Update On The Financial Sector Regulation Bill (“FSR Bill”)
The FSR Bill is in the final stages of Parliamentary consideration. As at 7 December 2016, the Bill was referred to the National Council of Provinces (NCOP) for concurrence.
Financial Advisory and Intermediary Services Act, 2002: The FAIS Act- Invitation to comment on the Draft Proposed Amendments to the Fit and Proper Requirements for Financial Services Providers and Representatives, 2016
The SAIA submitted comments on the proposed draft amendments to the Financial Services Board (“FSB”) on 15 December 2016.
It would appear from the comments received that amongst others, the following areas of concern have been highlighted and requests for clarity were made:
- Honesty, integrity and good standing of individuals.
- Minimum qualifications
- Continuous Professional Development
Invitation to Comment on the Proposed FAIS Conduct of Business Report
The invitation to comment on the proposed draft FAIS Conduct of Business Report (“FAIS OBR”), together with the draft FAIS COBR and Annexures thereto, was published on the FSB website by the Registrar of Financial Services Providers (“Registrar”), on 6 December 2016.
The Registrar intends to replace the current compliance reports with the proposed Conduct of Business Report (“COBR”), which focuses on the providers’ strategy, business model etc. thereby enabling the Registrar to better understand the risks or potential risks posed by a provider or its activities in achieving fair outcomes for customers and compliance with regulatory requirements.
On 8 December 2016, members were invited to submit written comments by e-mail to firstname.lastname@example.org by no later than 12H00 on Friday, 10 February 2017, in order to facilitate a timeous industry submission to the FSB by their due date of 28 February 2017.
National Treasury Transforming The Insurance Sector: Invitation for public comment on Draft Insurance Regulations
On 9 December 2016, National Treasury (“NT”) together with the FSB issued a media statement inviting public comment on the draft Insurance Regulations. The proposed amendments to the Regulations seek to improve market conduct in the insurance sector. The targeted effective date of the regulatory changes is 1 May 2017, with appropriate transitional arrangements where necessary.
On 12 December 2016, the SAIA extended an invitation to its members to submit written comments via e-mail to email@example.com by no later than 8 February 2017, in order to facilitate a timeous industry submission to NT by their due date of 22 February 2017.
The FSB has advised the SAIA that it will be hosting a workshop on the proposed amendments to the Regulations under the Short-term Insurance Act (STIA) and the proposed replacement of the Policyholder Protection Rules (PPRs) on 14 February 2017.
Publication of the Insurance Conduct of Business Returns
The bi-annual insurance Conduct of Business Return (“CBR1 2017”) for the period January 2016 – June 2017, as prescribed by the Deputy Registrar of Short-Term Insurance was published on the FSB website on 15 December 2016, together with a regulatory response to industry comments submitted on the draft conduct of Business Returns in March 2016 and a guide to questions and reporting levels on the Insurance Conduct of Business Returns.
The first CBR, containing data for the period January – June 2016, must be submitted to the FSB in electronic format by no later than 30 April 2017 on a best effort basis, together with action plans which insurers envisage will ensure compliance with full and complete submission of returns by the end of 2018. Insurers’ progress against the action plans submitted will be monitored by the FSB in subsequent insurance CBR submissions.
The final Demarcation Regulations (the Regulations) were published in the Government Gazette on 23 December 2016.
The Regulations will come into effect on 1 April 2017. All new short-term insurance accident and health policies, written after the Regulations come into operation, must comply with the requirements set out in the Regulations.
Existing accident and health policies will be expected to align to the Regulations by 1 January 2018.
The Regulations do not allow insurers to continue to provide Primary healthcare insurance policies, hence the Minister of Health has requested that the Council of Medical Schemes to grant a two year exemption, subject to certain conditions, for primary healthcare insurance policies. Such benefits will, going forward, have to be provided in accordance with the Medical Schemes Act.
In the interim, further research is being led by the Department of Health into the development of a Low Cost Benefit Option (LCBO) guideline. It is envisaged that the existing primary healthcare insurance policies will be required to transition into a LCBO framework once finalised.
The SAIA has received a few queries for clarity from its members and is in the process of engaging with the National Treasury on same.
Proposed Replacement of The Policyholder Protection Rules
On 15 December 2016, the Financial Services Board (FSB) published the proposed replacement of the Policyholder Protection Rules (PPRs) to give effect to numerous conduct of business reforms.
The FSB will host a workshop on the proposed replacement of the PPRs and Draft Insurance Regulations on 14 February 2017 with SAIA and its members.
The closing date for comments to the FSB is 22 February 2017.