February 2024 Legislative Update
Depending on how you feel, February is either too short or perhaps too long since it’s a leap year. We’re happy there’s an extra day which will allow South Africa to be a little more productive because our economy certainly needs it!
We’ll leave the dissection of the budget speech to the pundits (not that there’s much in their comments other than more doom and gloom – especially if you smoke or drink).
Noise around the National Health Insurance Bill continues, but it’s starting to look like a political move rather than a practical policy.
As 2024 seems to finally be “up and running”, there have been some things happening in the halls of the legislators; read on…
THE FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)
Warnings
It seems like the FSCA is inundated with cases of people and entities that are defrauding the public. Admittedly, investigating and reporting this is the FSCA’s role, but it is a sad indictment on the state of South Africa’s economy that we are such easy targets. It seems the public are desperate to generate an income and will continue to fall prey to scammers until action is taken to prevent them even starting. Until then, the public needs to treat every investment opportunity with elevated caution.
A case where persons are impersonating Brantam Financial Services Holdings (Pty) Ltd on Telegram. The scammers have even used the directors’ photos to create the impression of credibility!
Another case where persons impersonating Seed Investment Consultants on Telegram are advertising a Ponzi Scheme to potential clients.
In another, individuals are impersonating International Capital Markets (Pty) Ltd on TikTok and Facebook. The defrauded individual was even approached by another member of the scam to assist in returning the money, provided they paid that person!
An Instagram account purporting to be that of RCG Markets has been created to defraud yet more consumers and points to a clone trading platform.
Centaur Asset Management Ltd and its potential clients have also been the target of impersonation through a WhatsApp scam run by Lungelo Ngwane and Thembinkosi Dlomo.
The FSCA issued a warning about a Telegram group impersonating Old Mutual Limited Group. They claim to represent “Old Mutual Investment Company” which is a fictious entity. Of particular concern is that the Telegram channel is reported to have approximately 1,402 members.
A slightly different case where Lwando Daniel Jini (aka FXKing D Nasdaq Godly) is offering to trade forex on behalf of the public and offering unrealistic returns. It was also noted that the entity or person is not a registered Financial Services Provider (FSP).
The prevalence of people looking for financial advice through social media such as TikTok, Facebook, Telegram, Instagram, and WhatsApp is concerning not only to the FSCA but to FSPs and product providers due to the reputational and financial damage they cause. Reputable financial institutions don’t use these avenues, and certainly not to illicit direct business sales. The applications are also not likely to police users as this will reduce confidence, the number of users, and ultimately their revenue stream. This only serves to emphasise the essential role of capable and honest intermediaries who can assist consumers to achieve their financial objectives.
Request for Information – Personal Lines Claims
The FSCA issued a request to all licensed non-life insurers that are members of the Ombudsman for Short-term Insurance (OSTI) to provide information on the number of personal lines claims reported in the 2023 calendar year. The information is to be submitted via the FSCA’s Conduct of Business Upload facility by 8 March 2024.
The intention is to support and contextualise the information held by the OSTI.
Penalties for failure to furnish returns and information
The FSCA published the updated penalties for life and non-life insurers should they fail to furnish returns or provide information to the regulators.
The new amount for both types of insurers is R8,215 per day.
FINANCIAL INTELLIGENCE CENTRE (FIC)
Outstanding Returns to the FIC
The FIC issued a media release urging estate agents and legal practitioners with outstanding returns in terms of Directive 6 of 2023 to file the returns.
The media release notes that entities that have failed to file the returns are in breach of the Directive and liable for administrative sanctions.
Separate reminders were issued to Trust Service Providers, Legal Practitioners, Estate Agents, and Company Service Providers reminding them of their obligation in terms of the Act.
Administrative sanction imposed on Theuns Vosloo Financial Advisory Services cc
The FSCA has imposed an administrative fine of R400,000 on Theuns Vosloo Financial Advisory Services CC in its capacity as the regulatory authority.
The sanction was imposed as the FSP had not implemented and maintained a Risk Management and Compliance Plan. In addition, the FSP wasn’t screening its clients in terms of anti-money laundering risks, or checking their status against the financial sanctions list of the United Nations Security Council.
Half (R200,000) of the fine is suspended for three years provided the FSP meets the requirements as stipulated in the FIC Act.
Updated gambling sector assessment
The FIC released an updated assessment of the gambling sector.
The report notes that the sector does have a high exposure and does pose a high risk, but that it has taken measures to mitigate the risks.
Ongoing monitoring of the sector will provide further feedback.
PRUDENTIAL AUTHORITY (PA)
Corporation for Deposit Insurance and banks’ fund liquidity contributions
The PA released a proposed Directive to banks detailing the proposed minimum capital and reserve funds requirements related to credit risk exposure.
The requirements are aligned with the approaches already in place and agreed between the banks and the PA.
Revised Credit Valuation Adjustment Framework
The PA release Prudential Communication 1 of 2024 in February.
The Communication is intended as guidance to banks on the computation of credit valuation adjustment capital requirements in accordance with the Basel Committee on Banking Supervision’s
revised Credit Valuation Adjustment framework.
COMPANIES AND INTELLECTUAL PROPERTY COMMISION (CIPC)
Confirmation of address
The CIPC issued a Practice Note (1 of 2024) that will require companies to provide confirmation of their address when making the following applications from 1 March 2024:
- Registration of External Company (CoR20.1 and supporting documentation).
- Long Standard Form Profit Companies (Form CoR15.1B and supporting documentation).
- Long Standard Form Non-Profit Companies without members (Form CoR15.1D and supporting documentation).
- Long Standard Form Non-Profit Companies with members (Form CoR15.1E and supporting documentation).
- Application to Convert a Close Corporation (Form CoR16.1 and supporting documents).
- Application to Transfer Registration of Foreign Company (Form CoR17.1 and supporting documents).
INFORMATION REGULATOR (IR)
Public Warning
The IR issued a public warning during February.
Individuals are contacting registered Information Officers or Deputy Information Officers and their companies claiming to be calling on behalf of the IR and inviting them to a meeting where tender documents are to be signed. The IR states that “these calls are fraudulent, and the intentions are criminal.”
Turning a regulator into a method of defrauding the public is nothing new, but this is particularly insidious given which regulator is targeted.
NATIONAL CREDIT REGULATOR (NCR)
Unauthorised debt counsellors
The NCR noted a trend where persons are using the registration credentials of debt counsellors when engaging with the public, but are not registered.
In many instances this is done with the knowledge of the registered debt counsellor and is in direct contravention of the regulations. The potential effects on consumers are severe, and the NCR has noted that it will take enforcement action should debt counsellors continue to conduct activities in this manner.
COUNCIL FOR MEDICAL SCHEMES (CMS)
Adjustment on fees payable to brokers
The CMS increased the maximum amount payable to brokers on medical aid policies to R116.74 with effect from 1 January 2024.
A-PROOFED
Thank you to everyone who sent me mails regarding topics for this blog. It seems that most people want to know exactly what’s involved in proofreading, and how I do what I do.
As a proofreader, I’ve come to appreciate the power of transparency in the editing process. It’s not just about making changes; it’s about ensuring my clients understand every tweak and suggestion I offer. That’s why I rely on track changes and comments as my trusty companions in this journey of refining written content.
When I get started on a project, whether it’s a policy wording or a compliance document that Bryan needs, I make sure that I have track changes switched on in Word. Each correction, every adjustment, is like adding brushstrokes to a masterpiece, carefully enhancing the clarity and flow of the text. But what sets my process apart is that my clients get a front-row seat to what I do.
With track changes, you’ll get to see the evolution of your work and the changes I’m making. You’ll see the commas added for clarity, the sentences restructured for impact, and the words swapped for precision. It’s not just about fixing errors; it’s about illuminating the potential of your writing, one edit at a time.
Yet, my commitment to transparency doesn’t end there. Comments are my way of opening a dialogue with you, inviting you to join me on this journey of improvement. Whether it’s seeking clarification on a sentence or highlighting areas that need your attention, comments bridge the gap between us, fostering collaboration and trust.
It’s important to me that you feel empowered throughout the proofreading process. You’re not just a passive observer; you’re an active participant in shaping the final outcome of your work. With track changes and comments as our guiding lights, we navigate the intricate landscape of language together, striving for excellence with every edit.
Let me help you policy your written words. You’ll be so happy you did.
Kim Hatchuel
kim@a-proofed.co.za
083 657 3377
