PRESENTATION BY THE FINANCIAL SERVICES BOARD TO PCOF AND THE SELECT COMMITTEE OF NCOP
16 AUGUST 2000
HISTORY OF THE FINANCIAL SERVICES BOARD 1923 INSURANCE ACT - REGISTRAR OF INSURANCE
1956 FINANCIAL SERVICES OFFICE OF MINISTRY
OF FINANCE
REGISTRAR OF FINANCIAL INSTITUTIONS
1986 MELAMET COMMISSION OF ENQUIRY INTO
COLLAPSE OF A A MUTUAL
1987 BANK SUPERVISION TRANSFERRED TO SA
RESERVE BANK
HISTORY OF THE FINANCIAL SERVICES BOARD 1989 VAN DER HORST COMMITTEE
1990 FINANCIAL SERVICES BOARD ACT 1990
SUPERVISION OF FINANCIAL SERVICES (OTHER THAN BANKS)
1991 FSB COMMENCED OPERATIONS 1 APRIL 1991
FUNCTIONS - SUPERVISE THE EXERCISE OF CONTROL
- ADVISE THE MINISTER
2000 PROMOTE INVESTOR EDUCATION
IMPORTANT LEGISLATION SUPERVISED BY FSB PENSION FUNDS ACT: 1956
FRIENDLY SOCIETIES ACT: 1956
UNIT TRUST CONTROL ACT: 1981
PARTICIPATION BONDS ACT: 1981
FINANCIAL INSTITUTIONS: 1984
(INVESTMENT OF FUNDS) ACT
STOCK EXCHANGES CONTROL ACT: 1985
IMPORTANT LEGISLATION SUPERVISED BY FSB
FINANCIAL MARKETS CONTROL ACT: 1989
SAFE DEPOSIT OF SECURITIES ACT: 1992
FINANCIAL SUPERVISION OF ROAD: 1993
ACCIDENT FUND
LONG TERM INSURANCE ACT: 1998
SHORT TERM INSURANCE ACT: 1998
INSPECTION OF FINANCIAL: 1998
INSTITUTIONS ACT
INSIDER TRADING ACT: 1998
OTHER RELATED LEGISLATION POLICY BOARD FOR FINANCIAL
SERVICES AND REGULATION ACT: 1993
NON BANKING FINANCIAL SERVICES REGULATORY ARCHITECTURE [PMG Editor’s note: not included]
ACTS ENABLING ENFORCEMENT
OTHER IMPORTANT BILLS
· PENSION FUND AMENDMENT BILL (PENSION SURPLUSSES)
· FINANCIAL SERVICES BOARD AMENDMENT ACT (NOW PASSED)
· IMPLEMENTATION INCLUDES:
-STRATEGIC PLANNING FOR INVESTOR EDUCATION
-ADDITIONAL COMMITTEES OF THE BOARD
-LICENCING
-LITIGATION
-LEGISLATION
-GUIDELINES FOR DISCLOSURE TO FOREIGN AND
- LOCAL REGULATORS AND SROS
-BOARD OF APPEAL
OTHER MATTERS · WORLD BANK / IMF FSAP VISIT
INTERNATIONAL CO-OPERATION
- CO-OPERATION WITH OTHER REGULATORY BODIES
- BANK SUPERVISION DEPARTMENT COMPETITION COMMISSION
- REGISTRAR OF MEDICAL SCHEMES
-QUALITY PROGRAMME
FINANCIAL MATTERS · MOVE TO "USER PAYS", LESS LEVIES
· LEVIES WERE REBATED
· ANALYSIS OF ACCUMULATED FUNDS
-CUSHION OF R2.854 MILLION
· DISCRETIONARY FUNDS
STAFF
COMPLEMENT BAND
COMPLEMENT: A B C D E
WHITE MALES 40 4 13 20 3 -
WHITE FEMALES 41 - 1 17 13 10
BLACK MALES 33 - 1 8 14 10
BLACK FEMALES 31 - - 3 17 11
SUBTOTAL 145 4 15 48 47 31
BLACK STUDENTS 3
TOTAL 148
EMPLOYMENT EQUITY TRAINING
INVESTMENT INSTITUTIONS
· FINANCIAL MARKETS -BREAKDOWN OF MERGER OF EXCHANGES
-CENTRAL DEPOSITORY - STRATE
-FORMALISE SUPERVISION OF SRO’S
-IMPACT OF DEMUTUALISATION
-INVESTMENT MANAGERS - REVISED CONDITIONS
-NEW LISTING RULES FOR JSE
-IMPACT OF GLOBALISATION AND
-DEVELOPMENTS IN TECHNOLOGY
UNIT TRUSTS AND PARTBONDS · INTRODUCTION OF THE COLLECTIVE
INVESTMENT SCHEMES CONTROL BILL
-RAPID CHANGE IN MARKET TRENDS
-SUBORDINATE LEGISLATION
INSIDER TRADING -88 INVESTIGATIONS
-24 STILL IN PROGRESS
-2 CIVIL ACTION PENDING
-1 REFERRED FOR CRIMINAL PROSECUTION
- 8 CASES SETTLED - R4 500 000
-COMPENSATION - R3 500 000
COLLECTIVE INVESTMENT SCHEMES CONTROL BILL · REASONS FOR DELAY IN PROGRESS:
-CHANGES IN MARKET-ADVENT OF "WRAP FUNDS"
-CAPITAL REQUIREMENTS FOR REPURCHASE COMMITMENT
COLLECTIVE INVESTMENT SCHEMES CONTROL BILL · NEW PROPOSALS
-IF REPURCHASES ON ANY ONE DAY
EXCEED 5% OF VALUE OF THE FUND
(3% FOR ONE INDIVIDUAL) THE
-MANAGEMENT COMPANY HAS THE
-OPTION TO DEFER PRICING FOR UP TO 7 DAYS AND LIQUIDATE THAT
ELEMENT OF THE PORTFOLIO SEPERATELY.
· OPPORTUNITY TO PREPARE SUBORDINATE LEGISLATION
INVESTMENT SERVICES BILL · CONSOLIDATION OF:
-STOCK EXCHANGES CONTROL ACT
- FINANCIAL MARKETS CONTROL ACT
- CUSTODY AND ADMINISTRATION OF
- SECURITIES ACT
- INSIDER TRADING ACT
- CERTAIN ELEMENTS OF THE
-COMPANIES ACT
INVESTMENT SERVICES BILL
· WILL PROVIDE FOR:
- LICENSING OF CORPORATE ENTITIES - ENABLING DEMUTUALISATION
-TRADING OF LISTED SECURITIES OFF-MARKET
- SUPERVISION OF UNLISTED OVER-THE-COUNTER INSTRUMENTS
-LICENCING OF CLEARING HOUSES
- PRINCIPLES AND CONDUCT RULES FOR SERVICE PROVIDERS
- ENHANCED MARKET ABUSE PROVISIONS - CIVIL AND CRIMINAL SANCTIONS
-EFFECTIVELY CONSOLIDATE AND UPDATE ALL
· LEGISLATION RELATING TO SECURITIES TRADING
BOTH LONG-TERM AND SHORT-TERM INSURANCE ACTS
· FILLING OF GAPS (CONSUMER PROTECTION) -DEFINITION OF EXECUTIVE MANAGEMENT
-REGULATION OF ADVERTISING MATERIAL
- EXPANSION OF REGISTRAR’S APPROVAL WHEN
- INSURER CHANGES A TRANSLATION,
- SHORTENED FORM OR DERIVATIVE OF ITS NAME
· FILLING OF GAPS (CONSUMER PROTECTION)
-CERTAIN EXEMPTIONS ON FREE CHOICE WITH POLICY LOANS
-EXEMPTING BANKS FROM ISSUING PRESCRIBED RECEIPTS WHEN
PREMIUMS ARE PAID IN CASH
-CLARIFICATION OF RENUMERATION PAID TO INTERMEDIARIES
-INTEREST ON UNPAID LOANS (IN DUPLUM RULE)
-EXPANSION OF DEFINITION OF LLOYDS
-PROHIBITION TO USE TERMS ‘FUNERAL’ AND ‘BURIAL’ IN SHORT TERM
POLICIES
· REGULATORY ARCHITECTURE -BUY BACK OF OWN SHARES AND HOLDING CERTAIN CLASSES OF SHARES
-HOLDING OF SECURITIES/SHARES LISTED ON FOREIGN STOCK EXCHANGES
AND IN FOREIGN REGULATED MARKETS
-POWERS TO REGISTRAR TO IMPROVE FOREIGN INSURERS, SUBJECT TO
CONDITIONS FOR REINSURANCE PURPOSES
PENSION FUNDS AMENDMENT BILL
· FILLING OF GAPS
(CONSUMER PROTECTION AND ACCESS) -ALL TO DO WITH HOUSING LOANS -CLARIFIES THE POSITION OF FURNISHING GUARANTEES
-BROADENS CONCEPT OF HOME OWNERSHIP
-PROPERTY OF SPOUSE MAY BE USED AS SECURITY;
-OWNERSHIP THROUGH RIGHT OF OCCUPATION AND ENTITLEMENT BY VIRTUE OF ANY LAW;
-CERTAIN CONTROLS ON SIZE AND TERM OF REPAYMENT
-CERTAINTY REGARDING REPAYMENT WHEN BENEFITS ARE DUE
GENERAL
-REWRITE OF PENSION FUNDS ACT, 1956 (ACT) -POLICYHOLDER PROTECTION RULES (REGULATIONS) -DECAPPING OF COMMISSION (REGULATIONS)
-TRANSFER OF LIVING ANNUÏTIES (DIRECTIVE)
-LAPSES AND SURRENDERS AND PAYROLL
-DEDUCTIONS
COMPLIANCE WITH INTERNATIONAL STANDARDS
TAKE OVER OF FUNDS CONSTITUTED UNDER INDUSTRIAL AGREEMENTS
LONG-TERM INSURERS
· DELETE PRESCRIBED BASIS
· IMPROVED RETURNS
· INVESTIGATE DYNAMIC SOLVENCY TESTING AND OTHER TECHNIQUES TO IMPROVE ASSESSMENT OF CAPITAL ADEQUACY
FINANCIAL ADVISORY AND INTERMEDIARY SERVICES BILL, 2000
WILL REGULATE THE ACTIVITIES OF "FINANCIAL SERVICES PROVIDERS" i.e. PERSONS WHO AS PART OF A REGULAR BUSINESS:
· GIVE FINANCIAL ADVICE
· RENDER INTERMEDIARY SERVICE
· DO BOTH
BILL WILL AFFECT: · INSURANCE BROKERS (LONG & SHORT TERM)
· HEALTH SERVICES BROKERS
· FINANCIAL ADVISERS
· INVESTMENT MANAGERS
REGULATORY METHODS EMPLOYED
· LICENSING
- HONESTY AND INTEGRITY
- COMPETENCY
-FINANCIAL SOUNDNESS
· WITHDRAWAL OF LICENCE / SUSPENSION
· CODES OF CONDUCT
· COMPLIANCE
- COMPLIANCE OFFICER
-RECORDKEEPING
-ACCOUNTING / AUDITING
REGULATORY METHODS EMPLOYED -DISPUTE RESOLUTION (OMBUDSMAN)
-ENFORCEMENT : CIVIL AND CRIMINAL
-ADVISORY COMMITTEE
-DELEGATION TO REPRESENTATIVE BODIES
SPECIAL PROVISION FOR:
· DIFFERENTIATION - ADMISSION
- CODES OF CONDUCT
- ACCOUNTING
· EXCLUSIONS
- BANKS ON OWN PRODUCTS
- MEMBERS OF STOCK EXCHANGES
- CIS MANAGERS
-PENSION FUND ADMINISTRATORS
- EXECUTORS / TRUSTEES / CURATORS
ECONOMIC CONSIDERATIONS
· COSTS OF REGULATION
· COMPLIANCE COSTS
-NO UNREASONABLE ENTRY BARRIERS
-DOUBLE / OVER-REGULATION AVOIDED
- NO UNREASONABLE IMPEDIMENTS ON BUSINESS
· FLEXIBILITY
ESSENTIAL ELEMENTS · CONSUMER PROTECTION
· CONSUMER EDUCATION
· CREATION OF PROFESSION FOR INTERMEDIARIES
FINANCIAL INSTITUTIONS (PROTECTION OF FUNDS) BILL, 2000 REPLACES FINANCIAL INSTITUTIONS (INVESTMENT OF FUNDS) ACT, 1984
REPEATS PROVISIONS OF EXISTING ACT ON:
· INVESTMENT, SAFE CUSTODY AND ADMINISTRATION OF FUNDS AND
TRUST PROPERTY
· CURATORSHIPS
ADDITIONAL PROVISIONS AIMED AT CONSUMER PROTECTION
· CURATORSHIPS
-EXTENDED TO ASSOCIATED AND UNREGISTERED INSTITUTIONS
-UNDER CONTROL OF REGISTRAR
· ENFORCEMENT POWERS: CIVIL REMEDIES
· DECLARATION OF PRACTICES AS IRREGULAR/ UNDESIRABLE