Other Matters of Interest
Emigration and Retirement Fund Benefits
Individuals are currently able to withdraw funds from their pension preservation fund, provident preservation fund and retirement annuity fund upon emigrating for exchange control purposes through the Reserve Bank. The Minister stated that the concept of emigration as recognised by the Reserve Bank will be phased out. It is proposed that the trigger for individuals to withdraw these funds be reviewed and any resulting amendments will come into effect on 1 March 2021.
Third-party Cell Captive Insurance
In December 2019, the FSCA published a position paper to address concerns about third-party cell captive insurance, in which insurance is provided through cells, rather than directly to a client. Improving its regulation and supervision will protect consumers by ensuring that a financial adviser can no longer earn commission and share in the profits of the cell captive arrangement.
The CoFI Bill and Retail Distribution
In 2018, the Conduct of Financial Institutions (CoFI) Bill was published for public consultation. Public workshops were held during 2019. Over 800 pages of comments were received, including feedback on governance requirements, retirement funds, payment services, financial markets and wholesale banking. A revised draft of the bill will be published for public comment and tabled in Parliament in 2020.
The FSCA published an update of its Retail Distribution Review in December 2019. The report indicates significant progress in implementation, which establishes requirements for product sales and ongoing support to the consumer, and ends “sign-on” bonuses.
Levies
The Financial Sector Levies Bill, to be submitted to Parliament during 2020, will propose the collection of levies to ensure that the Prudential Authority, the FSCA and ombuds are sufficiently resourced to carry out their duties and functions.
Comment: In the past, levies were charged in terms of the Financial Services Board Act. Going forward, it will be charged in terms of the Financial Sector Levies Bill, which may have a much wider reach once enacted.
Transformation and Financial Inclusion
The Financial Sector Transformation Council has established eight subcommittees to review the targets in the Financial Sector Code to strengthen transformation of the financial sector. To date, the committees have developed targets for management control, skills development, socio-economic development, consumer education and retirement funds. A paper to establish a policy framework for financial inclusion in South Africa will be published for public comment in 2020.
Comment: Compliance with the Financial Sector Code and submission of a balanced scorecard is voluntary for retirement funds at present, but this is likely to change in future.