PRESENTATION TO THE MEMBERS OF THE PARLIAMENTARY COMMITTEE ON FINANCE ON THE INITIATIVES TO ADDRESS...
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Transcript of PRESENTATION TO THE MEMBERS OF THE PARLIAMENTARY COMMITTEE ON FINANCE ON THE INITIATIVES TO ADDRESS...
PRESENTATIONPRESENTATION
TO THETO THE
MEMBERS OF THE PARLIAMENTARY COMMITTEE MEMBERS OF THE PARLIAMENTARY COMMITTEE ON FINANCEON FINANCE
ON THEON THE
INITIATIVES TO ADDRESS THE NEEDS OF THE ASSISTANCE BUSINESS SECTOR
BY THEFINANCIAL SERVICES BOARD:
-INSURANCE: MASHUDU MUNYAI-FAIS: GERRY ANDERSON
-FRIENDLY SOCIETIES: WILMA MOKUPO (no presentation, only Q&A)
06 SEPTEMBER 2005
2
OVERVIEWOVERVIEW
-INSURANCE:
-Background-Importance of Assistance Business Sector -Policyholder Protection Rules-Financial Advisory & Intermediary Services Act as it relates to Insurance-Finmark Trust / Genesis-analytics Report: Regulation Of Assistance Business In South Africa -Inspection Carried Out In Limpopo Province (Tzaneen) On Funeral Parlours -FSB / Loa Consumer Education Booklet: Know Your Rights When Taking Out A Funeral Policy -FSB / National Treasury Working Group On Assistance Business -FSB’s Enforcement Committee establishment-Co-operatives Act 14 of 2005
-FAIS:
-FAIS and Consumer Education
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BACKGROUNDBACKGROUND
-PCOF hearings on abuses in Funeral Service Benefits Industry on 4 December 2003
-Lack of information to clients
-Problematic clauses in contracts
-Policyholder contact details
-Fraudulent practices
-Regulatory problems
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IMPORTANCE OF ASSISTANCE BUSINESS IMPORTANCE OF ASSISTANCE BUSINESS SECTORSECTOR
-Funeral cover is one of the most widely used financial services in South Africa
-Ensures access to financial services for people of LSM 1-5
-Funerals are a pivotal social event in indigenous African Societies
5
POLICYHOLDER PROTECTION RULESPOLICYHOLDER PROTECTION RULES
-Came into effect on 30th September 2004
-Old PPR amended to bring it in line with the FAIS Act 37 of 2002
-Long-term PPR has new section - Part VI - deals with Assistance Business Group Schemes
-New section ensures that underwritten group schemes cannot easily change underwriting
-Envisaged will result in reduction in prevalence of unregistered insurance business
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FINANCIAL ADVISORY & INTERMEDIARY FINANCIAL ADVISORY & INTERMEDIARY SERVICES ACT SERVICES ACT AS IT RELATES TO INSURANCEAS IT RELATES TO INSURANCE
-Act came into operation on 30th September 2004
-Drastic reduction in the number of assistance business complaints
-Implication that funeral parlours are registering under FAIS and are also underwritten
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FINMARK TRUST / GENESIS-ANALYTICS REPORT: FINMARK TRUST / GENESIS-ANALYTICS REPORT: REGULATION OF ASSISTANCE BUSINESS IN REGULATION OF ASSISTANCE BUSINESS IN
SOUTH AFRICASOUTH AFRICA
-National Treasury and FSB jointly considering Finmark Trust report
-Need arose from previous report “Making insurance markets work for the poor in South Africa”
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INSPECTION CARRIED OUT IN LIMPOPO INSPECTION CARRIED OUT IN LIMPOPO PROVINCE (TZANEEN) ON FUNERAL PARLOURSPROVINCE (TZANEEN) ON FUNERAL PARLOURS
-The FSB inspectors inspected approximately 30 funeral parlours
-Funeral parlours approached National Treasury for advice
-FSB convened meetings with representative bodies of funeral operators
-FSB delivered information presentations to SAFPA on compliance with Long-term Insurance Act and FAIS Act
9
FSB / LOA CONSUMER EDUCATION BOOKLET: FSB / LOA CONSUMER EDUCATION BOOKLET: KNOW YOUR RIGHTS WHEN TAKING OUT A KNOW YOUR RIGHTS WHEN TAKING OUT A
FUNERAL POLICYFUNERAL POLICY
-FSB assisted the LOA to develop this book
-Aim to educate policyholders on their rights when taking out a funeral policy
-Books to be distributed by insurance companies to the members
-Books available in 11 official languages
10
FSB / NATIONAL TREASURY WORKING GROUP ON FSB / NATIONAL TREASURY WORKING GROUP ON ASSISTANCE BUSINESSASSISTANCE BUSINESS
-FSB and National Treasury set up a working group
-Consider the proposals in the Genesis: Analytics report
-Tasked to look at the different licence options available for the assistance business industry
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FSB’S ENFORCEMENT COMMITTEE FSB’S ENFORCEMENT COMMITTEE ESTABLISHMENTESTABLISHMENT
-FSB endeavours to set up an enforcement committee
-Committee will have powers to impose penalties on parties that contravene the provisions of the Acts
-At present the only enforcement action is prosecution
-Envisaged that the Committee will give the FSB more powers to regulate more effectively
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CO-OPERATIVES ACT 14 OF 2005CO-OPERATIVES ACT 14 OF 2005
-This Act allows for financial co-operatives to be registered
-Financial Services co-op can conduct long-term or short-term insurance
-Consider whether to move the Friendly Societies to the Co-Operatives Act
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FAIS AND CONSUMER EDUCATIONFAIS AND CONSUMER EDUCATION
-Intermediaries/Advisors engaged in the funeral policy (assistance business) sector fall within the FAIS regulatory framework;
-Special category created (Long-Term insurance category A);
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FAIS AND CONSUMER EDUCATIONFAIS AND CONSUMER EDUCATION ((Continued)
-Dispensations granted: a) Later registration date; b) Exemption from qualification requirements;
-Interaction with stakeholders: a) South African Funeral Parlour Association (SAFPA);
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FAIS AND CONSUMER EDUCATIONFAIS AND CONSUMER EDUCATION ((Continued)
-b) Forum for Assistance Business (formerly GAF);
c) INSETA;
d) LOA’s sub-committee on assistance business;
e) Dedicated roadshows;
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FAIS AND CONSUMER EDUCATIONFAIS AND CONSUMER EDUCATION ((Continued)
-Number of licenceholders;
-Consumer Education initiatives; a) Dedicated staff; b) Other Consumer Education initiatives radio/community talks/brochures)
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QuestionsQuestions
(including Friendly (including Friendly Societies)Societies)