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Jurisdiction of the Financial Services Tribunal: medical scheme matters

10 July 2020 Ntokozo Ngubane, Norton Rose Fulbright

A medical scheme aggrieved by a decision of the Registrar for Medical Schemes must appeal to the Council for Medical Schemes and not the Financial Services Tribunal, even if the decision relates, broadly, to financial sector laws.

In Medihelp Medical Scheme v The Registrar for Medical Schemes and Another, the Council for Medical Schemes, instituted an investigation to review the relationship between Medihelp and Curamed Holdings, having regard to Medihelp’s investment in Curamed.

The Registrar appointed an audit firm to conduct an inspection in terms of section 44(2) of the Medical Schemes Act 1998 (MSA). The audit firm debited the Council with an amount of R 1 641 625 for the inspection. The Registrar, in turn, debited Medihelp for the amount.

The Registrar relied on Regulation 4B of the Financial Sector Regulation Act, 2017 (FSR Act) in recovering the costs of the investigation. The regulation permits recovery of costs where they are associated with the Council’s exercise of its investigative powers contemplated in section 129(2) of the FSR Act. Medihelp challenged the Registrar’s decision at the Financial Services Tribunal.

In determining whether the decision of the Registrar was a decision by a financial sector regulator as contemplated in section 129 of the FSR Act, the Tribunal held that:

  • The FSR Act and its structures do not generally apply to the Council and its structures under the MSA. One exception is section 129 of the FSR Act which provides that the decision which is a subject of reconsideration must be one of a financial sector regulator which by definition in that section includes the Council but not the Registrar.
  • The Tribunal cannot review a decision of the Registrar, because the decision of the Registrar does not fall within the ambit of a decision by a financial sector regulator. The Registrar is a financial sector regulator only for the purposes of Chapter 9 of the FSR Act. That chapter deals with information gathering, supervisory on-site inspections and investigations by a financial sector regulator, including the Council. The Tribunal’s powers to reconsider decisions by ‘decision makers’ is found under Chapter 15 of the FSR Act which does not include the Registrar.
  • The intention of the legislature was not to subject the Registrar to two administrative appeals under different Acts when fulfilling the same function.

Where a medical scheme is aggrieved by a decision of the Registrar, it must use the remedies provided in the MSA. Only decisions of the Council which clearly relate to financial sector laws can be reconsidered by the Tribunal.

First published by: Financial Institutions Legal Snapshot

 

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