increases later this year.
The guidance from the CMS is that it would recommend medical aids limit contribution increases to 5%. It is unlikely that benefits will commensurately be limited to 5%.
Given that the majority of the calculations have already been completed by the “propellorheads”, in our opinion it is unlikely that this guidance will have any effect.
Healthcare Brokerage Services Survey
The CMS is conducting a survey to measure the services offered by healthcare brokers in the medical schemes industry.
Participation is entirely voluntary, and should your FSP be a healthcare broker and interested in participating, then follow this link.
For more information on completing the questionnaire or taking part in the survey, contact Florence Maphanga at f.maphanga@medicalschemes.com.
A-PROOFED
This month I thought to voyage into the exhilarating and often confounding universe of punctuation blunders. Whether it’s commas playing hide and seek, or apostrophes dancing in the wrong spots, it’s time we mastered these delightful delinquents. Hold tight – this short punctuation roller coaster is setting off!
Imagine a world without punctuation. A sentence without its markers is akin to a pizza minus its toppings. Where’s the flavour? Commas, those miniature guides, lead us through sentences, letting us pause and breathe. But, oh, the infamous “comma splice”! When two independent clauses become too friendly and join with just a comma, you’ve got a splice.
Fix: Use a full stop or semicolon to separate them, or add a coordinating conjunction such as “and” or “but”.
Enter the world of the semicolon. Often, this mark feels a tad too sophisticated for its own good. Semicolons unite related thoughts; they’re a stylish bridge between ideas. Yet, many treat them like the forbidden fruit of punctuation.
Fix: Place a semicolon between closely related independent clauses. Think of it as giving two ideas the chance to coexist without forcing them into a full-blown merger.
Now, the ever-elusive apostrophe. Misplaced apostrophes are the jesters of the punctuation kingdom, always causing a ruckus. Remember, they’re here to indicate possession or to contract words.
Fix: For possession, “the cat’s toy” is correct if one cat owns the toy. For multiple cats? “The cats’ toy”. If we’re talking plurals without possession, leave the apostrophe out!
Now about that enthusiastic exclamation mark! Who hasn’t received a message bursting at the seams with excitement? While they bring zest to our words, a little restraint is needed.
Fix: Use them sparingly. If you’ve got big news or a strong emotion to express, bring out the exclamation mark. If not, a simple full stop will do.
To wrap it all up, while punctuation errors provide giggles and facepalms aplenty, there’s a genuine joy in mastering them. They bring order, clarity, and rhythm to our words. So, let’s celebrate punctuation, learn from our mistakes, and write with precision and flair. Onward, to grammar greatness!
Oh, and one more thing! As a proofreader, I am the lighthouse guiding people through the treacherous waters of punctuation pandemonium. My expertise can help uncover and correct those mischievous marks, transforming confusing chaos into coherent communication. Contact me if you need assistance with any of your compliance or other documents. Your compliance officer will be so happy that you did!
Kim Hatchuel
kim@a-proofed.co.za
www.a-proofed.co.za