The CBR saga revs up

The latest Financial Sector Conduct Authority (FSCA) communication to land in this writer’s inbox detailed the pending roll-out and implementation of something referred to as the cross-sectoral Conduct of Business Return (CBR), something the authority has reinvented as the Omni-CBR. We must confess, dear reader, to having taken our eye off the regulatory ‘ball’ of late; but the four-page FSCA Communication 16 of 2022 put us back on track. This letter informs all and sundry that the authority “has published a roadmap for the roll-out and implementation of the Omni-CBR, as well as the draft Omni-CBR template for public consultation”.

A rather grand design

It all sounds rather grand; but we guess for the thousands of individuals working in the compliance trenches at (or for) a licensed financial services provider (FSP) this is just another document to add to the growing list of items on your regulatory ‘to do’ list. The CBR matter has been bubbling in the background for quite some time, so we will take this opportunity to get readers back up to speed. As is often the case with regulatory instruments, the Omni-CBR has a long history that takes some uncovering, with the first stop on the journey being FSCA Communication 22 of 2021, which “signalled the FSCA’s intention to undertake a robust consultative process on the content and implementation of the Omni-CBR commencing in 2022”. 

Not particularly helpful, we thought, as the only reason to revisit that circular was to learn that the authority had promised, six months ago, that it would shortly be publishing an Omni-CBR Roadmap. “As highlighted in that communication, in order to fulfil our supervisory mandate, we require a strong off-site monitoring tool that will allow us to access meaningful, reliable, measurable and comparable information on key conduct indicators to assess the delivery of fair customer outcomes across the financial sector,” writes the FSCA in its latest letter. Ah, that’s more like it. The CBR is the tool they speak of, and the Omni-CBR is simply a tool that is designed to work for all financial institutions. 

Cross-sectoral statutory reporting template

In the FSCA’s plain language: “The Omni-CBR is intended to facilitate streamlined cross-sectoral statutory reporting and sets out the types of conduct indicators to be reported on in future by various financial institutions”. These are the institutions that the FSCA has regulatory oversight over including banks, insurers and micro-insurers, investment providers, co-operative financial institutions, FSPs, retirement funds and retirement fund benefit administrators. The astute among you will notice that medical schemes are still not included in this list, as the Council for Medical Schemes (CMS), FSCA and National Treasury are still thrashing out who calls the shots there… The debate might be moot though, because we sense that the pending National Health Insurance Act will leave few medical schemes standing. But we digress. 

The Omni-CBR is set to serve as the “cornerstone of the FSCA’s off-site supervisory toolkit and reflects the FSCA’s increasing focus on embedding an evidence-based and data-driven approach to regulation and supervision”. And that means industry stakeholders best set aside some time to participate in the process. This writer suggests clearing a couple of weekends, because the first step in getting to grips with the matter will be to dive into the background reading the authority has already provided. The first of these documents is the Omni-CBR Roadmap which contains: 

• Background information on the objectives and intended outcomes of the Omni-CBR.
• Details about the extensive local and international foundational work that helped inform the content and approach of the Omni-CBR.
• The envisaged engagement and implementation milestones to facilitate an incremental phasing in of harmonised regulatory reporting through the Omni-CBR.
• A high-level overview of the type of data requested in the Omni-CBR.
• The immediate next steps in respect of Phase 1 of the multi-year consultation process leading up to the finalisation of the Omni-CBR. 

On documents, industry engagements and webinars

And the second is the draft Omni-CBR template, containing the list of conduct reporting indicators applicable to different financial institutions and financial products, which are marked as Annexure A to the roadmap. According to the FSCA, the publication of these two documents signals the commencement of Phase 1 of the FSCA’s multi-year consultation process in respect of the Omni-CBR. 

Once you have familiarised yourself with these documents you will be ready to line up for the myriad industry engagement activities that are planned, starting with a three-part explanatory webinar series that will “contain detailed information on the contents and structure of the draft Omni-CBR, as well as the rationale for including certain indicators”. Still interested? The webinars will focus on the following: 

• The first webinar sets out the contextual and regulatory background to the development of the Omni-CBR and provides general guidance on the navigation and use of the Omni-CBR template.
• The second webinar provides detailed explanations on the information requested in the “All Sheets” section of the Omni-CBR; these are the sheets requesting general information that must be completed by all financial institutions across all sectors.
• The third webinar provides guidance on the “Additional Business Composition Sheets” section of the Omni-CBR; these sheets apply to financial institutions in certain sectors only and are aimed at obtaining information regarding specific risks and trends applicable to that sector. 

Consultative and transparent, but time consuming

Finally, a series of interactive workshops have been scheduled, “in line with the FSCA’s commitment to transparency and meaningful consultation, and to ensure a pragmatic and proportional approach to the implementation of the Omni-CBR over the longer-term”. These interactive workshops will be hosted on Microsoft Teams and provide a platform for stakeholders to present initial questions, comments and concerns relating specifically to the terminology used and types of indicators identified in the draft Omni-CBR template. Dates for FSPs have been set aside for the 7^th and 8^th of July, and we encourage readers to participate. Written submissions are also encouraged, with a web-based comments template and portal open from 10 June 2022 until 10 August 2022. 

The authority’s consultative, engaging and transparent approach can be applauded; but as we perused the long list of requirements we felt more than a passing sympathy for the industry stakeholders involved in the compliance field. How much time, we wondered, would these stakeholders have spent on reading FSCA General circulars one through 2022 by half-year, keeping in mind they would have received countless other FSCA, PA and joint communications over the same period. All of that just to stay informed of all the other documents you need to read and provide feedback on, and the truckload of reports that need completing each month and year. This writer’s parting shot: you can keep your compliance title, writing works better for me. 

Writer’s thoughts:
The level of engagement the authority is undertaking to design an apparently simple Conduct of Business Report suggests one thing: this is going to be another in a long line of reports that will demand a lot of man hours for an FSP’s compliance team to complete… Is your FSP coping with the compliance workload that has come about under twin peaks? Is it much the same as before, or do you feel really snowed under? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.