Apparently we ‘jumped the gun’ in deciding it was officially spring! As usual, Mother Nature had a surprise in store for South Africa and dragged us back into a few days of wintery cold. Nonetheless, some early rain is always welcome.
The halls of the regulators have been quite busy though with plenty to keep track of and we’ve included a quick look at the SARS findings under the “two-pot” system.
With a few months to go, it’s not time to consider the year-end wind down just yet!
THE FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)
Submission of financial statements
Over the past few weeks we have received queries from the FSCA regarding the submission of financial statements, or (even worse) notification that the statements were not received despite having been submitted well in time for the 30 June 2024 deadline.
If you receive correspondence from the FSCA in this regard, don’t panic. Please forward it to us immediately so that we can address it with the regulator.
Administrative penalties
Earlier this month the FSCA imposed an administrative penalty of R4.5 million on Shaheen Khan and debarred him for 10 years. Investigations revealed that Khan had rendered financial services on a foreign currency denominated investment instrument without being authorised to do so.
The debarment sanction prohibits Khan from providing or even being involved in the provision of financial services, and from acting as a key person of a financial institution and from providing specified financial services to a financial institution, including under an outsource arrangement.
In another case, the FSCA imposed an administrative penalty of R1 million, debarred Adell van Wyk for 15 years, and imposed a penalty of R100,000 on Wenru (Pty) Ltd.
The FSCA investigation found that van Wyk had instructed Wenru to process payments without the clients’ consent, and that by doing so Wenru had not acted with due care and diligence.
The debarment sanction also prohibits van Wyk from providing or being involved in the provision of financial services as well as from acting as a key person of a financial institution and from providing specified financial services to a financial institution, including under an outsource arrangement.
Warnings
The FSCA issue a warning about Isandiso Sethu Investments (Pty) Ltd trading as Isandisofx that claimed to be in a strategic arrangement with the FSCA which would never be the case.
Although licensed under FSP number 52985, the entity is only approved for funeral and friendly society benefits but is illegally offering financial services related to investments, derivatives, and forex.
In yet another warning about people perpetrating a financial services scam, the FSCA cautioned the public about individuals impersonating RisCura Solutions (Pty) Ltd and its Key Individual, Natalie Brink.
Individuals are using a Telegram group to fraudulently solicit funds from members of the public by claiming to be representatives of RisCura Solutions. As usual, the scammers offer unrealistic returns in a short period of time.
RisCura Solutions informed the FSCA that it does not use Telegram to market its services and has denied any association or relationship with the individuals administering the Telegram group.
The FSCA also provided a warning where a former Representative of Old Mutual Life Assurance Company is falsely claiming to still be conducting business for Old Mutual. Keshan Brijlal is offering fictious investments and taking deposits from the public despite having been dismissed and debarred on 16 May 2022.
Old Mutual confirmed that it is no longer in any way associated with Brijlal, and that the accounts used for the deposits are not Old Mutual bank accounts.
Exemption of Lloyds and Lloyds underwriters
The FSCA granted an exemption to Lloyds and Lloyds underwriters that relaxes the requirements on Lloyds to hold the names, identity numbers, and contact details of policyholders.
The exemption does note that there must still be sufficient governance controls over the activities of the Lloyds binder holders, and that if the lack of the information is likely to cause policyholders any prejudice, that Lloyds must inform the FSCA, which will likely lead to the exemption being withdrawn.
PRUDENTIAL AUTHORITY (PA)
Proposed Directive to banks
The Prudential Authority released a draft Directive to banks to align regulations to the revised Basel III requirements.
The proposed changes include a standardised approach to credit risk, revising the internal ratings-based approach to credit risk, streamlining the operational risk framework, refining the leverage ratio framework, and revisions to the output floor total risk-weighted calculation.
Comments can be submitted to SARB-PA@resbank.co.za by 21 October 2024.
BA returns changes
In a separate Directive, the PA informed banks that Banks Act returns (BA returns) and related instructions will be issued as Directives or determinations under the Prudential Standards.
This change will become effective from 1 January 2025. As usual, banks, auditors, and chief executive officers are required to acknowledge receipt.
…and then the PA released a draft Directive which lists the BA returns that will be affected by the above change. It seems to be a fait accompli, but comments can be submitted to SARB-PA@resbank.co.za by 21 October 2024.
SOUTH AFRICAN REVENUE SERVICE (SARS)
Two-pot retirement system withdrawals
SARS released a media statement on 11 September to provide details of withdrawals under the “two-pot” retirement system.
SARS states that it received 161,607 tax directive applications. Of these, 159,853 applications relate to savings withdrawal benefits, which is 98.9% of the total number of applications received. SARS received an average of 17,964 tax directive applications per day.
At the time of the statement’s release, the gross amount of the lump sums for the applications received totalled R4.1 billion.
Contributions made to a pension or retirement fund are not taxed at the time of payment to the fund, but deferred to the time the person retires and then taxed at a reduced rate. However, when an individual withdraws while employed, they will be taxed at their marginal tax rate.
SARS notes that applicants need to be aware of other tax implications. The process followed for tax directives is that applications are submitted to SARS by the fund administrators via the SARS eFiling portal. The Directive issued by SARS then indicates to the fund how much tax should be withheld by the fund on behalf of SARS before it processes the payout.
That means that taxpayers who owe SARS money will have their tax debt added to the tax on withdrawal from the savings benefit. SARS does note that where there are payment arrangements in place to settle the debt with SARS, the debt will be deducted as per the agreements between SARS and the taxpayers. Tax debts that SARS has agreed to defer will not be deducted.
At the time of the release, the turnaround time for SARS to complete Directive applications, without any human intervention, was no more than 48 hours.
Taxpayers can use the following channels to get more information from SARS about the new system: the SARS Online Query System on the SARS website and the SARS WhatsApp channel – 0800 11 7277. Taxpayers can undertake tax calculation simulations on their two-pot withdrawals via these channels.
Applicants are required to give one of three reasons why they want to make a withdrawal from the new system: a transfer due to divorce, a transfer to a retirement fund, and a withdrawal by the taxpayer.
Naturally, advisors are encouraging investors to withdraw only in the event of an emergency or similar event as the long-term values of the investments are being diminished and it is unlikely they will ‘catch up’ on the withdrawn amounts.
There is no current consolidated data, but SARS has stated that it will provide periodic updates on the numbers of withdrawals and totals.
OMBUDS
National Financial Ombud Scheme (NFOS) highlights obligations of policyholders
The non-life division of the NFOS released a summary of general findings relating to complaints rejected by non-life insurers. It noted that policyholders are also required to meet some obligations as stipulated in their insurance contracts, and that doing so would increase the likelihood of claims running smoothly.
Specifically, it noted that policyholders should make themselves aware of cover exclusions and to ask some questions should they be unclear on any terms that could appear ambiguous. NFOS went on to advise policyholders to make sure that they are aware of who is insured on the policy and to provide material information pertinent to their policy.
It’s a good reminder that the Ombuds are an unbiased party tasked with creating a fair outcome for policyholders and providers, and that they are aware that providers and intermediaries are not always at fault.
A-PROOFED
Don’t be a punc…
Imagine a symphony where every note is perfectly placed, every instrument tuned to the finest degree, creating an exquisite harmony that resonates deeply. Now, picture that same level of precision applied to the written word. Just as a maestro’s exacting touch can transform a mere melody into a masterpiece, the meticulous attention to detail in proofreading elevates a piece of writing from ordinary to extraordinary. Precision isn’t just about avoiding errors; it’s about crafting clarity and impact with every word, ensuring your message sings with perfect harmony.
Let’s for a second put aside the concern about the big stuff – fancy words, perfect sentence structure, sounding clever – and consider the smaller details that can cause the biggest headaches. Punctuation. Those easily overlooked marks that can transform your message from clear and professional to confusing or even unintentionally hilarious.
Punctuation might seem like a tiny detail in business correspondence, but it’s what separates “Let’s eat, grandma” vs “Let’s eat grandma”. That innocent little comma is the only thing standing between a family dinner and, well, a horror movie. While this might give you a chuckle, punctuation mistakes in the business world are no joke.
In your industry the stakes are high. A misplaced comma or full stop can cause more than just a bit of confusion. It can lead to legal disputes, misinterpretation of contracts, and paperwork nightmares that keep people up at night. Just imagine a policy wording where one comma changes whether a client is covered or not. Spoiler alert: it won’t end well for anyone involved.
And let’s not forget our day-to-day business emails. You know those quick ones where you dash off a sentence or two and hit send? Well, missing a simple apostrophe can make even the most polished professional look careless.
Now here’s where it gets fun. Ellipses. Ah, the good old three dots… or, for some people, four dots… or five, six, seven dots…. If you’ve ever seen a sentence that looks like it’s falling off the edge of a cliff thanks to a string of ellipses, you’re not alone. The truth is, ellipses should only be three dots, and they should be used sparingly. Overusing them makes your writing look uncertain, and is the kind of thing that can make even the most straightforward email sound like a cryptic message from a mysterious stranger.
Then there’s tone. Punctuation is the secret sauce that gives your writing personality. One well-placed exclamation mark can inject enthusiasm, while five in a row can make you sound a bit too excited, and like you’re trying to sell insurance at a carnival.
In conclusion, punctuation in business correspondence can make the difference between collaboration and confusion, politeness and catastrophe. So, use it wisely. And remember: no-one would want their grandma to be eaten.
The good news? All of these potential pitfalls can be avoided with a little attention to detail. That’s where I come in. I’m like your punctuation superhero, ready to swoop in and save the day before an innocent comma causes chaos.
Kim Hatchuel
kim@a-proofed.co.za
083 657 3377
