Treasury’s got more in store for you
Thought you had enough to worry about with FAIS and FICA? It seems legislators have more in store for you. The National Treasury recently published its General Financial Services Laws Amendment Bill, 2008. These amendments will be introduced to Parliament before June this year. The proposed bill will “amend a number of financial sector laws in order to improve efficiency and regulation of the sector.” And there’s hardly a financial services Act left untouched.
The bill includes amendments to the Pension Funds Act of 1956, the Friendly Societies Act of 1956, the Financial Services Board Act of 1990, the National Payment Systems Act of 1998, the Financial Institutions Act of 2001, the Co-operation of Banks Act of 2007 and of course the FAIS Act of 2002. In today’s newsletter FAnews Online takes a look at some of the proposed amendments to the FAIS Act.
Giving the FSB more power
Most of the amendments to the FAIS Act will extend the Financial Services Board’s sweeping powers in the financial services industry. One of the key amendments will “empower the registrar of financial services providers to conduct on-site visits and inspections of the businesses of providers and representatives, and the disclosure of details of on-site visits and inspections.” This will be through the addition of a number of sub-sections in Section 4 of the Act.
After an on-site inspection is carried out the registrar has additional sweeping powers which should prevent further abuses by a defaulting financial service provider or adviser. The registrar will be able to “direct the provider, representative or person concerned to take any steps, or to refrain from performing or continuing to perform any act, to terminate or remedy any contravention of or failure to comply with any provision of the Act.” Furthermore, the registrar will be allowed to “make known any details regarding the on-site visit or inspection, and the reasons therefore, by notice in the Gazette or by means of any other appropriate public media.” This amendment possibly stems from the Fidentia debacle which saw a lengthy delay between the first ‘inspection’ visit and ensuing legal action.
Amendments have also been proposedto “combine and extend the powers and duties of the registrar regarding the grounds for suspension and withdrawal of licences, and the disclosure of details of suspensions and withdrawals, to empower the registrar to debar certain persons rendering financial services” and “to extend the power of the registrar regarding drafting of codes of conduct.”
Incentives get a seeing to
Much has been written recently about incentives in the credit insurance industry. It seems the legislators have now turned their attention to the financial services industry as a whole. Changes to the FAIS Act will ensure that the registrar can “control or prohibit incentives.” This will be achieved through a simple addition to Section 16 of the FAIS Act by the insertion of the following paragraph after paragraph (e) of subsection (2): “(eA) the control or prohibition of incentives given or accepted by a provider.”
More demanded from service providers and advisers
Proposed amendments will also require financial services providers and representatives to exercise more care when conducting business with unauthorised persons. This goes hand in hand with the sweeping powers that allow the registrar to investigate non-authorised institutions rendering financial services. The registrar will also have powers to “make new provision regarding fit and proper requirements in respect of all directors, members, trustees and partners of providers.”
Finally the registrar will be able to “to effect changes and improvements regarding the qualifications of representatives and their key individuals, the maintenance of a central register of representatives, and the debarment of representatives.” The entire amendments bill is available at www.treasury.gov.za.
Editor’s thoughts:It makes sense to revise legislation from time to time. Many of the proposed changes to the FAIS Act will facilitate investigations into financial services institutions and hopefully prevent future Fidentia’s. Do you think the registrar needs more powers? Add your comment below, or send to email@example.com