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PRESENTATION BY THE LOA TO THE PORTFOLIO COMMITTEE ON FINANCE. Financial Services Laws General Amendment Bill Would like to highlight key points arising from our written submission. There are some changes in the Bill that was tabled so a few of our written comments are no longer applicable.
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PRESENTATION BY THE LOA TO THE PORTFOLIO COMMITTEE ON FINANCE • Financial Services Laws General Amendment Bill • Would like to highlight key points arising from our written submission. • There are some changes in the Bill that was tabled so a few of our written comments are no longer applicable
AMENDMENTS TO THE FSB ACT • APPEAL PROVISIONS • Appeal against decision of decision - maker (s26)- • It appears that the FAIS-Ombudsman falls within the definition of a decision maker • The appeal process is different to the process under FAIS – must be aligned • Section 26(2) reads “an appeal must be lodged within 30 days of the person becoming aware of….a decision……. • Reasons should also be provided with the decision and the section should say…”a decision and the reasons therefore”…
AMENDMENTS TO THE FINANCIAL INSTITUTIONS (PROTECTION OF FUNDS) ACT • Support better enforcement provisions. • Some concerns around the framework for the enforcement committee. • Panel must be independent and impartial – one must guard against institutional bias. • Right to legal representation, chairperson may allow legal representation? – s6(C) • Burden of proof (balance of probabilities/) & type of sanctions • Penalties – no maximum?
AMENDMENTS TO THE FINANCIAL INSTITUTIONS (PROTECTION OF FUNDS) ACT • Section 6D (4) – why does criminal charge mean no enforcement action? • Costs of the panel and expenses incurred by the applicant may have to be paid by the respondent – s6(D)(6)? • Section 6F(2) says that the launching of appeal proceedings does not suspend the operation or execution of a determination…..unless the chairperson directs otherwise. • Submit execution should be suspended unless the court decides otherwise on good cause shown.
AMENDMENTS TO THE FAIS ACT • INSPECTIONS AND ON-SITE VISITS • Who can conduct on-site visit. • Registrar should have reasonable grounds to suspect non-compliance. • Access only to documents relative to the reasons for the inspection/investigation. • S4(6) –gives the Registrar unfettered discretion without any guidelines or limitations- no requirement for prior consultation with the provider or representative or to provide a copy of the report.
AMENDMENTS TO THE FAIS ACT • s(7)(3)– have given suggested wording to make the section clear. • Should be extended to product providers who are not FSP’s –insurers have this requirement in PPR. • Appears that is also necessary to check that the FSP is licensed in the correct product category. This will require extensive systems work and time is needed. • Requirement to notify of company changes other than key individual questioned.
AMENDMENTS TO THE FAIS ACT • S14 -Debarment – provision that debarment should follow for “contravention of any provision of FAIS is too wide. • If necessary to expand to include serious non-compliance under the Act, this should be dealt with by expanding the fit and proper requirements.
AMENDMENTS TO THE FAIS ACT • S14A – welcome extension of debarment powers to the registrar. • However grounds for debarment too wide (as with s14). • S33(a) – should specify the maximum amount of any “punitive penalty” .
PENSION FUNDS ACT • TREATMENT OF PENSION INTEREST ON DIVORCE • Section 37(D) – provides for the immediate payment of the pension interest of a member of a pension fund assigned to the non member spouse in terms of a divorce order (clean-break principle) and that this should also apply to divorce orders granted prior to 13 September 2007. • We support the clean-break principle, but are concerned about a number of matters arising from the proposed amendment.
PROBLEMS WITH THE PROPOSED SECTION 37 (D) • WORDING AND PROCESS – require review • EFFECT ON VESTED RIGHTS • Divorce settlements before 13 September 2007 involving pension interests, may have have taken into account that the non-member’s share of the pension interest would only be paid out to him/her at a future date. • Need process for member (e.g. to approach the High Court) to prove that it would be unfair and inequitable for retrospective application to apply in his/her particular case.
PROBLEMS WITH THE PROPOSED SECTION 37 (D) • EFFECT ON FUNDS • Investment strategies effected and assets might have to be disadvantageously realised if funds receive large number of requests at around the same time. • ADMINISTRATIVE COSTS • Requests will have to be processed manually and will be costly for funds.
PROBLEMS WITH THE PROPOSED SECTION 37 (D) • EFFECT ON PENSION INTEREST OF THE NON-MEMBER SPOUSE • Support aim of the clean break principle to see to it that the non member shares in the growth of his/her benefit post the divorce. • However now the non-member can get immediate access and not use the money for retirement funding. • This is likely to lead to a substantial leakage in retirement provision for the spouses in question. • Proposal –pension interest of the non member spouse to remain in the retirement fund in question & will receive the same growth as that of the member.
THANK YOU - ANY QUESTIONS? • Contact details: • Anna Rosenberg • The Life Offices’ Association of South Africa • Deputy Executive: Legal & Policy • (021) 421 2586 • anna@loa.co.za • Sagie Nadasen • Legal Adviser - Sanlam • (021) 947 3684 • sagie.nadasen@sanlam.co.za • Rod Stevenson • Legal Adviser- Old Mutual • (021) 509 4708 • rstevenson@oldmutual.com