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No extension but exemption

22 September 2004 Angelo Coppola

The FSB hosted a press conference in Pretoria today and dispelled any rumours that there would be an extension of the section 7 deadline.

News story continued from the email newsletter

According to Jabu Moleketi, deputy Minister of Finance the South African culture of leaving everything to the last minute is to blame for the current situation: “We understand the difficulties and we are aware what has been a South African culture of dashing to the finishing line,” he said.

The reason that an exemption was announced is centred on the fact that the legislation is essentially for consumer protection and according to Jeff van Rooyen, consumers will be protected from 1 October, as was intended by the Act.

In essence Van Rooyen said that an extension was never an option as the rights of the consumer and their protection would then have to be held over until the new deadline date.

Advisors and intermediaries who haven’t done so should get their applications in, and the FSB’s Gerry Anderson maintains that should brokers get the applications in by 29 September it should take about six weeks before a licence is issued or withdrawn.

He is looking at November as a month when all the applications will have been processed and licences issued or revoked.

The exemption has one small rider. Those advisors who qualify for the exemption must inform all their clients that as of 1 October they have legal recourse via the Ombuds office.

According to Anderson there has been a 1% rejection rate thus far. “I don’t expect it to go past the 10% level,” he said. There is a right of appeal built into the process.

In terms of number of applications in hand, here are the official statistics:

  • 6300 applications had been received by 31 July.
  • Since then another 5500 applications had been received.
  • According to Anderson 2500 had been issued up until today (21 September) and he anticipates that another 2500 licences will be issued by 1 October.
  • Currently the FSB is receiving about 70 applications a day – giving another 6800 outstanding applications yet to be processed.

Anderson says that their initial estimates and information was scant. “Planning has been hindered – but we now estimate that between 12 000 and 20 000 licences will be issued, affecting about 75 000 individuals.

According to Jeff van Rooyen CE of the FSB, many of the applications are incomplete. “I wonder what these people were taught at business school,” mused van Rooyen aloud.

"We will not be hurried and allow FSPs that aren’t fit and proper to operate. We don’t want these people to slip through our net.”

Gerry Anderson says that this has not been an easy process, although the implementation was undertaken with empathy.

He did confirm that there were several other exemptions in the pipeline that have to be approved by the FSB CE. These include issues surrounding merchant banking, the re-insurers, and the issue of offering advice within a group of companies, where there is no client interaction.

Anderson said that they were also considering those FSPs that manage ongoing ‘testimonetary’ trusts, and those involved in the Nuclear pool of insurers.

Perhaps most importantly there is an exemption in the pipeline that looks at reducing or waiving the education requirement for those selling in the funeral policy and assistance markets, for three years.

Step up to the bat INSETA who plan to launch an extensive education and training process to upskill the FSPs operating in this environment.

According to Charles Pillay, the ombud, he is now fully and gainfully employed from 1 October. “Up until then we have been all dressed and nowhere to go… jurisdiction is still in place from 1 October, in spite of the exemption.”

Anderson confirms that all or most of the product providers have been contacted and made aware of the exemption.

Editor’s thoughts:
• So no extension, but a blanket exemption – nice save, as consumers are protected and stability is returned to the FSP market
• While no stats are available it does seem as if the exemption was aimed at a particular FSP market sector
• Those FSPs that haven’t completed their application forms and submitted them have been given a window of opportunity – almost a reprieve
• Don’t stress about not getting your licence by 1 October – you can still operate.

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