FINANCIAL ADVISORY AND INTERMEDIARY SERVICES BILL
[B 52-----2001]
MATRIX OF AMENDMENTS PROPOSED BY THE FINANCIAL SERVICES BOARD AND OTHER PARTIES
CLAUSE 1
1. Definition of "advice".
Proposed by FSB.
On page 4, in line 13, after "proposal" to insert "of a financial nature".
Reason : To clarify that advice is intended to relate only to financial matters.
2. Definition of "client".
Proposed by FSB.
On page 4, in line 42, to omit all the words after "means" and to substitute:
a specific person who is or may become the subject to whom a financial service is rendered intentionally, but does not include the general public
Reason : The present definition of client did not make clear what was intended, namely a particular person who is targeted for financial services.
Proposed by LOA.
On page 4, in line 42, to retain the existing definition of "client", namely:
any person as defined in this subsection
Reason: We do not believe that this definition, read together with other applicable definitions, creates any interpretational difficulties. Furthermore, the amendment proposed by the FSB may have the unintended consequence of removing advice or intermediary services rendered to a group of clients, from the ambit of FAIS.
FSB response:
Amendment proposed by FSB must stand but after "a specific person" must be inserted "or group of persons" which will accommodate the LOA’s problem.
Proposed by LOA.
On page 5, in line 4, to delete subsection (c)
Reason: This provision is exceptionally broad and vague, and creates the risk of overloading the Ombud’s office. The provisions of subsections (a) and (b) of this definition are sufficient to ensure comprehensive consumer access to the Ombud.
FSB response:
Opposed to LOA proposal.
Subsection (c) "has treated the complainant unfairly" must remain. This insertion was made on suggestion by the Ombudsman for Long-term Insurance and can be linked to clause 16(1)(d) which stipulates that a client should be treated fairly.
Proposed by LOA.
On page 5, in line 36, to replace the words "investment instrument" with the words "financial product".
Reason: The word "investment instrument" is not defined and could give rise to ambiguity. The term "financial product" is however clearly defined.
FSB response:
LOA’s proposal opposed. Use of "financial product" in definition will be circuitous.
Proposed by FSB.
On page 5, in line 56, to omit "part of a regular" and to substitute "a regular feature of the".
Reason : The new wording is seen to improve what is meant by the particular business activity which the law has in mind.
6. Definition of "licensee".
Proposed by FSB.
On page 6, in line 23, to omit "or which".
Reason: Linguistic improvement
7. Definition of "product supplier".
Proposed by FSB.
On page 6, in line 37, to omit "to clients".
Reason : The words "to clients" which are being omitted were confusing especially now that the definition of "client" has been revised.
8. Exclusion of advice on deposits.
Proposed by FSB
On page 7, from line 24, to omit subparagraph (iv).
Reason : See reason set out under paragraph 9 below.
9. Application of Act to financial services in respect of deposits
Proposed by FSB
On page 7, after line 43, to insert:
(4) The provisions of this Act shall only apply to the rendering of a financial service in respect of a deposit referred to in paragraph (f) of the definition of "financial product" in subsection (1) with a term not exceeding 12 months by a provider which is a bank as defined in the Banks Act, 1990, or a mutual bank as defined in the Mutual Banks Act, 1993, to the extent that such application is regulated in the code of conduct contemplated in section 15(2)(b).
Reason : This clause has the effect of excluding "advice" and "intermediary service" by a bank on bank deposits not exceeding twelve months. However, banks will in relation to such deposits have to comply with such codes of conduct as will be imposed in terms of section 15 specifically aimed at bank deposits, and excluding other codes under this Act.
The provision accommodates the concerns raised by The Banking Council in so far as both "advice" giving and "intermediary services" on short-term bank deposits are concerned.
The FSB recommends this amendment as bank deposits not exceeding one year are not risk-exposed, nor of an investment nature, and high volume business, the intensive regulation of which may well have hampered banking activities. Yet, the codes will provide the required measure of control over such deposits.
CLAUSE 4
1. Special provisions concerning powers of registrar:
Proposed by FSB.
On page 8, in line 25, to omit all the words after "misleading," up to and including "interest" in line 26 and to substitute "confusing".
On page 8, in line 27, to omit "the".
On page 8, in line 28, to omit all the words after "thereto" to the end of the paragraph.
Reason: To give effect to opinion by Adv Marcus.
CLAUSE 5
1. Advisory Committee on Financial Services Providers
Proposed by FSB.
On page 9, in line 23, to omit "that committee" and to substitute "the Committee".
Reason: Linguistic improvement.
CLAUSE 6
Proposed by FSB:
On page 9, in line 32, after Act to insert:
, excluding the power to make regulations under section 35,
On page 9, in line 38, after "Act" to insert:
, excluding the power to make rules under section 26
Reason: To give effect to opinion by Adv Marcus.
Proposed by LOA:
On page 9, in line 55, to omit the words "for the purpose of performing the functions determined by the registrar" and substituting the words:
of such group of persons, for the purpose of performing functions determined by the registrar and relating to the interests of such group of persons
Reason: Delegation of powers to representative bodies should only occur in respect of matters relating to the interests of the persons represented by such bodies.
FSB response:
LOA’s proposal (supported by SAIA) opposed. Proposal may give rise to perception of "captive regulator" where emphasis on delegation is to avail of expertise of delegated body.
CLAUSE 8
Proposed by LOA:
On page 10, in line 50, to omit all the words after "that", up to and including "financial soundness" in line 3 on page 11, and to substitute the following:
the applicant complies with the requirements for fit and proper financial services providers or categories of providers, determined by the registrar by notice in the Gazette, after consultation with the Advisory Committee, in respect of –
Provided that in addition to such requirements, where the applicant is a partnership, a trust or a corporate or unincorporated body, the applicant must, in addition, so satisfy the registrar that any key individual in respect of the applicant complies with the said requirements in respect of -
Reason: As the section currently reads, in cases where the applicant is not a natural person, it is the key individuals who are required to meet the three fit and proper requirements. Although this makes sense in the case of the requirements relating to honesty and integrity, it does not make sense in the case of the other requirements. It will not, for example, assist a consumer if the key individuals are operationally and financially sound, if the business itself does not have appropriate operational procedures in place or if it has insufficient capital to fund its liabilities. Furthermore, not all of the key individuals of the business will necessarily be the persons providing advice to clients (if they do, they are included in the definition of "representative" and so covered by FAIS anyway). It is therefore not reasonable to insist on all key individuals having the same competencies as a provider who is a natural person and provides advice in his or her own capacity.
The proposed amendment therefore seeks to ensure that the provider itself (i.e the business) meets the necessary criteria and that, in addition, key individuals meet the "honesty and integrity" requirements as well as those competency requirements that are appropriate to their role in the business concerned.
FSB response:
LOA’s proposal (supported by SAIA) accepted.
2. Registrar’s right to impose conditions and restrictions on licence
Proposed by FSB.
On page 11, in line 17, to omit "the registrar may deem" and to substitute "are".
On page 11, from line 18, to omit subparagraph (i) and to substitute:
(i) all facts and information available to the registrar pertaining to the applicant and any key individual of the applicant;
(ii) the type of financial services which the applicant could appropriately render or wishes to render;
(iii) the category of financial services providers in which the applicant will be classified in relation to the fit and proper requirements mentioned in subsection (1); and
On page 11, in line 21, to omit "(if any)".
Reason: To give effect to opinion by Adv Marcus.
CLAUSE 9
Proposed by LOA.
On page 12, in line 41, omit the words "during the period that the provisional suspension is in force" and substitute the words:
within a reasonable time after the provisional suspension has been imposed
Reason: Given the serious consequences of a provisional suspension for the provider concerned, the registrar should not have an open-ended time period within which to make a decision regarding the future of the suspension.
FSB response:
LOA’s proposal (supported by SAIA) accepted but with adjusted wording.
On page 12, in line 42, to omit the word "consider" and to substitute:
within a reasonable time after receipt of
On page 12, in line 42, after "," to insert "consider the response"
CLAUSE 10
Proposed by LOA.
On page 12, in line 59, to add the following words after "manner"
which has or is likely to prejudice clients or members of the public
Reason: The phrase "in a material manner" is unclear without further qualification.
FSB response:
Opposed to LOA proposal. To link contravention to prejudice will place an additional burden of proof on the registrar, where there may be glaring evidence of a material contravention.
CLAUSE 13
Proposed by LOA.
On page 14, in line 6, to omit the word "ensure" and to substitute "be satisfied that" and, in line 8, to insert the words "similar to those" before the word "contemplated".
Reason: The amendment aims to restore the wording to the version last seen by the LOA when submissions on the draft Bill to PCOF were requested. As the section currently reads, a representative will be required to meet the identical requirements to those which will be prescribed by the applicable regulations for licensed financial services providers themselves. Representatives are not required to be licensed because the licensed provider concerned is responsible for their actions. It is therefore inappropriate and unnecessarily onerous to require them to meet identical requirements to those for providers, who provide advice or intermediary services in their own right, without the ‘backing’ of another licensed entity.
FSB response:
LOA proposal accepted.
Clause 15
1. Code of Conduct for financial services in respect of deposits
Proposed by FSB
On page 15, in line 4, after "(2)" to insert "(a)".
On page 15, after line 6, to add:
A code of conduct must be drafted for the rendering of a financial service in respect of a deposit referred to in paragraph (f) of the definition of "financial product" in section 1(1) with a term not exceeding 12 months by a provider which is a bank as defined in the Banks Act, 1990 (Act, No 94 of 1990), or a mutual bank as defined in the Mutual Banks Act, 1993 (Act No 124 of 1993).
Reason : Same reason as that given under paragraph 9 on page 3.
CLAUSE 17
Proposed by LOA:
On page 15, in line 44, omit the words "one or more" and substitute "more than one".
Reason: As the section currently reads, a one-person operation would be required to appoint a compliance officer, which is unreasonably onerous.
FSB response:
LOA proposal is opposed. The intention is that the provision must apply where there are two persons in the business.
CLAUSE 18
1. Maintenance of records.
Proposed by FSB.
On page 16, in line 14, to omit "five" and to substitute "three".
Reason : To maintain records for a minimum period of five years is considered very onerous. A period of three years would accord with the normal prescription period as well as with the provisions of the Policyholder Protection Rules relating to record-keeping.
CLAUSE 19
Proposed by LOA.
The LOA does not have a specific amendment to propose to this section, but wishes to make the general point that the requirements imposed by section 19 (pages 16 and 17) remain onerous for individual intermediaries and small businesses, particularly those operating in the unsophisticated sectors of the market. These requirements are, for example, significantly more onerous than the requirements relating to accounting officers as imposed by the Close Corporations Act. Although the LOA accepts that the FSB intends to be flexible in regard to granting appropriate exemptions in this regard, we wish to place on record the fact that, in our discussions with intermediaries, the costs and operational implications of these provisions are cause for grave concern in respect of almost all but the most sophisticated corporate brokerages.
In particular, the provisions of sections 19(1)(b) (lines 30 – 33 on page 16) and 19(2) (lines 34 – 49 on page 16) cannot apply to natural persons and must be amended accordingly.
FSB response:
LOA’s concerns noted. Opening words of clause 19(1) allow for exemptions. FSB does not agree that sections 19(1)(b) and 19(2) cannot apply to natural persons. They can be so applied and are in fact presently applied to investment managers (to be transferred to FAIS regime) who are natural persons.
CLAUSE 20
1. Office of ombud for financial services providers:
Proposed by FSB.
On page 17, after line 44, to add:
(4) In dealing with complaints in terms of sections 27 and 28 the ombud must be independent and impartial.
Reason: To give effect to opinion by Adv Marcus.
CLAUSE 21
Proposed by LOA.
On page 17, in line 47, omit the word "or" and substitute "and".
Reason: The LOA believes that the Ombud should, in addition to having adequate financial services knowledge, also be legally qualified, for the following reasons:
FSB response:
Proposal accepted. Proposal also accepted by SAIA and industry ombuds. Proposed amendments will also address some of the constitutional criticism of Adv Marcus.
CLAUSE 23
1. Accountability of ombud
Proposed by FSB
On page 18, from line 33, to omit subsection (4) and to substitute:
(4) The ombud is accountable to the Board only in matters relating to the administration of the Office.
Reason: To give effect to the opinion by Adv Marcus insofar as the independence of the ombud is concerned.
CLAUSE 27
1. Declining by the Ombud to investigate a complaint where court proceedings have been instituted.
Proposed by FSB (adopting a proposal by the Banking Adjudicator).
On page 20, in line 5, after "instituted" to insert "by the complainant".
Reason : The provision as it now stands may enable the party against whom a complaint is lodged with the Ombud to frustrate proceedings by the Ombud merely by the institution of court proceedings against the complainant. The amendment makes clear that proceedings will only be stayed if the complainant institutes a court action.
2. Providing copies of a complaint received by the Ombud to other interested parties.
Proposed by FSB (adopting a proposal by the Banking Adjudicator).
On page 20, in line 15, to omit all the words after "parties" to the end of the paragraph and to substitute:
have been provided with such particulars as will enable the parties to respond thereto; and
Reason : Complaints may contain defamatory or inflammatory material and to provide copies may expose a complainant to claims for defamation. The wording proposed will enable the Ombud to provide sufficient particulars of the complaint to other interested parties without sending actual copies of the complaint to them.
Alternative proposal by Life Underwriters Association of South Africa (LUASA):
The other party/parties to the complaint should in addition be provided with copies of the complaint and supporting documentation (if any).
FSB response:
For the reasons set out above, the FSB opposes LUASA’s alternative proposal.
3. Resolving of a complaint by the Ombud
Proposed by FSB.
On page 20, in line 24, to omit "both" and to substitute "all".
Reason: Textual improvement.
CLAUSE 28
Proposed by LOA.
On page 20, in line 46, to omit the words "representative or other party concerned" and to substitute the words "or representative".
Reason: The current wording extends the Ombud’s jurisdiction beyond financial services providers and representatives. As such, it is inconsistent with the definitions of "complaint" and "complainant".
FSB response:
The LOA proposal is opposed. The deliberate intention is to give the ombud jurisdiction over unregistered parties. Otherwise complainants will be forced to take those parties to court. This tallies with clause 26(1)(a)(iii). There is also no consistency with the definitions referred to by the LOA as those definitions are qualified by the references to clauses 26(1)(a)(ii) and (iii).
2. Monetary awards, cost awards and interest determined by Ombud:
Proposed by LOA
The LOA wishes to make the general comment that section 28(2) (page 20, line 48) confers powers on the Ombud and the Board to make awards, and determine interest on those awards, which exceed even the powers of a High Court judge. For example, the Ombud may determine both the rate and commencement date of interest calculations – a matter usually governed by statute (eg. the Prescribed Rate of Interest Act). The section also gives the Ombud and Board far-reaching powers to make costs orders, without specifying what types of expenses or disbursements qualify as "costs". The granting of costs orders by a court are circumscribed by specific Rules of Court, which include provision for taxation of bills of cost to determine their validity.
The LOA suggests that the Act be amended appropriately to stipulate that the Ombud may award a monetary award as compensation, which shall bear interest at the rate prescribed by regulation, and order an unsuccessful party to pay such costs as may be prescribed by regulation. It is further recommended that the relevant regulations then be drafted in consultation with the Rules Board.
FSB response:
LOA proposal accepted partially. New clause to be inserted as clause 28(3).
"(3) Any award of interest by the ombud in terms of subsection (2) must not exceed the rate which a court would have been entitled to award, had the matter been heard by court."
It will be most impractical to tie the costs which an ombud may award, to the tariff of costs of the various courts. The complainant who has been awarded costs may then be required to draw a bill of costs which in any event will not be capable of taxation. The Board may cap costs by regulation (see clause 28(2)(b)(iii)).
3. Sending of Ombud’s determination
Proposed by FSB.
On page 21, in line 4, to omit "with" and to substitute "to".
Reason: Linguistic improvement.
CLAUSE 34
1. Declaration by registrar of undesirable practices:
Proposed by FSB.
On page 23, in line 2, to omit all the words after "(1)" up to and including "(2)" in line 3 and to substitute:
Subject to subsections (2) and (3)
On page 23, after line 5, to insert:
(2) The following principles must guide the registrar in considering whether or not a declaration contemplated in subsection (1) should be made:
(a) That there is a reasonable suspicion that an undesirable business practice is being conducted by an authorised financial services provider or a representative;
(b) that the registrar has a reasonable apprehension that without such declaration the interests of clients or the public are likely to be prejudiced or harmed; and
(c) that if the practice were allowed to continue the objects of this Act may be defeated.
On page 23, in line 7, after "declaration" to insert:
, giving reasons therefor
Reason: To give effect to opinion by Adv Marcus.
On page 23, in line 18, to omit "(4)" and to substitute "(5)".
CLAUSE 35
Proposed by LOA:
On page 23, in line 39, delete subsection 35(1)(c) and renumber the remaining subsections accordingly.
Reason: Section 16 of the Act (page 15) already contemplates the promulgation of subordinate legislation regarding compliance arrangements (inter alia) in the Code/s of Conduct. Overlaps between the Codes and the regulations issued by the Minister will lead to regulatory uncertainty, particularly as the consultation and drafting processes, as well as the compliance obligations, in respect of the two sets of subordinate legislation differ.
FSB response:
LOA proposal is opposed. Regulations envisaged under clause 35(1)(c) may go further than matters relating to conduct.
2. Contravention of or non-compliance with regulations
Proposed by FSB.
On page 23, in line 47, to omit "criminal".
Reason: Linguistic improvement.
CLAUSE 38
Proposed by LOA:
On page 24, in line 21, to omit subsection 38(d).
In line 24, to insert after "company," the words "and no voluntary closure of business by an authorized financial services provider".
Reason: The current wording, unlike the version on which the LOA’s previous submission was based, extends the rules surrounding voluntary closure of business to representatives. This leads to the absurd result that a representative cannot resign from his job, or terminate his contractual relationship with a provider, without the registrar’s permission. In the case of representatives, the provider concerned remains accountable to any clients of the representative should the representative leave. This matter is also specifically addressed in the draft General Code of Conduct.
FSB response:
LOA proposal is opposed. Representatives need to be covered by provision. They may also conduct their business in corporate form. Closure of their business is different from severing relationship with provider.
CLAUSE 40
Proposed by LOA.
The LOA requests clarity on the interaction between this section 40 (page 24, lines 41 – 47) and section 33 (page 22). Section 33 gives the registrar the power to institute a ‘class action’ for losses suffered by any person in consequence of non-compliance with the Act. Although section 40 reserves the common law rights of such persons, it is presumably not the intention that the financial services provider be exposed to ‘double jeopardy’ – i.e having to pay compensation in respect of a particular client in consequence of a civil action instituted by the registrar, as well as in consequence of a subsequent action brought by the client in his or her own capacity. It is suggested that clause 40 be amended to address this concern.
FSB response:
Clause 40 needs no amendment. Court rules of procedure will take care of "double jeopardy". Defendant facing two actions based on same cause, will plead "lis pendens" or "res judicata".
CLAUSE 41
1. Fees and penalties which may be levied in terms of the Act.
Proposed by the FSB (giving effect to a request by National Treasury)
On page 24, in line 49, to omit all the words after "The" up to and including "Committee" and to substitute:
Minister must, after consultation with the registrar
Reason : National Treasury prefers that the Minister should have the prerogative of controlling fees and penalties, after consultation with the registrar.
Proposed by LOA:
To further amend the FSB proposal above by the insertion of the words "and the Advisory Committee" after "registrar".
Reason: Given the newness of the type of regulation provided for by this Act, the LOA is in favour of extensive consultation with an appropriately constituted and fully representative Advisory Committee.
FSB response:
LOA proposal is opposed. It would be inappropriate to fetter the Minister’s power by requiring him to consult with the Advisory Committee as well.
CLAUSE 44
1. Interaction between the FAIS Act and the Policyholder Protection Rules.
Proposed by FSB (after consultation with National Treasury).
On page 26, after line 23, to add:
(5) The Minister, after consultation with the registrar, may, on such conditions as the Minister may determine, by notice in the Gazette exempt a financial services provider or representative, or category of financial services providers or representatives, from any provision of the Policyholder Protection Rules (Short-term Insurance), 2001, published in Government Notice R.164 of 23 February 2001 and the Policyholder Protection Rules (Long-term Insurance), 2001, published in Government Notice R.165 of 23 February 2001, as amended.
Reason : It is considered more prudent to deal with the interaction between the FAIS law and the Policyholder Protection Rules in this fashion. This amendment must be read together with the amendment effected to the Schedule set out below. The ultimate objective is to procure that the FAIS Act will regulate the market conduct of financial services providers who are authorised under the Act. Insurers who do not register under the FAIS Act will remain subject to the Policyholder Protection Rules.
Proposed by LOA.
For reasons provided in the LOA’s previous written and oral submissions, the LOA is opposed to this proposal by the FSB and remains strongly of the view that FAIS should repeal all aspects of PPR other than those PPR obligations which can only be carried out by insurers (eg. granting a cooling off right).
However, even if the FSB’s proposal to retain PPR, together with exemptions from PPR for insurers who are licensed as financial service providers, is accepted – the LOA still does not support the proposed new clause 44(5). Instead, if this approach is adopted, the LOA requests that it be effected by way of the proposed amendment of section 45 below.
FSB response:
The FSB maintains that the interaction between the PPR and FAIS should be dealt with in terms of the new clause 44(5). This allows for flexibility and a space of time within which duplications and other transitional problems could be addressed. There does not appear to be a difference of opinion between the LOA and the FSB on the objectives to be achieved. The FSB which administers both the PPR and the FAIS Codes should be given the opportunity to effect the transition to the extent necessary. This course is also favoured by the Ministry of Finance, rather than a repeal of the PPR "to the extent necessary".
CLAUSE 45
1. Bringing the activities of health brokers under the ambit of the Act.
Proposed by FSB (following the recommendation of many commentators).
On page 26, in line 43, to omit "or 65".
Reason : The exclusion of health brokers from the operation of the FAIS Act was a mistake and nonsensical. The amendment rectifies the situation and has the effect of making health brokers subject to this law as it does with all other intermediaries. The amendment will not result in any invasion of the regulatory territory of the Medical Schemes Council.
Alternative proposal by the Association of Health Benefit Advisors:
Section 65(3) and (4) of the Medical Schemes Act, 1998 should be repealed by the FAIS Act so that health brokers are no longer accredited by the Medical Schemes Council. The effect thereof would be that health brokers will be regulated entirely by the FAIS Act, as is the case with other intermediaries including investment managers.
FSB response:
The FSB supports the proposal of AHBA. The proposal is likewise supported by the LOA, SAIA and The Banking Council and makes regulatory sense from the perspective of the FAIS objective to regulate all market conduct in the field of financial services. This amendment will also give effect to the holistic approach of a single regulatory framework recommended by the Nel Commission in its recent report.
The amendment proposed by AHBA does not revoke section 65(1) and (2) of the Medical Schemes Act, 1998, which empowers the Minister of Health to prescribe the amount which medical schemes may compensate a broker for the introduction or admission of a member to a scheme.
National Treasury supports the view that the market conduct of all brokers must be included under FAIS (referring to the Nel Commission report), "but decision must rest with PCOF".
2. Transitional provision regarding the Collective Investment Schemes Control Act, 2001.
Proposed by FSB.
On page 27, after line 15, to add:
(3) Until such time as the Collective Investment Schemes Control Act, 2001, referred to in sections 1(1) and 45(1)(a)(iv) of this Act, comes into operation, any reference in this Act to-
(a) a collective investment scheme, a manager and an authorised agent, shall be construed as references to a unit trust scheme, a management company, and an authorised agent referred to in the Unit Trusts Control Act, 1981 (Act No. 54 of 1981), respectively; and
(b) any word or expression defined in the Unit Trusts Control Act, 1981 shall unless clearly inappropriate or inconsistent with this Act, have that meaning.
Reason : This provision has become necessary because the indications are that the new Collective Investment Schemes Control Act will not become law ahead of the FAIS Act. In the latter Act, reference is already made to the Collective Investment Schemes Control Act.
3. Exempting insurers who are registered under FAIS from PPR:
Proposed by LOA.
Only if the FSB proposal discussed under Clause 44 above (which proposal is not supported by the LOA), is nevertheless adopted, the LOA requests that it be implemented as follows, and not by the introduction of the proposed subsection 44(5):
On page 27, after the new subsection 45(3) proposed by the FSB in relation to collective investment schemes, to insert a new subsection 45(4), worded as follows:
The provisions of the Policyholder Protection Rules (Long-term Insurance), 2001 and the Policyholder Protection Rules (Short-term Insurance), 2001, do not apply to the rendering of financial services by any authorized financial services provider or its representative. Provided that the foregoing does not apply to the following provisions of such Rules: [The specific parts of PPR which relate to product suppliers, as explained above, must be identified]
FSB response:
This alternative proposal by LOA is also opposed. Please refer to reasons given above under Clause 44. This important matter cannot be dealt with prematurely as the General Code of Conduct under FAIS is in the consultative stage.
SCHEDULE
1. Removal of regulation of health broker services from Medical Schemes Act.
Proposed by FSB (following the recommendation of many commentators).
On page 35, after item II(c), to insert:
|
II (d)
(e) |
Act No. 131 of 1998
Regulations in terms of the Medical Schemes Act, 1998 (Act No. 131 of 1998) |
Medical Schemes Act, 1998 GN No. 1262 of 20 October 1999, as amended from time to time. |
1. The repeal of section 65(3) and (4).
2. The repeal of all provisions of the Regulations relating to matters referred to in section 65(3) and (4) of the Medical Schemes Act, 1998, at the date of repeal of these subsections in terms of Item II(d) of this Schedule. |
Reason : Please refer to FSB response under clause 45 on page 17.
2. Interaction between the FAIS Act and the Policyholder Protection Rules.
Proposed by FSB (after consultation with National Treasury).
On page 35, to omit items II(d) and II(e).
Reason : The repeal of the Policyholder Protection Rules is withdrawn as those rules will now be dealt with in terms of the new clause 44(5). Please refer to the said clause above.
Proposed by LOA:
For reasons provided above, under the comments on Clauses 44 and 45, the LOA objects to the FSB’s proposed amendment. We are of the view that items 11(d) and 11(e) of the Schedule should be retained. We further suggest that these items be amended to identify the specific provisions of the applicable Policyholder Protection Rules which are to be retained – i.e only those provisions which impose obligations (such as granting cooling off rights) which can only be carried out by insurers themselves.
FSB response.
Proposal by LOA is opposed. Please refer to reasons under clause 44 above.