PRESENTATION TO THE PORTFOLIO COMMITTEE ON FINANCE FINANCIAL SERVICES OMBUD SCHEMES BILL, 2004 ("FSOS BILL")

COMMENTS ON JSE' s SUBMISSION DATED 30 SEPTEMBER

  1. The JSE creates the impression that there is a conflict between two Bills, namely the FSOS Bill ("FSOSB") and the Securities Services Bill ("SSB"). There is nothing in clause 18(2)(t) of the SSB that represents a clash between the FSOSB and the SSB. Clause 18(2)(t) makes general provision for rules on settlement of disputes between clients and authorised users. There is nothing in clause 18(2)(t) preventing rules from being made which provide for the application of the FSOSB. Furthermore, such rules may in terms of clause 10(2) of the FSOSB contain additional provisions to those mentioned in clause 10(1). Furthermore, flexibility has been built into the FSOSB by the possibility to grant an exemption from any provision of FSOS under clause 18(4).

Clause 18(1) of the FSOSB will override rules made under 18(2)(t) of the SSB because rules are subordinate measures which must give way to an Act of Parliament. Existing rules, which in terms of clause 116(3) of the SSB are deemed to be made under clause 18(2)(t) of the SSB, and which are in conflict with the FSOSB, will have to be changed to comply with FSOS (for instance its requirements regarding the independence of the ombud and informal, fair and cost-effective procedures).

2. it does not make regulatory sense for the JSE to be able to establish a scheme without being subject to FSOS, in view of the holistic approach envisaged in the FSOSB. The intention behind the FSOSB is that all ombud schemes in the financial services sector must, provided they meet certain prescribed requirements, be recognised by the Financial Services Ombud Schemes Council (not the FSB as such) in order to ensure the consistency of ombud schemes across the sector.

3. A further object of the FSOSB is to co-ordinate activities of recognised schemes. FSOSB also deals with the issue of overlapping of jurisdiction of different ombud schemes, including those established by law. The establishment of a scheme without being recognised under FSOS will undermine the aim of having a uniform approach to the recognition of ombud schemes. It will also defeat the objects of harmonising and co-ordinating the activities of ombud schemes similar in nature and ensuring clarity on the demarcation of the jurisdictions of the different schemes.

4. Another compelling reason for the inclusion of a scheme by the JSE under FSOS is the limited application of clause 18(2)(t) of the SSB. It only provides for rules on settlement of disputes between clients and authorised users "in respect of transactions in listed securities". The SSB does not provide for rules on settlement of disputes between authorised users and clients in respect of transactions not related to listed securities. Such disputes will have to be dealt with by the statutory ombud (clause 14(2) of FSOS).

JOINT SUBMISSION OF THE NATIONAL TREASURY AND FINANCIAL SERVICES

BOARD

7 October 2004