Financial Services Regulation - Monthly Update: July 2021

​​​​Keep up to date on the most important developments in Financial Services Regulation in South Africa in July 2021.

Financial Sector Conduct Authority

Press Release: The FSCA imposes administrative sanctions on Momentum Wealth (Pty) Ltd and Momentum Collective Investments RF (Pty) Ltd

The Financial Sector Conduct Authority (FSCA) has imposed administrative sanctions on the abovementioned entities and has issued a directive for them to take remedial actions.  The FSCA found that the entities' money laundering/terrorist financing control measures, following an inspection conducted in terms of the Financial Intelligence Centre Act 38 of 2001 (as amended), were inadequate to effectively enable them to mitigate against such events.

The FSCA found that Momentum Wealth (Pty) Ltd had failed to comply with cash threshold reporting requirements on historic transactions, and had failed to identify, verify and risk-rate a beneficiary. Equally, Momentum Collective Investments RF (Pty) Ltd was found to have failed to comply with the cash threshold reporting requirements.

Both entities have co-operated with the regulator and have commenced remedial action.  Access this press release here.

Press Release: Statement on Sasria SOC Limited insurance claims

On 20 July 2021, the FSCA expressed its concern about the civil unrest, riots and looting that occurred in various parts of the country.

Sasria Soc Limited (Sasria) is the only non-life insurer that provides special risk cover in South Africa for risks such as civil commotion, public disorder, strikes, riots and terrorism.  Following discussions with Sasria, the FSCA received confirmation that Sasria will settle claims where the relevant cover is in place.  The FSCA advised Sasria policyholders to submit their claims directly to their insurers, who will engage with Sasria on the specific claims.  Access this statement here.

Draft Conduct Standard on the Conditions for Pension Fund Benefit Administrators

On 29 July 2021, the FSCA published the draft Conduct Standard – Conditions prescribed for Pension Fund Benefit Administrator, in accordance with the requirements of section 98(1)(a) of the Financial Sector Regulation Act 9 of 2017 (FSR Act).

The FSCA intends to issue the draft Conduct Standard under section 13B of the Pension Funds Act 24 of 1956, which allows the FSCA to prescribe conditions for persons that administer the receipt of contributions or the disposition of benefits provided for in the rules of a fund (benefit administrators).

At present, the conditions for benefit administrators are prescribed by Board Notice 24 of 2002 (published by Government Notice no. 10505 in Government Gazette 23153).  The FSCA has acknowledged that the conditions found in the Board Notice are outdated and do not reflect the regulatory developments that have occurred in the sector since its publication, including the promulgation of the FSR Act (which created the Twin Peaks architecture) as well as the introduction of the Treating Customers Fairly (TCF) principles.

The draft Conduct Standard will align the regulatory framework governing benefit administrators with other sector-specific regulatory frameworks and principles.  It also introduces conditions that are not currently dealt with in the Board Notice, such as the business principles, culture and governance principles, and the fit and proper requirements relating to directors, senior managers and head of control functions.

Comments on the draft Conduct Standard must be submitted to FSCA.RFDStandards@fsca.co.za on or before 13 September 2021. Access the documents relating to the draft Conduct Standard here.

Board Notice 82 of 2021: Proposed amendments to the JSE’s derivatives rules for public comment

On 30 July 2021, the FSCA published a notice under section 71(3)(b)(ii) of the Financial Markets Act 19 of 2021 on the proposed amendments to the JSE’s derivatives rules (the notice).

The proposed amendments relate to the definition of 'beneficial ownership' and the provisions on off-book trading (Annexure A), as well as exchange for physical (EFP) and exchange for risk (EFR) transactions (Annexure B).

All interested persons who have any objections to the proposed amendments are invited to lodge their objections within 14 days from the date of publication of the notice.  To access the notice and the proposed amendments, click here.

Invitation to comment on the Financial Ombud System Diagnostic Report

National Treasury (Treasury) and the FSCA have invited the public to comment on the diagnostic study prepared by the World Bank Group, entitled "South Africa – Financial Ombud System Diagnostic".  The study, which was commissioned by Treasury, aims to provide an independent review of South Africa's present ombud system, constituting the Credit Ombud, the Ombudsman for Short-Term Insurance, the Ombudsman for Banking Services, the Ombudsman for Long-Term Insurance, the Pension Funds Adjudicator, the Ombud for Financial Service Providers and the Johannesburg Stock Exchange Ombud. 

The study showed that there are potential overlaps, gaps and inconsistencies, both in the overall financial ombud system and the individual ombud schemes in South Africa. It also found that there is need for a centralised and comprehensive ombud system that supports greater accessibility and efficiency across the sector.

Among several other recommendations, the study proposes that a National Financial Ombud be established as a non-statutory body to replace the current seven ombud schemes (excluding retirement funds) and that the Pension Funds Adjudicator should  become the Retirement Funds Ombud. 
Treasury expects that the findings from the study, together with the comments received from the public, will help to shape and inform its policy approach to reforming the financial ombud system.  The closing dates for comments is 3 September 2021.  Access the media statement and the study here.

Proposed amendments to the Policyholder Protection Rules

On 30 July 2021, the FSCA published its proposed amendments to the Policyholder Protection Rules (PPRs) governed by sections 62(1) and 55 of the Long-term Insurance Act 52 of 1998 and the Short-term Insurance Act 1998, respectively.

The proposed amendments are informed by supervisory findings on the implementation and compliance of the current PPRs published in 2017.  The changes will align with the FSCA's mandate of protecting financial customers and promoting fair treatment by financial institutions. 

Due to the possible effect of the proposed changes on the products, processes and systems of insurers, a transitional period is proposed. The FSCA invites industry stakeholders to give specific comment on the proposed transitional period.

Written comments on the proposed amendments to the PPRs can be submitted to FSCA.RFDStandards@fsca.co.za and are due on 10 September 2021. The documents relating to the proposed amendments to the PPRs can be accessed here.

South African Reserve Bank

Notice of invitation to submit informal comments on the draft Prudential Standard on public disclosure for insurers.

The Prudential Authority (PA) is governed by the Insurance Act 18 of 2017 to prescribe information that must be publicly disclosed by insurers.  The PA intends to follow the conventions of the International Association of Insurance Supervisors (IAIS) Insurance Core Principle (ICP) 20 on public disclosures when prescribing disclosure requirements through a draft Prudential Standard – Public disclosure requirements for insurers (PDI Standard).

The noticed issued by the PA for public consultation has the following annexures:


The first annexure is the draft PDI Standard, which sets out the information that insurers are required to disclose to the public to promote market discipline and an understanding of the risks to which insurers are exposed, as well as the manner in which those risks are managed.

The second is the draft Guidance Notice on public disclosures for insurers, which aims to assist insurers in complying with the disclosure requirements set out in the Prudential Standard - Public disclosures for insurers (PDI Standard).  In addition, the purpose of this notice is to provide guidance on the qualitative regulatory return (QRR) and quantitative return template (QRT) that may contain the information required to be disclosed as well as guidance on some of the disclosure requirements prescribed in the PDI Standard.

Finally, a comments template is attached on which to provide comments on the PDI Standard and the Guidance note. The comments received will be published in a consultation report. Comments must be submitted to the PA before 1 September 2021. Access this notice and the annexures here.

Parliamentary Monitoring Group

The public hearings on the NHI Bill continued into this month, with more organisations making submissions before the Portfolio Committee on Health. Keep up to date with the latest submissions made on the NHI Bill here.


Webber Wentzel > News > Financial Services Regulation - Monthly Update: July 2021
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