Insight December 2010 by Greenpepper Communication

4th 1st Quarter Edition 2008 2010 R19.95 (incl)

INSIGHT Ahead: A Challenging 2011

Website: www.fia.org.za S A’s PREMIER INTERMEDIARY MAGAZINE 36647575797597359738765-0

Editor’s Soapbox

Presidents Message

FIA Code of Conduct

From the Desk of the CEO

COO’s Report on IAIS Conference

Profile - Chris Busschau

The Compliance Professional

Absa & UJ

Employee Benefits

Short - Term Exco

Insurance Advice

Premium Savings

Insurance Service Levels

Pension Funds vs RA’s

Leadership Seminar& Advisory Council

Financial Planning

Demarcation of Health

FAIS Conflict of Interest Policy

Succession Planning

Insurance Outlook

The Short-Term Ombud

FIA CANSA Golf Day

Santam Black Intermediary Development Initiative

Appointments

Humour

Sanlam on Trevor Manuel

Snippets

Please visit our website: www.fia.org.za

FIA Insight The official mouthpiece of the Financial Intermediaries Association of Southern Africa P O Box 11901 Centurion 0046 Tel: 012 665 0085 Fax: 012 665 0534 Email: info@fia.org.za Website: www.fia.org.za Publisher Financial Intermediaries Association of Southern Africa Chief Executive Officer Manie Booysen manie@fia.org.za Chief Operating Officer Justus van Pletzen justus@fia.org.za President Seamus Casserly seamusc@firstequity.co.za Editor & Media Manager Clive Franks Fax: 086 642 4540 Cell: 082 306 9158 clive@fia.org.za Graphic Design Streak Design cc Cell: 083 447 2010 Editorial Contributors Seamus Casserly, Manie Booysen, Justus van Pletzen, Brian van Flymen,Joe Kotzé, Mike Stoker, Gareth Stokes, Brian Martin, Gari Dombo, Chris Busschau, Barry Taylor, Julie Methven, Debbie Barret, Michael Morris, Caroline da Silva, Kieran Godden, Brett Wallenkamp, Linda Shurlck, Johan van der Merwe Subscription Rate: R79.80 inclusive of VAT per annum FIA national office has the name of an independent practitioner near you. The views expressed in this magazine are not necessarily those of the FIA. Readers following any advice contained in the magazine, do so at their own risk The FIA does not endorse any product supplier or any advertisers products.

EDITOR’S SOAPBOX

Editor’s Soapbox The 4th and final quarter for 2010 has started off once again with very significant events. First off was the Leadership Seminar / Advisory Council which took place at Leriba Lodge in Centurion on 7 & 8 October. The Leadership Seminar was introduced by Seamus Casserly President of the FIA who welcomed all the delegates as well as the distinguished guest speakers. First up was Neliza Goch who informed the delegates of the latest developments occurring within FICA and their responsibilities in this regard. She was followed by Stefanie Mackenzie of the FSB and Moonstone regarding the Regulatory examinations. This topic was cause for a very animated debate with delegates expressing their concern over two main subjects namely the level of language that questions were asked and secondly the time allowed for the completion of answers. The main bone of contention was that the English used in questions was of such a high standard that the average participant would not understand what was being asked, and that the time given to answer each question was way too short. Stefanie agreed to take the concerns in this regard back to the FSB in order to try and find an amicable solution to the concerns expressed. One of the most interesting guest speakers was Jonathan Dixon of the FSB who addressed the Future Developments of the FSB. Jonathan emphasised the high esteem regard that the FSB has for the FIA and its leadership. He praised the FIA for the manner in which issues were addressed and the positive outcomes of solutions were found to concerns on the side of both parties. Dixon also expressed admiration for the very comprehensive and high standard of the FIA’s Code of Conduct that members have sworn to adhere to. He was convinced that with the understanding and cooperation the two bodies enjoyed the results would improve the standing of the industry not only with all role players and legislators but with the consumer clarifying the transparency and professionalism that intermediaries were striving to achieve.

by Clive Franks

The day concluded with an address by Terry Booysen of CFG on the importance of Good Governance and what significance it has on all South African citizens both in their private capacity as well as in their businesses. The following day the Advisory Council received a report back from Elian Weiner CEO of Epic Communication the FIA’s new PR Company. The achievements made by them thus far have been very impressive during the short period that they have been involved with us, gaining the FIA exposure in the National Press and on TV and Radio. The remainder of the day was spent in discussion at reviewing what had been achieved by the FIA to date and what areas still had to be addressed and the way forward for the FIA two years after the merges of the various organizations into the FIA. All in all the two days proved to be very fruitful and highly significant to all. Justus van Pletzen our COO represented the FIA and WFII at the IAIS 17th Annual Convention in Dubai with an observer status. Justus found the convention very relevant and informative, and the various sessions were addressed by a host of international speakers. The FIA and its members learned of the sad and untimely passing of Chales Pillai form FAIS Ombud and the current Pensions adjudicator to cancer. The President, Board and members of the FIA would like to convey their heartfelt sympathy to Charles’ family friends and colleagues. He was a true friend and supporter of the FIA. Rest in Peace Charles. We at the FIA wish all our members a safe and prosperous Festive Season and may 2011 be filled with health, peace and happiness. To all those that will be on the roads over this period please stay alert, stay alive and remain safe on our roads.

FIA PRESIDENT

Message From The President of the FIA to Our Members Dear Colleagues 2010 has been one of the most eventful years in my career which has as a consequence had a significant impact on my personal life. My personal goal setting and planning for 2010 was poor and I always seemed to be playing catch-up. I am probably not alone in feeling this way but I do prefer being more organised. One can only think about our numerous interactions with markets, regulators, reinsurers and other stakeholders to appreciate the extent of change during the year. And we all have clients to service as well just to ice the cake! Your Association, the FIA, its strategy and intentions for members, remains intact and we are certainly growing in stature influence and scale. Yes, sure, there are wrinkles which need ironing from time to time, issues where we don’t necessarily reach consensus or discussions about prioritisation and the like. All of these are normal in an association as dynamic as ours and in an industry which is so changeable as well. This diversity breeds strength of purpose and we can be proud of our achievements to date. What is important to me is that we as members and the FIA are directionally on track to fulfilling our strategic goals. I submit that we are. Manie will deal with the 2010 scorecard and achievements and I was asked to give a perspective of 2011 and what it may hold for us brokers and the FIA. I’d like to emphasise that these are my views without consultation and not necessarily those of any other party. So if you disagree, fire the cannon my way and not at our colleagues on the Board or on the Executive.

1. Data Exchange – Stride initiative The automatic exchange of Short Term insurance policy data between brokers who are binder-holders and insurers will be a reality for personal and commercial business. This is really a watershed moment for the industry as a whole and the FIA involvement will inhibit necessity for any regulations to be too onerous. There will be some adaption of our policy administration systems to comply with the ‘Acord’ South African standards, but I don’t believe that there will be material impact other than improved accuracy with cost savings for both insurers and brokers. As part of the second phase in 2011, Claims processes will be included and I suspect that we will easily adapt to working off the same data in an integrated way. Customer service will improve as a result.

2. Relationships with Insurers and other Associations We have demonstrated to the entire market that we are a professional association representing our members in a manner that invokes respect. Our relationships are at a level where a number of insurers will implement FIA membership as criteria for granting agency agreements. We sincerely hope that this happens sooner rather than later.

Agency agreements with insurers, particularly for those who are binder-holder brokers will change and have to be reissued to deal with matters such as client ownership, actual responsibilities in terms of the binder regulations, Claims performance etc. The Stride project also illustrates that the Industry can co-operate for the benefit of all our stakeholders. Hopefully we will also build on the current relationships with fellow industry organisations and other bodies such as Asisa, Inseta, Medical Schemes Council, IISA, FPI and others.

3. Premium pressures The market results for 2010 were good, so I suspect that a gradual softening of rates, and therefore reduced revenues to brokers, will materialise.

4. The Regulator(s) The FSB recognises that the FIA has a significant part to play in their plans for 2011. We will continue to build on the positive professional relationships that exist and will add value to any negotiations that are initiated. The FIA is the custodian of the Intermediary Industry’s interests and we will continue to promote these at all times. We were fortunate that the FSB was sufficiently comfortable to disclose their 5 year regulatory agenda to us at the October 2010 Advisory Council so we can plan our position on a number of fronts properly. The Insurance Laws Amendment Act regulations are likely to be promulgated finally and we will have to change our business models to accommodate these. However the drafts we have seen appear to assist brokers earn fees rather than restricting this practise which will be received positively. The Consumer Protection Act will be effected during 2011 and will have a major impact on our clients but fortunately we expect a limited impact on Intermediaries in conducting our business. Watch the space for Insurers coming under pressure too. I believe that the “Treating Customers Fairly” initiative will have a serious impact on the Direct insurers who have continued to make exotic claims of savings, performance and efficiency without anyone challenging these claims. This piece of legislation (or initiative) when initiated will change this landscape. If this is the intention then it can’t happen too soon so let us hope for 2011.

FIA PRESIDENT 5. Structure A number of the membership matters were dealt with via the membership sub-committee and the real BHAG (Big Hairy Audacious Goal) of voting and fee determination are a thing of the past. The new dispensation will be implemented for all 2011 membership renewals and is certain to result in a much fairer fee structure. We received a mandate from the Advisory Council to look at our structure and will be spending some time developing proposals in this regard. Hopefully, by early 2011 we can present these proposals to membership.

6. Organisation The FIA business strategy for the next 3 to 5 years is currently being formulated following serious input on priorities from the Advisory Council in October. We will hopefully complete this by the end of the financial year in order to implement it in 2011. Watch this space. We will develop an FIA “membership value proposition” i.e. what does the Association do for members, for use both to encourage membership and to market our organisation. Hopefully this will be completed in the next few months and I am sure the executive will deliver.

remains to be seen and I therefore urge all colleagues to complete these as early as possible and so prevent the rush at the end of the year. The consequences of non completion are extremely serious for all of us. By my estimation we are in for a very active year which will hopefully consolidate our position in the industries we serve even further and for the benefit of all our clients. Good luck to everyone in achieving their goals. My thanks again to all the FIA volunteers who actively participate at every level in the FIA. Branch members, Committee members, Directors, Chairpersons, social secretaries, colleagues at all levels. Your contribution makes the FIA what it is today and an association to be proud of. Please keep up your efforts in 2011 and encourage your colleagues to do likewise. To the Executive and staff of FIA a big thank you for your unstinting efforts and loyalty. Finally may I wish you all a pleasant Christmas break with your family and friends and a very prosperous 2011. I am certainly looking forward to the challenge. Regards. Seamus

7. Regulatory exams These will be a reality next year and all FSP’s will be required to complete successfully. Whether the FSB will relax the December 2011 deadline

CODE OF CONDUCT

Code of Conduct By Brian van Flymen FIA’s Vice-President This is the third article in a series dealing with the members’ responsibilities in terms of our code. Specific reference is made to the necessity of complying with all legislation that affects the financial services industry. Members undertake to operate only in those areas of business for which they have been licensed. The logic behind this undertaking is unassailably clear in that members should at all times conduct themselves in a competent professional manner avoiding those disciplines where they do not have the necessary skills. It must be remembered that the FAIS act provides for punitive sanction and / or heavy fines should an intermediary be found operating outside the ambit of the licence.

Of all the provisions contained in the code, this is arguably the most important. We surely wish to be seen as acting in our clients best interests and professional in the execution of our duties thereby ensuring that we remain the preferred distribution channel of product suppliers and the first choice of advisor to the public. In order to do so, we need to cultivate and maintain an appropriate image and encourage our employees to act in similar fashion. Members should not malign each other and must refrain from making public or private statements which could be construed as bringing our industry into disrepute.

Why run the risk of placing our livelihood under threat ? Members’ undertake to not act in a manner which may harm the image of the FIA or its members.

We are after all a party to our clients financial aspirations and the key agent of their risk management – let us act accordingly.

CEO

CEO’s Report - Highlights of 2010 By Manie Booysen - FIA’s CEO

In many ways 2010 will be remembered as a historic year for South Africa with plenty of highlights that were applauded both locally and internationally as the world descended on our country for the biggest sporting event in the world. The 2010 FIFA World Cup soccer tournament turned out to be an extremely successful event that showcased South Africa to the world and added enormous socio-economic value to the country. We look forward to seeing the long-term benefits of this event in the years ahead. Globally, the economy seems to be on the road to recovery however the sovereign debt crises in Europe are a stark reminder that we are not quite out of the woods yet. South Africa appears to have weathered the storm relatively well; however, we are mindful of the fact that ongoing retrenchments remain a real concern for the South African consumer. Clearly this also impacts on their ability to insure themselves properly and it is important that we, as advisers, continue to assist clients to protect themselves as best they can. At the FIA we also look back on 2010 with a sense of achievement and recall a number of highlights:

2. THE INSURANCE CONFERENCE (TIC) On 23 – 26 May, history was made when the inaugural Insurance Conference was held at Sun City, hosted by the FIA, SAIA and the IISA. The event was very successful and was well attended by role-players across the entire spectrum of the insurance industry. The participation of both international and local speakers from across the industry and regulatory environment set the tone for strong future growth of the event and we look forward to another successful conference in 2011. The 2010 Advisory Council meeting was combined with this event as a breakaway session. The meeting, which was chaired by Steven Akakios, was handled with professionalism, embodying the seriousness of the feedback that was given. Each of the Exco’s gave feedback to the delegates and addressed the various concerns of the members. This opportunity to cooperate and network with the broader insurance industry has helped to position the FIA as a genuine partner in the industry for the benefit of all. 3. RE1 & RE2 ROAD-SHOWS The uneasiness of industry members regarding the new regulatory examinations was identified and a decision was taken to conduct road shows on the examination process, jointly with the FSB, Inseta and other industry role-players in over 30 centres. The FIA has never presented in more centres than this and we are confident that all those who participated are now better informed about the pending examinations and their requirements. Continuous feedback on all developments related to the examination process was sent to members by Joe Kotze. 4. FIA CODE OF CONDUCT

1. FIA AWARDS The 2010 Financial Intermediaries Association of Southern Africa (FIA) Industry Recognition Awards were held at Emperors Palace on Thursday 3 June 2010. With more than 1 000 guests in attendance, this is one of the most significant events on the insurance calendar and enables us to pay tribute to those insurance product providers who received a favourable rating in the FIA’s annual intermediary stakeholder benchmark survey, conducted by Bluestream research.

During the first quarter of 2010 the FIA Code of Conduct was revised to be aligned with those of SAIA and ASISA, with whom the FIA shares a common future. Our code was in fact approved by the FSB before it was finally accepted and endorsed by the FIA leadership at the Sun City; Advisory Council Meeting. Epic, the newly appointed communications and public relations partner of the FIA, has worked with us to engage a greater public awareness of the FIA, our self regulatory measures and our ethical behaviour. The directors and management have committed themselves to promote the image of the Intermediary wherever possible.

The top contenders per segment for 2010 were, in most results, no surprise with Discovery, Sanlam, Santam and Momentum. CIA backed by Compass won the new UMA category of underwriters.

5. LEADERSHIP SEMINAR / ADVISORY COUNCIL

The awards add real value to the industry by: • Providing benchmark best practice statistics for intermediary satisfaction • Tailor-made feedback to all product suppliers, which is proven to add value to their continuous improvement strategies. • Providing a strong marketing message to the general public by communicating the number 1 position of these prestigious awards.

The FIA held its first Leadership Seminar on 7 October 2010. The seminar was well attended by the branch leadership and senior management of larger members. The event proved to be a great success and representatives from both the Financial Intelligence Centre and the Financial Services Board were present to explain what some of the future regulatory changes mean and to answer questions on how this will affect intermediaries.

CEO The strategic review session on day two gave some perspective on the FIA and its achievements in the post-merger period. It was agreed that a followup session will be held early in 2011 to unpack the identified areas of concern and to establish new action plans for the way forward. 6. INSURANCE BOOT CAMP At the Advisory Council meeting in May 2010 at Sun City the Western Cape Division announced their vision to roll out a training programme to â&#x20AC;&#x153;up-skillâ&#x20AC;? or improve on the education of our staff in the insurance industry. The Insurance Boot Camp concept was received with great enthusiasm and support from all members of the Advisory Council. On 16 September 2010 the Insurance Boot Camp was launched and the first milestone seminar took place in Cape Town. We envisage the Insurance Boot Camp project as having the potential to develop in the short to medium term into a national programme that can benefit all the FIA members.

8. FIA OFFERINGS At the FIA we look back on a year in which great inroads have been made in establishing stronger relationships with regulatory bodies, industry role players, organizational bodies and last but not least the media. These burgeoning relationships have helped to open up new doors for the FIA as a major role player in its industry as well as creating new opportunities in negotiations on behalf of members. These achievements have been made possible by a number of very committed and knowledgeable individuals on the Board of Directors, Executive Council, Short Term Exco, Employee Benefit Exco, Financial Planning Exco, Healthcare Exco as well as the Membership Exco of the FIA. It is through the hard work and dedication of these people, all of whom volunteer their services, that the FIA is able to achieve the success we are already seeing and I take this opportunity to thank these individuals for their efforts over the past 12 months.

7. FIA / CANSA GOLF DAY The annual FIA/CANSA golf day was held on 12 October 2010. The event was once again a great success and well supported by the entire insurance industry. The CEO of the Council of Medical Schemes, Dr. Gantsho took part in the day and also presented the cheque to CANSA.

I would like to take this opportunity to wish all our members and their families a blessed festive season and a prosperous new year. Once again thank you all for your continued and valuable support over the last year.

C O O ’s R E P O RT

International Association of Insurance Supervisors (IAIS) 2010 17TH Annual Conference – Dubai Report back by Justus van Pletzen COO of the FIA

1. INTRODUCTION The 17th annual conference of the IAIS hosted by the Dubai Financial Services Authority (DFSA) took place from 27 – 29 October 2010 in Dubai. I as COO of the FIA represented the WFII (World Federation of Insurance Intermediaries). Although it was in an observer status the interaction with the regulators across the globe was invaluable.

financial supervision are inadequate and comprehensive risk analysis is hampered by the lack of realistic data. This holds in a potential risk for financial stability. Looking at the different discussion points it is clear that the worldwide economic crisis alerted regulators and specifically the IAIS.

2. DISCUSSION POINTS BY EXPERT PANEL SPEAKERS 3. The following topics were discussed by expert panellists:

The role of the IAIS is to establish and set clear standards and to build a positive reputation over the long term performing and meeting of needs and expectations of consumers. This includes market conduct, consumer protection and financial stability (policy holder protection).

3.1. Financial Stability and Systemic Risk (including Macro Prudential Dimension) Synopsis The panel discussed various issues related to systemic risk and financial stability and how these issues intersect with the insurance sector as well as definitional questions related to systemic risk and how they are related to the insurance sector, and how insurance supervisors should supervise too-big-to-fail institutions. Macro prudential surveillance and how insurance supervisors work with supervisors and policymakers from other sectors will also be a focus of the discussion.

The conference was opened by Peter Braumüller chairman of the IAIS; “The world economy is still recovering from turbulent times and supervisors across the financial sector are digesting the lessons learnt from the financial crisis” he declared. The theme of the conference The Gateway of Trust in the Insurance Industry enables us to reflect on the role the insurance industry is expected to play in a more stable financial system and indeed in minimizing the risk of any future crisis. The consideration of system-wide financial risks has emerged as an area of focus following the crisis.” It is clear that the recent financial crisis moved the focus of the regulator from the intermediary to that of systemic risk. The important thing is that there should be a clear distinction between banking and Insurance.

3.2. Impact of International Accounting Standards on Insurers and Insurance Regulation Synopsis An overview of the IASB Exposure Draft on Insurance Accounting which was released in July 2010 and other IASB standards which have a significant impact on insurance companies was shared. In addition to providing an overview, the panel will discuss / concerns from a regulatory, industry and IASB Board perspective.

One of the big challenges for regulators is to coordinate data as a uniform intellectual as it is difficult to aggregate data at any level. The standards of

C O O ’s R E P O RT

3.6.

IAIS Standards Implementation

Jonathan Dixon from the Financial Services Board served on this panel. Synopsis

3.3. Common Framework for the Supervision of Internationally Active Insurance Groups Synopsis This session was aimed at addressing the supervision of IAIS ComFrame project – from various perspectives. One perspective is to compare ComFrame with the rules and experiences with the consolidated supervision as practiced under banking regulation. Another perspective results from setting ComFrame into relation to the evolution of the supervision of insurance groups in the European Union. Both regulatory approaches are complemented by the perception and assessment of the insurance industry. 3.4.

Vision of Future Safety Net and Resolution Framework

Synopsis The recent financial crisis has demonstrated the need for the improvement in the safety net and resolution framework. What has been introduced in FSB (Financial Stability Board) discussion on systemically important financial institutions is that the application of taxes and ‘systemic risk levies’ along with capital and liquidity surcharges over financial institutions across jurisdictions. 3.5. Similarities and Differences between Supervisors Responses to 2009 Crisis Synopsis The global financial crisis has generated a wide range of different and difficult issues within the financial sector around the globe, giving cause for analysis, reflection and reassessment of many aspects of risk, capital management, business models, etc. This session is aimed at understanding, arisen in banking, life insurance and general insurance brokers before, during and since the global financial crisis. The implications for regulation and supervision will be explored along with the lessons learned from the actions taken or actions not taken by various supervisors.

The financial crisis has highlighted that implementation of supervisory principles, standards and guidance in an internationally coordinated and consistent manner is necessary to protect against adverse cross-border, regional and global developments affecting international financial stability. A critical success factor is to raise the level of adherence to international standards by reinforcing implementation; carrying out assessments and peer reviews to indentify gaps as well as vulnerabilities and risks; and linking it sequentially to capacity building and improved standard setting. By addressing the different priorities and allocating appropriate resources, supervisors from both developed and emerging market jurisdictions can commit themselves for supporting strong, sustainable and balanced growth of the insurance market. 3.7. The Impact of the Global Financial Crisis on Policyholders and Market Conduct Issues Synopsis The global financial crisis should not just be viewed from the perspective of its financial impact on the insurance industry but also in relation to its effect on policyholders. Market conduct issues are an important part of this debate. The panel will discuss relevant issues relating to these topics including potential tensions between prudential and market conduct policy objectives, how market conduct disclosure and other rules can enhance financial stability and increase policyholder protection. Takaful and Regional issues Synopsis The Takaful business in the insurance industry has grown remarkably, consolidating its position in the global insurance industry of today.

3.8. Solvency 11 Solvency 11 was treated and discussed as a high priority and the IAIS also had a solvency 11 Information Seminar. The challenges of Solvency 11 were discussed from a supervisory and industry point of view.

PROFILE

Profile: Chris Busschau Chairperson of the Financial Planning Exco and Director of the FIA By Clive Franks

FIA: Preamble: With the desire of finding out more about what the FIA Board members do besides devoting their valuable time to the FIA; FIA INSGHT will be conducting interviews with them in each quarter. Our eighth interview is with Chris Busschau a Director and Chairperson of the Financial Planning Exco at FIA. FIA: In what way do you feel that you are making the most contribution to the FIA? I have been in the Financial Planning industry for 36 years, and I’ve been incredibly privileged to work with many very astute and very wise people. I would like to think that some of their insight and ability to understand the industry has rubbed off onto me, and that this has enabled me to bring some of that accumulated experience to the FIA. FIA: What does being Chairperson of the Financial Planning Exco of the FIA mean to you? It means being constantly alert to the various dynamics of the Financial Planning industry. It is a complex, ever changing world, with different elements and diverse external forces coming to bear on the industry. We have risk management, through life, disability, and aspects of health insurance; estate planning with the complex issues of trust formation, wills, and liquidity provision; retirement planning covering pension and provident funds, retirement annuities, and many other investment structures; and finally, pure investment planning including collective investments such as unit trusts, endowments, structured investments, and extending into property syndication, containers, and offshore investment structures. Then, of course, we have the ongoing development of new legislation and other forms of regulation, and the need to represent our members when dealing with the Financial services Board, the National Treasury, the FAIS Ombud and other Ombuds, and even on occasion representing the industry and our members at hearings in Parliament. FIA: Do you think the predicted double dip recession will occur and what will intermediaries and consumers have to do in order to survive the adverse effects of such a glitch occurring? I wish I had a neat, absolute answer to that question! However, the consensus of opinion among economists seems to be that we won’t see a double dip, but that the recovery will be slower and tougher than we had

originally expected. However, if we do see a double dip, the role of the intermediary will once again be to constantly remind consumers of the importance of sticking to their plans, to guide people in preparing detailed and comprehensive budgets that will help them to manage their cash flows in tough times, and in extreme circumstances to find temporary solutions that will reduce expenditure. FIA: What incentives are there for young people to join our industry and how do you think we will be able to attract them? I was talking to a young man who joined the industry 18 months ago. He has a B Com and he was telling me that he is the envy of his buddies from university. He loves what he is doing, and says that it is far more satisfying to help people to plan their financial lives than to be an audit clerk or working on an accounting software programme! He has been able to build a client base quite quickly, and says that he is able to “write his own pay check” each month. FIA: What in your opinion do you foresee as the main challenges facing the FIA and its members? Lets tackle those separately. The FIA has to constantly examine itself to ensure that we are fulfilling the requirements of our members. We have to be certain that we are offering real value for the membership fees that our members pay. Our members face the very real challenge of being in the industry at a time when we are making the transition from being an army of sales people into a profession with skill, technical know-how, and pride in what we do. This will include ongoing education, meeting the ever more complex requirements of consumers, and becoming the Financial Doctors to the people of South Africa.

PROFILE

FIA: What is the most important message that you have for the members? Welcome the increasing fit and proper standards. Other professions have been through this process in the past, and the people who have embraced the increasing standards have built careers that they had never dreamed were possible. FIA: What is your feeling with regards to the RE1 & RE2 Level Examinations? I have two views. Firstly, in principle, we have to see these as important building blocks in creating the true profession we all aspire to. However, secondly, it seems that there are aspects of detail and implementation that need to be re-visited, and we in the FIA have a role to play here. FIA: How do you feel about the FIA’s interaction with the regulators such as the FSB?

My own experience of the Regulators, particularly the FSB, is that they are staffed with excellent people. Our working relationships with them have become increasingly open and constructive, and it has been exciting to see the development of a situation where the FSB now automatically consults with the FIA on all aspects of regulation. It means that FIA members can rest assured that the FIA will always receive an open hearing from the regulators, and that the needs and complexities of the lives of intermediaries will be noted. FIA: Are you willing to share a brief CV and a glimpse in to the private life of Chris Busschau when you are not involved with the business of the FIA I’ve been married to Ruth for 38 years and we have 5 adult children. I am active in Catholic Church affairs. Among other things, I am the Chairman of the Board of the Catholic Church’s radio station, Radio Veritas, and I also broadcast a weekly programme on the station. I serve on the committee of the alumni association of my old school, St David’s Marist Inanda. I play enthusiastic but erratic golf, often with members of my family who are all keen golfers. I am a heavy reader, and enjoy everything from modern history to thrillers.

COMPLIANCE

Promoting Confidence in the Compliance Profession By Julie Methven CEO of the Compliance Institute

New, more stringent requirements for compliance officers dealing with FAIS (Financial Advisory and Intermediary Services Act 2002) have been gazetted. FAIS impacts on all financial institutions that are financial services providers and their representatives. In terms of FAIS such financial services providers need to appoint a compliance officer, who must be approved by the Financial Services Board (FSB). Since the Act came into force, there have been increasing concerns about the level of skills, knowledge and experience of some FAIS compliance officers, prompting the FSB to develop enhanced regulations to address the issue. These regulations, issued in terms of the FAIS Act, set out the qualification and experience criteria for approval as a compliance officer by the FSB.

The new amendments to Section 17 of FAIS, specifically Annexure 1, set out the qualifications, experience and criteria for approval as a compliance officer by the FSB. The requirements endorse the Generally Accepted Compliance Practice (GACP) framework released last year by the Compliance Institute of South Africa. "Effectively many of our standards have been incorporated into the regulations and compliance officers will need to be able to demonstrate knowledge of the applicable principles set out in GACP framework," says Julie Methven CEO of the Compliance Institute. She says the role of the compliance officer in South Africa has grown into one of significant importance, as financial service providers are increasingly relying on their compliance officers to guide them through their regulatory responsibilities. The GACP framework provides a set of standards and norms that act as a benchmark of compliance best practice, and is the first of its kind in the world.

E D U C AT I O N

Absa and University of Johannesburg encourage excellence in Financial Planning Final-year B.Com (Finance) students at the University of Johannesburg (UJ) are able to put theory into practice through an Absa-sponsored initiative that promotes excellence in financial planning. “We are delighted to partner with UJ in this exciting project. We strongly believe that we need to do more to ensure that we produce well qualified financial planners in this country to meet customers’ needs for financial advice,” says Peter Todd, Managing Executive at Absa Insurance and Financial Advisers (AIFA). With 34 groups of students participating, the students are given a comprehensive case study in which they are expected to prepare a financial plan for a prospective client. The case study, which gets given at the beginning of the year, includes all aspects of financial planning such as insurance, real estate and retirement planning, among others. In the initial stages of the case study, 250 students work individually on the different aspects of the financial planning case study. They later form groups of between 3 and 6, which make a presentation to the Lecturers in Financial Planning at the University of Johannesburg. Following intensive presentations and based on technical and visual aspects of the presentation, the top ten groups are selected. These groups proceed to make presentation to a panel of experts comprising of officials from the University of Johannesburg’s Department of Finance and Investment Management, the Financial Planning Institute and Absa. “We would like to appreciate Absa’s efforts and commitment to filling the skills gap within the financial planning environment. We believe that Absa’s decision to sponsor the best financial planning initiative makes a huge difference in the lives of both the students and encourages excellence” says Professor Els, Head of the Department of Finance and Investment Management at the University of Johannesburg. Absa has been sponsoring the event for the past two years and will do so in the coming years.

Absa launches Absa Adviser Academy Absa launched the Absa Adviser Academy to train and develop high calibre Financial Advisers in an effort to help address the shortage of skilled financial advisors in the country. Situated in Blackheath, Johannesburg, the academy will be run by Absa Insurance and Financial Advisers (AIFA). Chief Executive Officer of Absa Financial Services, Willie Lategan said: “There is a general shortage of skilled advisers in the country and the current adviser force is ageing. The Academy is a strategic initiative that will enable us to close the skills gap and to serve our clients in the best way possible.” The launch of the academy is a significant milestone in the history of Absa. “As the leading financial advisory business, we have taken a leading position in the attraction and retention of the necessary skills and we hope that this academy will help us launch the careers of future advisers,” says Peter Todd, Managing Executive at AIFA. A team of professional trainers and a stringent quality control programme will ensure the proper training and development of excellent financial advisers. The trainee adviser will receive a competitive remuneration package, which promotes financial freedom and provides financial stability. The Academy will also provide each Trainee Adviser with a tailor-made personal development and training path as well as a range of other opportunities within Absa.

The new Absa Advisor Academy was launched 03 November 2010, and some of the delegates were Rabbia Sarang (Head of Absa Advisor Academy), Willie Lategan (CEO: Absa Financial Services), Bonane Phiri, Hlobisile Tshabalala, Charlene Dippenaar, Mokgatla Makaleng, Senate Mohale, Deeran Kuni, Jacqueline Hollamby, Mululamsi Ndou, Godly Mothabi, Lebo Molemane and Faizal Shariff Noor (Business Development Manager Absa Advisor Academy). Picture by Lettie Ferreira.

E B

Employee Benefits By Michael Morris of the FIA EB Exco

Looking forward to 2011, the EB Exco is planning to hold EB Educational Workshops in Cape Town, Durban, Johannesburg, Port Elizabeth, Nelspruit and possibly Bloemfontein late in April next year. These will take a similar form to the successful Educational Workshops held early in 2010 when EB experts from the major product providers and large broker organisations were invited to address groups of EB Brokers. Some of the topics that will be addressed include Tax and legal update, input on disability and PHI cover, a general introduction covering the FIA position paper on the independent EB broker, section 14â&#x20AC;&#x2122;s and when they apply, approved and unapproved group life, multiple organisations under a single umbrella fund to name a few. Members in all these areas will receive timeous notification of this event. A number of events that have taken place during the last six months have concerned members of the EB Exco. The FSA in the United Kingdom announced the withdrawal of commissions paid to Employee Benefit brokers from 1st April 2013. This announcement was followed last month by Holland who has also withdrawn EB commissions. Our own FSB has also this year expressed their concern on the high reduction in yield currently experienced by our own pension funds and are looking at pension fund costs. There is also a perception that the industry is greedy and looks primarily at its own profits. With this in mind, the EB Exco realizes that there is a need to draw up a positioning document setting out the duties and input of the independent intermediary which adds value to the EB industry. This will after all inputs are considered be submitted to the FIA Board. In this regard, two meetings of independent brokers engaged in employee benefits were held in Cape Town to explore and annotate what services independent brokers offer. A fair amount of information emanating from these meetings was presented to the EB Exco which will be very useful in compiling the positioning document. The Government has not moved much further in outlining its retirement reform plan for all citizens. There is talk that Group RAâ&#x20AC;&#x2122;s will not be regarded as pension funds but merely as top up thus necessitating those companies who have these products to join a government pension fund or establish their own. There appears however to be an acceptance of the protection of existing accrued members interests. Changes to the Pension Funds Act were being considered to address the issue of allowing unclaimed non-member spouse divorce benefits to become an unclaimed benefit after 24 months, to change the section

12(2) time period to 180 days, to allow the FSB to withdraw section 15B approvals of s u r p l u s appor tionment schemes and to bring the handling of death benefits arising after a member has resigned or retired (but before the benefit has been paid) into the ambit of Section 37C The FIA had sent a request through to the FSB concerning group scheme commissions which have not been adjusted for a number of years. Indications are that this will not be regarded as a high priority by them although it is hoped that the will be dealt with early in the New Year. Best regards. Michael Morris.

There is also a perception that the industry is greedy and looks primarily at its own profits. With this in mind, the EB Exco realizes that there is a need to draw up a positioning document setting out the duties and input of the independent intermediary which adds value to the EB industry.

S H O R T- T E R M

Where has 2010 gone? By Barry Taylor Chairperson of the FIA Short-Term Exco

It was indeed an eventful year not only for our Industry but for the Country what with the very successful hosting of the FIFA 2010 World Cup soccer tournament with the spinoff of the Gautrain, a host of magnificent stadia and a mammoth exercise in upgrading the roads, airports and other infrastructure. We can look back and say we have much to be proud of. And what have we achieved in our Industry? 2010 has been a very busy year for us in the FIA Short Term space and on taking stock of all the issues that we have dealt with in the Short Term committees it is a credit to all those who have given so freely of their time and expertise. We were saddened at the passing of Nan MacLennan who was given a huge send off by many friends and colleagues from the Industry. It was a tribute to the contribution she had made and for the wonderful character she was. Who would have thought that she was seventy three – with all that energy and enthusiasm? Dear Nan, we will miss you. Our main focus for the year was the ongoing involvement in the regulatory processes, in particular the Insurance Laws Amendment Act, the Data Sharing project and a focus on education and development. It was a year in which the FIA Short Term division made great strides in the improving and cementing of relationships within the industry, the regulators and industry bodies which will stand us in good stead in the coming years. After two years of lively debate and constructive engagement with Jonathan Dixon and his FSB team as well as SAIA and SAUMA representatives, the draft regulations pertaining to Binding Authorities were put to the Industry for comment at the end of September 2010. The main thrust of these regulations will in essence deal with; the Accountability of the Insurer in terms of the outsourcing of Binder functions, the Responsible outsourcing of binders, Policy Holder protection in terms of ensuring the fair treatment and protection of policy holder data and dealing with the areas of potential Conflicts of Interest. The process and regulations have ensured continuity of the practice of intermediaries operating binding authorities with a call to employing sound judgement and governance and avoiding and or mitigating areas of potential conflict of interest. We at the FIA are grateful to Jonathan and his team for their support and willingness to listen and debate. Another of the major achievements has been the industry initiative (SAIA and the FIA) in putting together the data exchange project now branded as “STRIDE” (Short Term Insurance Data Exchange”).The purpose of STRIDE will be to facilitate the exchange of policy holder data from Intermediary and other third party systems to the principle Insurer involved in the transaction. Not only will this facilitate compliance with the Insurance Laws Amendment Act but will support the Solvency Asset Management (SAM) requirements on 20

Insurers and will set a standard which in the long term will create efficiencies, economies of scale and sustainability of current business practices. This initiative has been a long time coming and it is a credit to the Insurer and Intermediary players involved for having the foresight and commitment to pursuing this project with the enthusiasm that has prevailed. The next question is what to 2011? I foresee an equally active year from the FIA’s positioning where we will see the promulgating of the ILAA Binder regulations and the activities that will go with ensuring compliance. STRIDE should become a reality in terms of going live, the full implementation of the FAIS General Code of Conduct, Conflict of Interest regulations and the going live of the Consumer Protection Act. I don’t believe that we must underestimate the time, effort and cost that the implementation that these issues will have and management and all responsible staff will need to apply themselves to ensuring that sound and good practice as well as a common sense approach is adopted. Other initiatives that could progress into 2011 will be Treating Customers Fairly (TCF) where work is well under way by the FSB and Industry bodies. This will be an important piece of legislation which aims to ensure the fair treatment of customers in particular by Product providers and will focus on the following outcomes; • • • • • •

Consumer Confidence in the service providers they are dealing with. That products and services are designed to meet the needs of identified consumer groups. Those consumers are provided with clear and understandable information pre and post the transaction. That advice is appropriate to the circumstances. Those products perform and meet the expectations of consumers and that the service is of an acceptable standard. Those consumers do not face unreasonable post-sale barriers when it comes to changing of products and in the fulfillment (claims) stage.

The other initiative, if successful, that could have a major impact in years to come will be the proposed “Compulsory Third Party Motor Insurance” deliberations, currently being driven (!) by the Department of Transport. A further challenge that we as an Intermediary Industry body is the crying need for skilled practitioners and the time has come for a concerted effort into designing an Education and Development programme to elevating the allround skills of our members and to once again becoming “respected Insurance Intermediaries” with a focus on superior client service. So we are in for interesting times and as the year draws rapidly to an end I would take the opportunity of thanking all of those colleagues in the FIA fold, the many supportive friends in the FSB and greater Insurance Industry for their support of our endeavors during 2010, Season’s Greetings and a fulfilling 2011.

DISCLOSURE

Insurance is only as Good as the Advice you Get Gari Dombo, Managing Director Alexander Forbes Insurance a member of the FIA Consumers will get better advice, service and satisfaction from insurers if they fully disclose information relevant to the risk that they wish to insure – and ask the right questions. “Insurers rely completely on the information they are given to underwrite correctly and to be able to advise clients correctly. Without all the relevant information it becomes difficult to assess all the risks involved and provide the right cover,” says Gari Dombo, Managing Director Alexander Forbes Insurance. The kind of information that people most often forget to disclose include the fact that they: • Rent out their house and are deriving an income from the property. • Have a thatched roof or garden cottage. • Occasionally park their car at their girlfriends place overnight. • Have changed their job (pertinent where the new job involves business travel by car with the insured vehicle). • Allow their child to drive their car on weekends. • Are going on holiday leaving their home unoccupied for two months. • Insure the car for private purposes though drive to the occasional business meeting. • Have stopped paying the armed response service. • Have started alterations to the home. The information above is not relevant to all insurers and relevancy also depends on the basis of your cover. For example, • Many insurers are not concerned where you park when you are not at home. • Your vehicle cover may allow any licensed driver to use the vehicle. Failure to disclose this information, or any other information that could affect the terms, condition or detail of your cover, may lead to claims being rejected. So the best way to ensure that you disclose all relevant detail is to “either thoroughly read your insurance contract and ask the right questions - or over disclose so you can get the best

advice,” says Dombo. As such, Dombo advises those who do not have the time to read through their insurance contracts in detail to rather “disclose as much information as possible when talking to their insurance consultant.” The insurance consultant will know what is relevant and what advice to give. The purpose of insurance is to protect people against unforeseen risks and possible dangers. It is not about making profit by misleading clients. Similarly, if clients try to trick their insurer into issuing a lower premium “when something does go wrong the only loser is likely to be you” warns Dombo. For example, “if your policy is on a named driver basis and you don’t disclose that your children occasionally drive your car, your insurer will not advise you to include them as named drivers. If they damage your car, or injure themselves or others while driving, your insurer will reject your claim,” explains Dombo. Instead insurance is about asking questions and getting good advice. There is no shame in not understanding the wording. Dombo encourages consumers to “ask as many questions as they want until such time as they fully understand everything they are agreeing before signing.” And when it comes to advice Dombo believes “you should develop a close relationship with your insurance consultant so that your cover can be tailored to meet your individual needs.” For example, a good insurance consultant will advise that “you can pay a lower premium by insuring your motor and household contents in one portfolio instead of insuring your assets separately. Or if you say you are going on holiday they will suggest how you should insure the items that you take with you” explains Dombo. Once the insurance consultant and the client form a good relationship it becomes easier for the client to ask the right questions and disclose the correct information – compared with the confusion and miscommunication that typifies the faceless call-centre scenario. That said, warns Dombo, “insurers will not go through every single term and condition when you purchase cover. Ultimately, it remains the clients’ responsibility to read the contract and ask the relevant questions as well as remain mindful of their duty for continual disclosure.”

RETIREMENT FUNDING

2.2

Taxation of retirement contributions and benefits

Tax deductibility of contributions (i)

Pension fund contributions by members

(ii) Taxation of lump sum benefits on withdrawal Value of lump sum Between R 0 and R 22 500 Between R 22 501 and R 600 000 Between R 600 001 and R 900 000

For current pension fund contributions, it is the greater of: R 900 001 and above

• •

7.5% of remuneration from retirement funding employment, or R1 750.

Any excess may not be carried over to the next year. For arrear pension fund contributions the maximum tax deduction is R1 800 per annum. Any excess over R1 800 may be carried forward to the following year of assessment. (ii)

Provident fund contributions by members

Provident fund contributions are not tax deductible. They are paid from post-tax income.

(iii)

Retirement annuity fund contributions by employees and employer

2.3

Comparison of retirement annuity, pension and provident funds

(i) •

Contributions A retirement annuity fund is a private arrangement fully owned by the member. Employers and employees can now contribute in a tax efficient fashion to retirement annuity funds. Member and employer contributions under a pension fund arrangement are paid from pre-tax income. However, under a provident fund arrangement, member contributions are paid from post-tax income, whereas employer contributions are paid from pretax income. Retirement annuity fund contributions are paid from pretax income. The contributions paid from pre-tax income have upper limits given above. The retirement annuity benefits can be made paid up should an individual encounter financial difficulty that makes it difficult to keep up recurring premiums. There are restrictions in making such a move in pension and provident funds.

•

For current retirement annuity fund contributions, it is the greater of: • 15% of taxable income other than from retirement funding employment, or • R3 500 less current deductions to a pension fund, or • R1 750.

(ii) •

Any excess may be carried over to the next year. Taxation of benefits In the taxation of any lump sum benefits, the taxable amount is the member’s lump sum benefit less any member’s own contributions not previously allowed as tax deductible. The taxation of such benefits can be summarised as follows: (i) Taxation of lump sum benefits on retirement; death; termination of employment due to redundancy; and termination of employer’s trade

Taxation of monthly income during retirement

Any income earned during retirement is taxed using the scales published by the National Treasury annually.

Employer contributions to pension and provident funds are tax deductible, or paid from pre-tax income, for the member. This deductibility is subject to an maximum of 20% of salaries for the employer’s contribution to retirement funds and medical aid schemes. (iii)

Tax rates 0% R 0 plus 18% of taxable amount exceeding R 22 500 R 103 950 plus 27% of taxable amount exceeding R 600 000 R 184 950 plus 36% of taxable amount exceeding R 900 000

•

Benefits Pension and retirement annuity fund members can take up to a third of their retirement benefit as a lump sum. The remaining benefit must be used to provide a regular income. Provident fund members have the option to either take their entire retirement benefit as a lump sum, or only take part of their benefit as a lump sum and use the remaining benefit to provide a regular income. The cash lump sums and regular incomes are taxed as shown in Section 2.2 above. Retirement annuity funds do not allow members to receive their benefit before age 55. Members may retire from pension or provident funds subject to certain restrictions in the Income Tax Act. Members may receive their benefits from pension and provident funds when they leave their employer for any reason. These benefits may be transferred to another fund or preservation fund free of tax or the member may take an after tax cash benefit.

Value of lump sum Tax rates Between R 0 and R 300 000 0% Between R 300 001 and R 600 000 R 0 plus 18% of taxable amount exceeding R 300 000 Between R 600 001 and R 900 000 R 54 000 plus 27% of taxable amount exceeding R 600 000 R 900 001 and above R 135 000 plus 36% of taxable amount exceeding R 900 000

Leadership Seminar Leriba Lodge

Advisory Council 7 & 8 October Leriba Lodge

FINANCIAL PLANNING

The Only Constant Thing is Change! By Chris Busschau Chairperson Financial Planning Exco of the FIA The last three years have been a roller coaster of emotions in the Financial Planning industry! First came the Statement of Intent that introduced radical improvements in the values applicable to terminated investment policies. This was followed helter skelter by new commission regulations for some life assurance products, an ongoing increase in the educational / Fit and Proper requirements to be licensed to give advice, the first visits on FSP’s by the Financial Services Board, regulated requirements for improved and regular communication with clients, and, recently, the new FAIS Code on Conflict of Interests. Will 2011 be different? Well, it depends on what you mean by different. The one thing that won’t change is the flow of change! WHAT IS IN STORE FOR US? The first few changes below are already in place, but will only really begin to change our lives next year. Other are waiting around the corner for us. • Conflict of Interests. The new code has been in place, and the FSB and other bodies have run a number of informative workshops to help the industry understand the implications and the changes we’ll have to make. I have attended a number of these workshops and have realised that human nature does not change! The really big issues, the situations where major conflicts could arise, tend to be easily understood and generally accepted. People have generally agreed that payment of business expenses by product houses is unacceptable, that the rule that states that product houses can provide training for all intermediaries, but not pay for accommodation is understandable, and I don’t hear too many people complaining that golf days and the like are critical to our business. The hottest debate seems to centre on what I believe is a genuinely trivial issue, and that is “how do we apply the R1000 per annum per representative rule?” We are simply going to have to apply that most uncommon commodity, common sense, and accept that product houses will be able to provide facilities to enable us to do business with them (their branded stationery, software, etc) but not the things we use to run our businesses. • The new Companies Act will come into force in 2011. This is going to introduce some critical changes in the way we interact with business clients. For example, we will need to ensure that the full and precise name of a business is reflected on every single piece of paper that forms part of a business transaction. We will also have to conduct Know your Customer verification for all of the related parties (i.e spouses, children) of key people in the business clients we transact with. The FIA is planning to run workshops for members on the impact of this important new legislation. Watch this space for details. • The Consumer Protection Act will also come into operation in 2011. Many aspects of this legislation will not apply to Financial Planners, as those aspects of our business that are regulated by the FAIS Act will be exempted from the CPA. However, any activities not regulated by FAIS, such as mortgage origination, any form of estate agency work, direct selling that does not involve advice, • Workflow Two will come back onto the radar screen in the next few months. Many people will have forgotten that this even exists! The National Treasury released its Discussion Paper on Contractual Savings Products in the Life Insurance Industry way back in April 2006. Its contents covered a wide range of issues. The first of these, early termination values, was addressed through the Statement of Intent and the new commission regulations. However, other issues were placed into two further wrokstreams, and Workstream Two includes a very important element,

namely “Intermediary Relationships”. The National Treasury proposed that any intermediar y who receives any commission payment at all should be defined as an “Insurer Agent”, and that only those intermediaries who charge fees to their clients could be classified as Independent Financial Advisers. As you will appreciate, this has both emotional elements as well as reputational and functional aspects. At the saem time that this is being addressed, we need to recognise that there is a possibility that commission regulations for other products may come into the discussion. The FIA has already done some preparatory planning for the consultation process that this will set in motion, and has made a submission concerning some aspects. We remain of the view that the correct dispensation is the de-regulation of all commissions, and will continue to promote that view. • Retirement Fund reform. This process has been on the go for some years, and the discussion will continue. The FIA will continue to be actively involved in the debate. • Medical cover. This too has been on the agenda for some time, and the FIA will keep you informed as the debate evolves. • Fit and Proper examinations are facing us next year. Plenty of study and preparation! We can view it as an absolute pain, or we can welcome the opportunity to sharpen up our skills and our knowledge. SO WHERE DO WE COME INTO THE PICTURE? Well, the one thing that has not changed, and will not change, is the need that the pulic has for professional, skilled and knowledgable analysis and advice from Financial Intermediaries who are capable of persuading people to make the changes needed to satisfy their long term requirements. FINANCIAL DOCTOR The professional Financial Intermediary is a financial doctor. Let’s look at the similarities: • Diagnosis: The medical practitioner does a careful examination of your state of health – we conduct a financial needs analysis • Feedback: The doctor tells us what is right, and what is wrong with our health. We tell the client where the gaps are in the financial plan. • Solutions: The doctor tells us to lose weight, give up smoking, have an operation, take a prescription of medication, start exercising. We recommend the use of life assurance, health care cover, unit trusts, endowments, retirement annuities, disability cover, structured investments, offshore products, etc to solve the financial “illnesses”. • The doctor then uses persuasive skills to ensure that we do accept the advice, and that we take the medication, have the operation, or change our lifestyles. We use persuasive skills to enable people to make the decision to set aside some cashflow to purchase the solutions, or to set aside some capital to make the investment. WE ARE FORTUNATE We are fortunate to be in an industry where we can be such a power for good in people’s lives. Welcome the challenge of the changes we face in 2011, knuckle down to the studying needed for the exams, and emerge in December next year fitter, stronger and of more value to our clients. The choice is yours – I know what mine is!

H E A LT H

Demarcation of Health Insurance By Michael E. Stoker Insurance Gateway® www.insurancegateway.co.za In the midst of a sea of changes in the medical aid environment and the uncertainty surrounding the national health insurance proposals, lies another important related issue, the demarcation of health insurance between the short-term, life and medical aid industries.

Products and practices harmful to the medical scheme environment In providing a balanced view Mr. Schoeman acknowledged concerns regarding health insurance products and practices which may be seen to be harmful to the medical scheme environment.

Presently with each sector being governed by its own legislation, namely the Short-term Insurance Act, the Long Term Insurance Act and the Medical Schemes Act, there are areas of overlap between products offered by Shortterm and Life Companies and those offered by Medical Aid Schemes.

Health insurance marketing practices which may be harmful to the medical scheme environment include those where intermediaries are incentivized to oversell or to mislead the public into thinking the product is a medical scheme.

What is allowed by the legislation applicable to the various sectors and what should be allowed, is referred to as the health insurance demarcation debate and Mr. Herman Schoeman, Managing Director of Guardrisk provided a very informed and balanced presentation on this at The Insurance Conference, held at Sun City, in May this year.

Products and practices harmful to consumers Health insurance products and practices which may be seen to be harmful to consumers include misleading marketing and sales practices, exclusions due to age or deteriorating health, cancellations of individual policies due to claims and the limited disclosure of benefits to and obligations of policyholders.

Historical perspective of insurance law Looking first at the historical perspective Mr Schoeman advised that for many years, under the 1943 insurance acts, the different covers offered by different institutions in the various sectors co-existed in harmony, until the borders between what was a short-term or long term product, or a medical aid, began to get blurred, with the sectors encroaching on each other’s territories. The 1998 Short-term and Long Term Insurance Acts attempted to ring fence areas of overlap and whilst continuing to allow areas of commonality in products, covers and benefits, endeavoured to limit further encroachment and clarify the borders, by introducing limits to features of insurance products such as stated medical benefits, which may not defer actual medical expenses and with benefits being payable only to the policyholder. Health insurance product categories Health insurance says Mr. Schoeman, can be categorised into four main categories: Category 1 Those where the product intent is totally removed from medical scheme business. Category 2 Medical expenses cover linked to a health event but as sub-component of non-health related cover. Category 3 Products offering a degree of augmentation to cover provided by medical schemes. Category 4 Products offering benefits targeted at consumers that are unable to afford a medical scheme. Since different considerations apply to the categories, the best possible outcomes can only be achieved if discussions surrounding the demarcation of health insurance and medical scheme business have regard to the unique aspects of each health insurance product category.

These include insurance products that cause the public to replace their medical aid with insurance policies, or change their medical aid scheme plan or benefit options, products which cause anti-selection by incentivizing good risks to buy insurance until they need more comprehensive medical scheme cover, or which may give rise to systematic exclusion from ongoing “lifetime cover”.

Towards demarcation Whilst the Council for Medical Schemes and the Financial Services Board issued a joint press statement in September 2000 announcing an agreement on the demarcation between the business of a medical scheme and health insurance, the Insurance Laws Amendment Act 2008 proposes further measures to clarify demarcation issues, which includes: • • • • • • •

Retention of a Health event policy Excludes the “business of a Medical Scheme” Specifically includes policies conducting Medical Scheme business as allowed by Minister of Finance The detail will be in regulations still to be promulgated Consultation between Ministries and Regulators Regulators may request any relevant information Rules relating to marketing and product design

Consumer needs At the beginning of his talk Mr. Schoeman posed the question “Can health insurance products and medical schemes co-exist?” Certainly when one considers the needs of consumers and their Constitutional right to protect themselves against exposures, one would like to think so. Some factors highlighted by Mr. Schoeman… • • • • •

The cost of medical scheme membership is beyond the reach of the majority of South Africans Gaps in medical scheme benefit structures leave medical scheme members with potentially large uninsured financial exposures The same can be said of medical scheme benefit limitations and caps Closed employer schemes offer little or no choice The demand by consumers for value for money

Recently the FIA issued an update on the demarcation of health insurance products and members who would like to know more can find a link to the update, in the FIA Weekly Indaba # 4 (21 September 2010), under item 1, General.

CIP

The “FAIS Conflict of Interest Policy” By Brett Wallenkamp of Wallenkamp Consulting cc Mandated by the FAIS Act the FAIS Department of the FSB continue to drive the financial services industry to make full disclosure to clients on financial services in order for them to make an informed decision. The latest amendment seen to the General Code of Conduct, published under Board Notice 58 of 2010 on 19 April 2010, has introduced what can be considered as the “FAIS Conflict of Interest Policy”. As is always pointed out by the FSB, the FAIS Act must be applied within the spirit of the law, i.e. to protect the consumer. When interpreting who and what is affected by the disclosure’s required under the new conflict of interest, the definitions must be placed into context with the provisions.

•

The type of financial interest, or recompense, that a provider or its representatives may receive or offer is limited to: • • •

• A provider and a Representative must avoid and or mitigate any conflict of interest between themselves and a client . This requirement already became effective on 19 July 2010. • The definition of "conflict of interest" means you should always ask yourself the following:

Contain a list of all associates of the FSP

Commission authorised under the Long-term Insurance, Shortterm Insurance and Medical Schemes Acts . Fees authorised under these Acts, if those fees are reasonably commensurate to a service being rendered. If the above fees are not paid, then fees that have specifically been agreed to by a client in writing and which may be stopped at the discretion of that client, are allowed. Fees or remuneration for the rendering of a service to a third party, which can be considered reasonably appropriate to the service being rendered or reasonably proportionate to the value of the financial interest. An immaterial financial interest that is subject to any other law.

However, a provider may not offer any financial interest to Representatives:

When you sell a financial product or service to a client are you in a situation where any commission or incentive etc, motivates you to present biased and unfair product recommendations or hide certain facts that would otherwise negatively influence that client’s decision?

•

If such incident arises, then there is a conflict of interest, and in the spirit of the law, must be appropriately managed and disclosed.

So then, what is “a financial interest”?

Apart from additional definitions introduced to the FAIS General Code of Conduct, the newly inserted ‘Section 3A’ describes the requirements FSP’s must comply with as from 19 October 2010. A synopsis thereof is abridged as follows:

This is defined as any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable consideration.

Every FSP must adopt, implement and maintain a Conflict of Interest Policy that complies with the provisions required. This policy must be easily accessible for public inspection, eg published on your company website and reducible to writing at all reasonable times.

Exclusions are made, such as an ownership interest and on any training (that is not exclusively available to a selected group of providers or Representatives) on products and legal matters relating to those products, general financial and industry information or on specialised technological systems.

•

for giving preference to a specific product supplier or product (if that Rep is able to recommend other products or suppliers) for bringing in high volumes of sales without any consideration to the quality of that service.

It must manage conflicts of interest by adopting the following principles: • •

• •

•

Ensure mechanisms are in place for identifying conflicts of interest. Build procedures and business rules that ensure avoidance of conflicts by providing suitable documentation to clients that make the disclosure. Adopt controls that will identify reasons for non-compliance and prescribe mitigating actions. Implement suitable risk management processes to that will facilitate compliance with the policy through adequate monitoring review and reporting. Awareness and understanding by all Representatives of the consequences of non-compliance, eg suspension of licence, and to provide relevant training as required.

As daunting as it may initially appear, the “FAIS Conflict of Interest” can be used effectively to instil client confidence that they are dealing with FSP’s of integrity and that the financial product sold to a c l i e n t i s most suitable to the client’s financial needs. www.faisfirst.co.za 1

Sec 3(1)(b) of FAIS General Code of Conduct 2 The definition of “associate” may at first glance appear ludicrous when measured against such list, but parties listed must be taken in context with the financial service rendered and related business relationships. 3 Acts 52 and 53 of 2008 and 131 of 1998

PLANNING

Succession Planning – An Overview By Joe Kotzé, FIA National Manager; Compliance

At a recent seminar on the above topic, hosted by Celestis, industry experts gave their views on this complex matter. In the same vein as retirement planning, succession planning is of critical importance and should be part of an overall business planning strategy. Some factors to be noted is the fact that the average age of advisers is over 50 and rising, barriers to entry into the industry are materializing and sellers and buyers may be entering into a serious life changing transaction.

• What to do after the sale and financial survival • Tax matters Many sales are lost because of poor financial records or because the buyer must work off old information. Accounting and financial statements must be kept up to date and must be available readily and accurately. The secret is not to wait for your accountant or auditor but to dictate processes.

Selling your business As background to succession planning the following needs were identified from sellers and buyers: • • • • • • • •

Valuation of the business and client base Identifying potential buyers or successors Preparation of a practice for sale Legal agreements Transition of clients Due diligence or practice audit Financing of the sale Negotiations

When sale of a business is considered it must be established whether the business is an asset of liability. In most cases it may be a liability because of failure to plan and prepare for the sale. An obvious question to ask is whether you would buy your own business and if it really is worth something to someone else, keeping in mind that the biggest asset of the business is the client base. Other considerations include: • • • • • • •

Due diligence A due diligence is a complex fact finding device and an intense examination of a target business. It can assist in the answering of three questions: • • •

Whether to buy at all How much to pay How to structure the acquisition

The function of a due diligence is to assess the potential risks of a planned transaction by enquiring into all relevant aspects of the past, the present and the predictable future of the business to be purchased. It will also assist in determining what the possible benefits and liabilities of a transaction will be. You will need a due diligence to avoid nasty and costly surprises. The buyer should be looking for reasons NOT to invest in the identified business. Studies show that up to 50% of acquisitions are subsequently disinvested or merely fail. Every due diligence is unique and considerable professional judgment, skill and experience is required to verify assertions.

Problems you may encounter:

The following risks may need to be managed carefully:

• •

• • • • • • • •

• • • •

Are you ready to sell – mentally and otherwise? If you have partners, what arrangements have been put in place? Are your clients ready for you to sell? What about your staff? Is your business “house” in order? Are your business financials in order? Is your own financial plan in order?

There is also no set formula for valuating a book. Value models differ and it may be better to look at opportunities that may arise from the sale. Keep in mind that trail commissions may not be a certainty in future due to possible changes in legislation.

Unrealistic expectations about the sale Problems you must deal with at exit rather than having planned for earlier The reality of a forced sale Whether your clients’ affairs are in order and their willingness to accept other advisers in your business Agreements with your partners – the how, when and what for Valuation of the business

Understanding of the business Understanding of the industry Sustainability of the business Changing taking place in the industry Contractual exposure Warranties and representations – external and internal Pending or possible claims or litigation FAIS and compliance

PLANNING

The due diligence process can have the following scope: • • • • • •

To determine assets and liabilities Historical trading results Current trading Financial projections Taxation, VAT and possible penalties Cash flows

• • • • • •

Registers Commission tracking and financial records Compliance policies and procedures Complaints register and pending complaints Contents of client files Compliance reports and financial statements submitted to the registrar Annual levies fully paid Registration with the Financial Intelligence Centre Interview with the compliance officer and handover report

The due diligence and valuation process should go hand in hand.

• • •

Legal aspects

Key FAIS considerations when selling:

Aspects to clarify will include:

• • • •

• • • • • •

What is the legal nature of the buyer and seller? What is it that is being sold? How and when will ownership be transferred? Are there any unusual circumstances like contractual capacity, insolvency or suspending conditions? What are the tax implications? What are the main terms of the sale agreement?

A serious consideration would be not to draw up your own agreement but to rather use a legal expert. A checklist for such an agreement should include the following: • • • • • • • • • • • •

Parties – check legal nature and founding documents Subject for sale – check ownership and clear description of assets Purchase price and manner of payment – take into account the cost of any risks VAT implications – check if applicable Security – whether required for payment in installments Date of transfer and possession – check for different dates and suspending conditions Warranties business sold “voetstoots” or guarantees of income Transfer of employees – is it a sale of a business as a going concern Seller to assist buyer – agree time period and remuneration Restraints of trade – check if applicable Cancellation – check if special circumstances for cancellation Cater for unusual circumstances

FAIS compliance The FAIS and FICA are the key legislation applicable in the sale of a business or a book. Key principles to keep in mind are that clients cannot be unduly prejudiced by your actions of buying or selling a practice or book. They should be kept informed as to what is going on and your actions should be fair and equitable. Key FAIS considerations when buying: • •

• •

Regulatory returns and levies up to date Client files in good order Compliance records in good order Key risk documentation – - Risk management plan - Business continuity/succession plan - Conflicts of interest duly recorded Pending matters disclosed Contractual obligations

When selling a business it is important to keep clients in the loop and plans are in place to transfer to another business. The FSB must be informed in writing to lapse the license with reasons as to why and the effective date. The compliance officer must provide the FSB with a letter of resignation and submit a handover compliance report. Clients must immediately be informed and steps must be in place to ensure that outstanding business is completed promptly or transferred to another provider. The FSB expects each provider to have a business continuation plan in place in the event of death, disability and retirement of key staff so that clients are not prejudiced in any manner. Buy and sell agreements should be an essential element for the sole proprietor business. This will ensure that beneficiaries get fair value for your business and effect prompt payment of the purchase price. Some pointers for selling a business: • • • • •

Include an objective valuation methodology Choose an auditor who understands your business Review insurance policies to reflect the true value of the practice Identify a buyer that is aligned to your client profile Ensure the buyer has adequate resources in terms of capital and capacity

When considering all the aspects above it should be clear that succession planning should start at an early stage of any business. It is essential to engage the services of experts to assist and guide you through the process of due diligence and valuation of your business.

Advice records Know-Your-Clients records (FICA)

O U T L O O K 2 0 11

After a whirlwind 2010 Insurers and Brokers are Already Scanning the Environment for Next Year’s Challenges By Gareth Stokes Online Editor for FA News

As 2010 winds down the financial services industry is preparing for another year chock full of regulatory change. Stakeholders in both the short-term and long-term insurance space will have to adjust business practices to comply with reams of new legislation. At the outset insurance companies will take steps to adhere to the stringent solvency and reporting requirements introduced in the latest International Financial Reporting Standards (IFRS). There are plenty of developments around an industry-wide Financial Services Charter (FSC) too. Ministers at the departments of finance and trade & industry have expressed their desire for the financial services industry to carve out its own Financial Sector Charter. The first phase of the Charter has already been finalised and should be gazetted by the end of November 2010. And the industry hopes the second part of the Charter will be gazetted by the end of the first quarter, 2011. Once the Charter is finalised and gazetted insurance industry stakeholders – including brokers – will have to make radical changes to their reporting practices. Compliance with industry codes will no longer suffice. Insurers and brokers face numerous operational challenges too. Some of the biggest changes to how insurers conduct their businesses stem from the new binder arrangement rules contained in the Insurance Laws Amendments Act (ILAA). Insurers will still be able to outsource to brokers (brokers with binders, or persons with binding authority), but will have to address the inefficiencies and conflicts of interest inherent in the current binder structures. In particular brokers will have to address the challenge of working with data on two separate platforms Insurers and brokers will also have to adjust their internal procedures and systems to accommodate FAIS-related initiatives such as Conflict of Interest (already in force) and Treating Customers Fairly (under

discussion). The addition of Conflict of Interest to the General Code of Conduct has been the focus of numerous industry discussions in recent months amidst concerns large industry players will interpret these provisions differently. Compliance officers will keep a close watch on Financial Services Board (FSB) enforcement activities in this regard. The long-term insurance industry is looking forward to improving trading conditions through next year. New business is on the up – and lapses and surrenders are on the decline. Peter Dempsey, deputy CEO of the Association for Savings and Investment South Africa (ASISA), says the value of surrendered individual policies decreased from R18.7-billion in the second half of 2009 to R17.2-billion in the first half of 2010. Lapse rates have been in decline for the past three periods and the trend is expected to continue through 2011. Meanwhile, short-term insurers are putting in the hard miles to improve their operating environment. The South African Insurance Association (SAIA) is spearheading a range of initiatives to improve profitability in members’ motor books – some of which could be implemented early in 2011. The SAIA has also partnered with the Financial Intermediaries Association (FIA) to develop a secure method of transferring customer information and underwriting data between insurers and intermediaries. The joint venture – to be marketed as the Short-term Insurance Data Exchange (STRIDE) – will revolutionise data sharing among insurance industry stakeholders. This system will also facilitate compliance obligations introduced by ILAA. The good news is South Africa’s economic recovery is still on track, albeit at a slower pace than expected. Conditions for intermediaries in the financial services industry are finally improving.

S H O R T- T E R M

The Ombudsman for Short –Term Insurance: Unintentional Violation or Non Compliance should Not always leave you Empty-Handed By Brian Martin

The Ombudsman for Short-Term Insurance says that policy holders who have violation cover for their motor vehicle should always remember, in the event of their claim being repudiated by their insurer, due to unintentional violation or non-compliance, to check with their financial institution, to see if they have lodged a claim with the insurer. Violation cover, in general, permits the finance institution whose interests in the vehicle have been noted on the policy, to file a claim in terms of the policy where the financed motor vehicle is damaged, written off or stolen during the period of insurance and where a term or condition of the policy, has been unintentionally violated or not complied with, resulting in the claim being rejected by the insurer. In such cases, the violation policy usually pays for the cost of repair to the vehicle less the applicable excess (if the vehicle is repairable) or in the case of a total loss, the maximum indemnity less the applicable excess. “What may happen is that the financial institution does not lodge a claim in respect of the violation cover provision, or that if a claim has been lodged, they may fail to advise the consumer of this fact. This leaving the policyholder to believe that they have to carry the full burden of making good the outstanding amount on the finance agreement or repairs to the vehicle”, says Brian Martin, The Ombudsman for ShortTerm Insurance. An example of the workings of this type of cover is illustrated by this scenario: “Ms. Smith purchased a motor vehicle valued at R200 000, 00 and took out violation cover as part of the insurance cover for the vehicle. The vehicle was stolen and the claim was repudiated due to a change in the risk address which occurred after the inception of the policy and of which Ms Smith had failed to notify her insurer. Had her insurer been notified of the change in the risk address they would not have continued with the cover as

the security requirements at the new risk address were unacceptable to the insurer. Ms Smith did not check with her financial institution if a violation claim was lodged and continued making her monthly payments to the finance house on a vehicle she no longer had. She had unintentionally violated the terms of her policy, but had a violation claim been submitted the outstanding balance in terms of the agreement would have been settled.” “We cannot stress how important it is for consumers to read the specific terms and conditions applicable to the type of insurance cover that they wish to purchase and in the case of violation cover, to make the necessary enquiries with both the insurer and financial institution to avoid unnecessary financial burden”, says Brian.

In such cases, the violation policy usually pays for the cost of repair to the vehicle less the applicable excess (if the vehicle is repairable) or in the case of a total loss, the maximum indemnity less the applicable excess.

FIA/CANSA GOLF DAY

A most enjoyable and successful day was held at the Centurion Golf Estate on Tuesday, 11 October 2010, a day that was well supported by both members of the FIA and sponsors. A truly fun and enjoyable day was had by all, with CANSA benefiting by the generosity of all. Over the years the FIA both nationally and at local branch level have contributed in excess of a half a million Rand to CANSA and have formed a close relationship with their branches throughout the republic. A full field of players once again turned out to support this worthy cause at the Centurion Golf Estate, many Insurers and our business partners participated and supported this event. The proceeds collected will enable research in to trying to find cures for this devastating disease. In our daily lives whether at

work or in the course of business we frequently have to deal with cancer particularly in the field of Healthcare Insurance. This is an opportunity to support and assist CANSA with their awareness campaign, but more importantly to contribute to the research which will have an impact on the industry in the long term, and quite possibly touch our lives as individuals. We look on this as a hugely important from the FIA's corporate and social investment contribution to those that are inflicted with this debilitating disease The Cheque for R40 000 was handed to Antionette Joubert and Dalene van Rooyen of CANSA by Dr Monwabisi Gantsho Registrar and CEO of the Council for Medical Schemes (CMS) and Manie Booysen CEO of the FIA.

October 2010

SBIDI

SBIDI is the future of short-term insurance in South Africa Developing and creating access for black intermediaries into the short-term insurance industry gives Santam the opportunity to influence the transformation of this sector, not only in terms of skills transfer, enterprise development, and job creation, but also in recognising an emerging market that is under-serviced in insurance terms. Santam, has therefore implemented enterprise development in a way that specifically focuses on its supply chain and broker distribution channel through the Santam Black Intermediary Development Initiative (SBIDI), launched in 2008. Selven Govender, head of Business Development at Santam says: “Santam is looking beyond only training and qualifying black intermediaries – the SBIDI’s ultimate aim is to create operational and viable black brokerages. We are constantly engaging with existing brokers and sharing the goals and objectives around the SBIDI programme.”

being employed either in Santam or at large brokerages. This year Santam relooked the programme and made enhancements to ensure that 90% to 100% of the candidates would be successfully placed in employment in 2010 either within Santam or established black brokers. Santam has to date invested over R1million in this initiative and envisages the programme becoming a long-term, sustainable contribution to the shortterm insurance Industry. Govender concludes: “Santam is committed to transformation and development within the short-term industry. We have taken SBIDI to new heights in 2010 and aim to achieve even bigger milestones in 2011 and beyond. There is huge excitement within Santam about SBIDI; we want to spread the word and make SBIDI ‘business as usual’.” To find out more about our SBIDI programme email sbidi@santam.co.za or contact 011 912 8183

The brokers who become part of the programme have very specific involvement in it. All brokers participating in this programme mentor the interns on all aspects of the business, for example, day-to-day operations, sales and relationship building etc. Santam would like existing black brokers: to contribute to transformation in the short-term industry and South Africa; to be mentors to the graduates attending the programme; to eventually employ these graduates once they have completed the programme; to introduce other existing black short-term and life brokers to Santam. In return, the black brokers will receive the following value from Santam: Increased capacity within their brokerages by employing the graduates The black brokers could attend short courses on business development, marketing, sales etc. skills as well as Santam product training (Personal and Commercial Lines) Santam would look at removing the ‘barriers to entry” to doing business with Santam to make it easier for the black brokers to do business with Santam SBIDI 2009 concluded with success, 42 Interns completed the programme with 35% of the interns in Gauteng and 56% of interns in the Western Cape

All brokers participating in this programme mentor the interns on all aspects of the business, for example, day-to-day operations, sales and relationship building etc.

APPOINTMENTS

Old Mutual

Old Mutual Life Assurance Company (South Africa) Limited (“OMLACSA”) announces the appointment of Mr Paul Baloyi, CE of the Development Bank of Southern Africa, to its Board of Directors as an Independent non-executive Director with effect from 22 October 2010.

Liberty Corporate Liberty Corporate today announced the appointment of Seelan Gobalsamy as the new Chief Executive of Liberty Corporate with effect from 1 December 2010. Gobalsamy joins the business from Old Mutual, where he most recently held the position of Managing Director for Old Mutual Corporate.

Sanlam The Sanlam group today announced the appointments of three new business unit heads: Ms Lulu Letlape as Group Head of Corporate Affairs, Mr Basil Forbes as Group Head of Market Intelligence and Ms Siobhan McCarthy as Head of Group Communications

Mutual & Federal announces new Group Manager: Business Systems Support Salvatore Nicolaci has been appointed as the new Group Manager for Business Systems Support at Mutual & Federal, one of South Africa’s leading short-term insurers. His appointment is effective from 1 October 2010.

Lion of Africa 1 November 2010: Lion of Africa Insurance - the first short-term insurer in South Africa to achieve a Level 1 Broad Based Black Economic Empowerment rating - has appointed Colly Mata as Executive: Commercial and Local Authorities Sales at Lion of Africa Insurance. Lion of Africa Life Assurance Company has appointed Derek Pead as its Chief Executive Officer. Pead brings with him a wealth of industry experience and an exemplarily performance record.

HUMOUR

Laugh and the World Laughs with You... Results of cutting out the middleman!!!

N E PA D

Sanlam Investments' head welcomes Trevor Manuel's NEPAD involvement From the perspective of boosting investment and trade in Africa, Johan van der Merwe, head of Sanlam Investments, believes the proposed new role for Minister in the Presidency Trevor Manuel, as announced on Sunday 24 October, is an extremely positive move. Manuel’s new assignment is to assist President Zuma on the New Partnership for African Development (Nepad) sub-committee on infrastructure and forms part of the cabinet’s new growth plan. “Manuel’s deep understanding of the economic fundamentals in South Africa and Africa will prove invaluable in this position.” Van der Merwe said that, in terms of foreign and local investments, the move was likely to be viewed favourably both locally and internationally. “Manuel’s successful term as SA’s finance minister has earned him strong support globally and his presence on the sub-committee is likely to be very well received by investors. “It is also great news from our perspective because Sanlam Investments is a deep believer in the opportunities which abound on the African continent. We have a presence in seven countries, have launched among others, an African opportunities fund, a Pan-African property fund, and we are exploring private equity opportunities across the continent. We also acquired a stake in Sustainable Capital an investment firm focusing on social responsible investment in Africa. We’ve been operating in Africa since 1994 and have real experience of the challenges faced here in terms of doing business. We are thus hopeful that the sub-committee and Manuel’s role on it will have a very positive impact on the African success story.” Sanlam Investments is the cluster of investment businesses within the JSE-listed Sanlam Group. Businesses include Sanlam Investment Management, Sanlam Employee Benefits, Sanlam Private Investments and SIM Emerging Markets. Van der Merwe has headed up Sanlam Investments since 2003.

Van der Merwe said that, in terms of foreign and local investments, the move was likely to be viewed favourably both locally and internationally. “Manuel’s successful term as SA’s finance minister has earned him strong support globally and his presence on the sub-committee is likely to be very well received by investors. 45

SNIPPETS

INAUGURAL BOTSWANAN INSURANCE CONFERENCE HAILED A SUCCESS 8 September 2010: The insurance industry came out in force for the launch of the inaugural conference for the Insurance Council of Botswana (ICB), which was held in Gaborone last week (9 September 2010). The historic event, which attracted some of the biggest players in the South African insurance industry, took place in the Gabarone International Convention Centre in Botswana and was well supported by various speakers from South Africa. Manie Booysen, CEO of the Financial Intermediaries Association of Southern Africa (FIA), who attended the event, said it was clear from the presentations that Botswana and South Africa have the same views regarding the regulatory environment for the insurance industry. â&#x20AC;&#x153;The conference was a huge success and it was gratifying to see so many important players in attendance such as the IISA, SAIA and UNISA. It also presented a valuable opportunity for the South African insurance industry to liaise and network with the government, regulatory authorities and industry leaders in Botswana. Booysen added that a number of prominent FIA members are members of the ICB, including AON, Glenrand MIB and Alexander Forbes, which were also sponsors of the event. The ICB is a voluntary and nonprofit organization with the purpose of promoting the interests and self regulation of the insurance industry of Botswana.

FSB Conference The Annual FSB Conference was held on Tuesday 19 October 2010 in Pretoria. The key addresses were by Gerry Anderson of the FSB followed by Jacky Huma & Marinus Mans of the FSB on the subject of Treating Customers Fairly. Gerhardus van Deventer of the FSB and David Davidson of the FAIS Ombudâ&#x20AC;&#x2122;s office addressed the issue of Fraud Cases & Complaints. This session was concluded by Francisca Khoza of Bowen Gilfilian on the New Trends in employment Benefits and Pensions. The day continued with various break-away session which proved to be of interest to all those attending.

Ladies of FIA National Office at CANSA Tea 27-10- 2010

The Minister presents Certificates to Members

SNIPPETS

Durban Sports Day

Kremetart Division Meeting The Kremetart Division Meeting was held on Friday 5 November 2010 at Stonecutters Lodge near Lydenburg and was very well attended.