Moonstone
From the Crow's Nest
You may recall that last week was a disaster in terms of productivity with virtually everyone on leave. On the the second (and last) working day of the week I received an invitation from Inseta "..in conjunction with its appointed training provider, Imfundo..." inviting "...all Financial Advisors, from all categories, who need to obtain credits towards licensing under the FAIS Fit and Proper Requirements to a presentation regarding INSETA’s National Assessment in June 2008.
The presentation that I could attend was scheduled for this morning at nine. This means that all those who so injudiciously took two days leave would only find out about this important meeting after the event.
My impression is that someone organised a party but forgot to invite the guests or, alternatively, that they have no regard whatsoever for other people's schedules.
What is disconcerting is that this national assessment could make or break any number of FSP's still in need of credits, and Inseta and Imfundo appear to be oblivious to the consequences of this oversight, or the impact on the livelihood of people who are dependent on them for proper service delivery.
We are still attempting to obtain clarity (as in a simple yes or no) from them on whether the 30 credits contained in the Imfundo training for Category 1A FSP's conform to the Fit and proper requirements, but answers received thus far did not provide clarity. As far as we can make out their training only offers 24 core unit standards, while the Act requires 30. If we are correct, then a lot of people may be under the impression that they have the required credits when they in fact do not have it.
This could affect their licenses, unless they are made aware of the shortfall and attend (and pay for) a second course to obtain the outstanding credits.
One would have assumed that clarity would be the operative word for an educational institution, but then, assumption is not an exact science, is it? Nor, would it appear, is education.
On a brief sporting note, we must commend some of the Lions players who are having their best season ever: Conrad Jantjes, Gcobani Bobo, Wylie Human, Ricky January and Brian Mujati.
Jokes aside though, I thought that the Lions team who lost 28-21 two weeks ago against the Brumbies after the latter scored in the dying seconds was the epitome of guts. They only had 29% of the possession, yet nearly salvaged a most commendable draw.
Spur Franchise holders in the Cape are ecstatic about the possibility of Ollie le Roux joining the Stormers for the rest of the Super 14 season. Rising food prices have caused havoc to their profits, but Ollie will hopefully set that right in the month or two that he will reside here.
Amendments to the Financial Intelligence Centre Act (Fica) propose an administrative enforcement process that critics say would allow the Financial Intelligence Centre and supervisory bodies to sidestep law enforcement processes. It would increase to R50m the penalty for institutions that fail to comply with the law and impose a R10m fine on employees and directors held responsible for such failure, according to a report in the Sunday Times.
It is hugely ironic that the proposed changes, to a large degree, appear to emulate what is envisaged for the FAIS and FSB Acts, namely to extend the powers from a supervisory function to include the enforcement thereof.
Business Report’s Ethel Hazelhurst spoke to a number of parties who would be involved in the changes to the FICA.
It proposes an administrative enforcement process that critics say allows the Financial Intelligence Centre (FIC) and supervisory bodies to sidestep normal law enforcement processes. It increases the penalties for administrative non-compliance to a massive R50 million for institutions and imposes a R10 million fine on employees and directors held responsible for corporate failure to comply with Fica.
Louis de Koker, the director of the University of Johannesburg's Centre for the Study of Economic Crime, said the legislation "does not address" aspects of Fica compliance duties that were unclear and out of line with international standards. He said the bill placed the FIC at the top of a money laundering regulatory hierarchy, essentially usurping money laundering decision making powers exercised by the Reserve Bank's banking supervision department and the Financial Services Board. "There is … potential for conflict and regulatory miscarriage because the briefs of the FIC and … the other supervisory bodies differ."
Marelise van der Westhuizen, chairperson of the Law Society of SA's committee on Fica, was concerned that a state body could impose administrative sanctions on "lawyers without due process, effectively making the FIC the super-regulator of attorneys".
John Symington, a director of Compliance and Risk Resources, said: "Aspects of the law relating to customer identification, verification and other matters need to be clarified at a practical operational level."
Herman de Beer, the managing director of KPMG forensics, said the amendments would bring "a significant increase in compliance costs".
The bill provides for institutions to be inspected at the discretion of the supervisor but at their own cost. Pieter Smit, the FIC's head of legislation and policy, said supervisors would have the discretion to recover the costs from institutions or to carry them on the FIC own budget. But the FIC did not plan to recover the cost of routine inspections from the inspected institutions. Smit said the centre did not intend "to act unilaterally".
The irony for me lies in phrases such as “impose administrative sanctions without due process”, “clarified at a practical operational level”and "a significant increase in compliance costs".
Is this not what we have experienced since October 2004?
Brokerages involved in Leaderguard had to pay for the inspections requested by the FSB with not too much of an option of “…at the discretion of the supervisor.”
The wide definition given to “accountable institutions” of course includes us as FSP’s, so the proposed changes will also impact on us.
Luckily, we are used to it, and in fact, its nice having company for a change.
Levies will be payable by 31 October 2008 in respect of the period 1 April 2008 to 31 March 2009. Your levy will be based on the number of representatives in your business as at 31 August 2008, and not the end of September as was the case last year.
Those people contemplating cancelling their licenses need to inform the FSB before the end of August, or they will be liable for the full levy.
Levies in respect of the FSB FAIS Department were increased by 8 percent, mainly as a result of staff increases in the Enforcement division. A number of positions budgeted for in the previous book year were not filled, yet there is still an 8 percent increase. It will be interesting to see whether this department’s financial statements reflect a surplus as a result of this, and how it will be handled, as they are not allowed to make a profit.
The FAIS Ombud’s levy is increased by 9.5 percent, also as a result of an increase in staff to cope with the increased workload.
A partial exemption previously granted to FSP’s in Long-term category A (friendly societies and funeral parlours) are withdrawn and they are liable to also pay the full levy in future.
By way of example, a
sole proprietor will have to fork out R2 858 this year, made up as follows:
FSB Levy = R2 195 (base amount R 1 863 + rep/K.I. fee R332)
FAIS Ombud = R663 (base amount R482 +R181 for rep/K.I. fee)
This represents an increase of R221 on last year.
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