Almost there! Winter is nearly done, and the days are definitely getting longer and warmer. But before we start thinking about cricket season, we have a few weeks of international and Currie Cup rugby as well as the Olympics to get through. In the interim, we’re awaiting the regulators’ release of the (final?) consultation version of the Conduct of Financial Institutions (COFI) Bill. There is a lot underway to bring this about.
THE FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)
Regulatory Actions Report
The FSCA has published its latest Regulatory Actions Report for the period from 1 April 2023 to 31 March 2024.
The report aims to increase the visibility of the FSCA’s enforcement activities, deter misconduct, raise awareness of regulatory requirements in the financial sector, and identify emerging trends and risks.
The report details a number of enforcement interventions by the FSCA, including 156 debarments, 104 public warnings, 41 enforceable undertakings, suspension of 1,061 licences, the withdrawal of 75 licences, and the imposition of penalties in excess of R943 million on 33 persons. The report also details the number of cases the FSCA has fully investigated and handed over to various law enforcement agencies, including highly publicised cases.
The main concerning trends in the sector include copy trading and signals, construction guarantee policies being issued by unregistered entities, deepfake scams, impersonations of Financial Services Providers (FSPs), and exploitation via social media platforms.
Updated RE1 and RE5 preparation guide
The FSCA released updated guides to the regulatory exams, particularly where there have been changes to the regulations.
We always recommend that candidates who are writing the exams soon refer to the new guides to ensure they are studying from the correct material, and that they also verify this with the examination body.
Three-year Regulatory Plan
The FSCA releases its updated three-year regulatory plan at this time every year.
As helpful as the document is, there is still no confirmation of when the COFI Bill will be enacted. After six years, it must be imminent, but it seems we’ll need to wait a little longer.
Much work is being done in aligning legislation in preparation for COFI, and to get the anti-money laundering legislation to show some results.
FINANCIAL INTELLIGENCE CENTRE
Adjustments to the increased monitoring jurisdictions
Another plenary meeting of the Financial Action Task Force (FATF) was held in June. As usual, the list of countries under increased monitoring was changed and now includes Bulgaria, Burkina Faso, Cameroon, Croatia, Democratic Republic of the Congo, Haiti, Kenya, Mali, Mozambique, Namibia, Nigeria, Philippines, Senegal, South Africa, South Sudan, Syria, Tanzania, Venezuela, Vietnam, and Yemen.
Following the progress made in their plans, Jamaica and Türkiye have been removed from the list.
The FATF also confirmed that Barbados, Gibraltar, Uganda, and the United Arab Emirates are no longer subject to increased monitoring.
Three high-risk jurisdictions that have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing (TF), and financing of proliferation were noted. These jurisdictions are: the Democratic Republic of Korea, Iran, and Myanmar.
Accountable Institutions will once again have to adjust their Risk Management and Compliance Programmes.
Administrative sanctions on Safrican Insurance Company Limited
The Prudential Authority released a notice confirming that administrative sanctions had been imposed on Safrican Insurance Company Limited (Safrican) for non-compliance with the Financial Intelligence Centre Act, 38 of 2001.
Safrican was fined R13 million, but R6 million was suspended for 36 months from 10 June 2024.
The areas of non-compliance were:
- Failure to conduct customer due diligence.
- Record keeping failures.
- Failure to develop and maintain a Risk Management and Compliance Programme.
The PA does note that the administrative sanctions are not as a result of Safrican being involved in or facilitating money laundering or TF.
Terrorism Financing Risk Assessment
The FIC released a risk assessment of South Africa’s exposure to involvement in international TF.
Numerous concerns were raised, namely:
- Border insecurity and the exploitation of South African documentation, including the abuse of the country’s refugee and asylum system.
- A large cash-based informal economy utilised to transfer cash out of the country.
- Remittances from émigré and diaspora communities in South Africa to their host countries, which include jurisdictions in which terrorist organisations are active.
- Abuse of Non-Profit Organisations as their registration is voluntary in South Africa.
- The burgeoning fintech and crypto asset community in South Africa is still poorly governed and exposed to TF abuse, as are crowdfunding structures.
- South Africa’s high crime rate allows for the proceeds of crimes to be routed to terrorist groups.
- Weaknesses in South Africa’s beneficial ownership transparency regime and customer due diligence practices of financial and non-financial businesses may be exploited for TF. Legislative changes are being implemented to mitigate this risk.
It is inevitable that legislative mechanisms will be introduced to try to limit these exposures. As usual, the effect on ‘honest’ operations will be onerous and noticeable, but serves its purpose and makes it all the more difficult for dishonest ones.
PRUDENTIAL AUTHORITY (PA)
Annual Report
It’s the time of year when everyone releases their annual reports – including the PA. The PA’s report serves as a good summary of the regulator’s activity over the past year.
As expected, a large portion of the report is dedicated to dealing with the actions to remove South Africa from the FATF ‘grey list’.
In general, it seems that the sectors under the influence of the PA are weathering the storm of South Africa’s economic and political shifts.
Cybersecurity and resilience
The FSCA and PA published Joint Notice 1 of 2024 to provide the effective date of Joint Standard 2 of 2024. The effective date of the Standard will be 1 June 2025, which means that banks and insurers (the only ones affected) have less than a year to implement the Standard.
Insurance sector data
Every year the PA releases consolidated data on the insurance sector.
The primary life insurers have collectively now surpassed the R4 trillion assets mark, having grown by 10%. In comparison, the primary non-life insurers reached the R222 billion assets mark (4.2% growth); which might explain why the regulators are more concerned about the life industry – a case of following the money…
SOUTH AFRICAN RESERVE BANK (SARB)
Annual Report
The SARB also released its annual report at the end of June.
It’s a complex and lengthy read (you might not be into sports – Ed.). The most important points being that the SARB’s interventions have managed to keep the inflation rate at the top of its range (6%) and that it remains independent and able to manage the financial stability of the nation.
NATIONAL TREASURY (NT)
Response to FATF grey listing review
National Treasury released a media statement following the results of the last FATF plenary meeting mentioned above.
In short, it does not expect South Africa to move off the grey list until June 2025, some three months after the February deadline.
NATIONAL CREDIT REGULATOR (NCR)
Misleading practices by debt counsellors
The NCR released a circular laying out its concerns about debt counsellors engaging in deceptive and misleading practice of placing consumers under debt review without a full understanding of the process they are entering into or consenting to.
Specifically, the NCR noticed:
- Consumers are contacted telephonically where they are offered assistance on debt consolidation or reduction of interest or instalments on their accounts. In other instances, the caller claims to be calling from the NCR.
- Callers already have consumers’ information in respect of their obligations, thus deceiving consumers into believing that they are genuinely working with the NCR.
- Consumers are deceived into providing and/or confirming personal information telephonically with the understanding of providing this for something other than debt review (such as debt consolidation or reduced interest or instalments on accounts which are not the same as a legally binding debt review).
- Application forms are sent to consumers via a link to their phone and information is later transferred to the Form 16.
- Some consumers only become aware of the debt review flag when they apply for credit or when they attempt to use their existing credit facilities.
As much as these practices are in contravention of the NCA, the NCR has released this as awareness to consumers and to instruct debt counsellors to desist. Let’s hope that further action is taken.
COUNCIL FOR MEDICAL SCHEMES (CMS)
Demarcation Exemption Renewal Framework
The CMS provided a further extension to the deadline for the submission of information on insurers conducting the business of a medical scheme. Insurers are required to submit their demarcation information by 30 August 2024.
OMBUDS
FAIS Ombud Rules changed
The Ombud Council officially changed the rules of the Ombud for Financial Services (commonly known as the FAIS Ombud).
The rules increase the maximum amount of compensation the FAIS Ombud may award from R800,000 to R3.5 million. This will only apply to complaints lodged on or after 1 July 2024.
FSPs and financial institutions will have to update their complaints policies once again.
Annual Reports
The Ombudsman for Long-term Insurance (OLTI) and the Ombudsman for Short-term Insurance (OSTI) have published their last joint annual report, and the and the Ombudsman for Banking Services (OBS) its final report as the three Ombuds have now been incorporated into the National Financial Ombud Scheme South Africa.
OLTI and OSTI jointly placed more than R386 million in the hands of complainants during the 2023 financial year. OLTI recovered R283 million for complainants and an additional R727 838 was awarded in 169 cases as compensation for poor service. OSTI recorded payments of R102.6 million.
The OBS noted a 12% increase in cases reported, and referrals increased by 11%. The number of cases opened by the OBS totalled 21,641, an increase of 11% on the 2022 figures. The number of cases closed by the OBS in 2023 increased by 6% from 2022, with a total of R25,735,594 being recovered for consumers in the year under review.
A-PROOFED
OOO…
In the world of professional communication, the Out of Office (OOO) message is that virtual notice that lets colleagues and clients know you’re away from your desk, soaking up the sun on a tropical beach or perhaps attending a conference in a different time zone.
Crafting an OOO reply is an art form that balances professionalism with a touch of personality. While it’s essential to convey key information like your absence dates and alternate contacts, injecting a bit of quirkiness can make your message memorable. For instance, instead of the standard “I am currently out of the office”, why not try, “G’day, Mate! I’m off to the land down under for a family event and will be back on [return date]. If you need immediate assistance, please contact [colleague’s name] at [colleague’s email]. Otherwise, I’ll get back to you as soon as I’ve returned and recovered from all the kangaroo sightings and Vegemite tastings!” This not only informs your correspondents of your unavailability but also adds a playful twist to a potentially boring stock-standard template. Another fun example could be, “I’m currently out of the office, probably sipping a mojito and losing at beach volleyball. I’ll be back and ready to tackle your emails when my suntan starts fading on [return date].”
There are, however, important things to include when crafting the message.
- Let people know who to contact while you’re away if anything urgent comes up.
- Keep your audience in mind – not everyone responds to jokes the way you think they will. For example, if you mainly email your sales colleagues, they’ll have a different response to how a very formal client might respond.
- Consider including links to relevant resources or information that might be helpful to the person trying to reach you.
- Keep it light-hearted and fun but still informative – people should know when they can expect you to be back and how to reach you.
- Keep it concise because a few sentences are enough to convey the necessary information and a bit of humour.
- Before setting your OOO message, run it by someone you trust to ensure it’s appropriate and effective.
- Once you’re back in the office, remember to turn off your OOO message.
That’s me. I’m really out of the office until 19 August, but I do want to hear from you when I’m back. We both know that there are ways I can help you make even the shortest of your professional documents stand out above the rest!
Kim Hatchuel
kim@a-proofed.co.za
083 657 3377
