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MAY 2018

Dear stakeholder

The International Investment Funds Association (IIFA) held its annual Board and working committee meetings in Washington in May.

The IIFA consists of investment funds associations from 40 jurisdictions around the world, representing assets under management of US$49.3 trillion as at the end of the fourth quarter of 2017. ASISA is one of only 15 associations holding tier one IIFA membership.

The IIFA has seven working committees that focus on International Regulatory Affairs, Cybersecurity, Pensions, Investment Funds Accounting, Taxation, Statistics, and Social Media. ASISA’s senior policy advisers are represented on most of these committees.

High on the agenda for investment funds associations around the globe are the following topics:

  • Dealing with conflicts of interest and proper disclosure;
  • Achieving meaningful and comparable cost disclosure; and
  • Regulating investment structures like hedge funds and private equity funds that are currently not included in the Undertakings for the Collective Investment of Transferable Securities (UCITS) framework.
  • The introduction of the Foreign Exchange Global Code. The Code does not impose legal or regulatory obligations on market participants, nor does it substitute for regulation. Instead it serves as supplement to rules and regulations by identifying global good practices and processes. The Code has been presented to the ASISA Investments Board Committee for endorsement.

At ASISA, these topics have been high on our own agenda for many years and in collaboration with our regulator significant progress has been made in finding workable solutions. We have therefore offered to share examples of our solutions with other associations via the IIFA. For example:

  • In April 2015 South Africa became the first country to put in place comprehensive regulation for hedge fund products;
  • All ASISA members adopted the ASISA Standard on Effective Annual Cost (EAC) from 1 June 2016. A world first in its comparative scope and cost transparency, the EAC Standard facilitates a standardised approach to cost disclosure irrespective of whether the product is a unit trust, a living annuity, a retirement annuity or an endowment policy.

Ikusasa Student Financial Aid Programme (ISFAP)

The second year of the ISFAP pilot is currently underway with some 1 472 students (652 returning to their 2nd year and 820 new 1st year students) enrolled across 12 Universities in faculties covering occupations in high demand.

The programme aims to provide young South Africans with a higher education that will enable them to pursue careers that have been identified as critical to South Africa’s economic development.

The ISFAP pilot kicked off at the beginning of last year with funding and wrap-around psychological, social and educational support to some 690 students. The wrap-around support system is a key component of ISFAP and aims to improve the success rate of students thereby reducing drop-out rates. This approach proved very successful last year in that it achieved an unprecedented retention rate of 94% for students enrolled in some of the toughest degree programmes like medical, engineering, accounting and actuarial.

ISFAP is covering students with household income up to R600 000 per annum. The programme will not replace the National Student Financial Aid Scheme (NSFAS), which has a different mandate.

The purpose of the ISFAP pilot is to stress test systems and models underpinning the programme. The end goal is the launch of a Public Private Partnership in 2020. The feasibility study for the Public Private Partnership is in the final stages of completion and will move into the procurement phase by mid-year. Work is also currently being done on structuring a social impact bond to finance wrap-around support.

ASISA is represented on the ISFAP steering committee and financial support is being provided by ASISA members. ASISA also supports the financial modelling for the project.

Tax certainty in CIS portfolios

It was announced as part of the National Budget in February that the tax treatment rules for amounts received by portfolios of collective investment schemes (CIS) would be clarified to provide certainty on the treatment of trading profits in portfolios.

Following engagements with National Treasury and the South African Revenue Service (SARS) to obtain clarity on what is being proposed, ASISA made a submission on 26 May 2018.

We appreciate the consultative process that is being followed by National Treasury and SARS aimed at finding a workable solution.

ASISA Foundation

In partnership with Sun International, the ASISA Foundation successfully rolled out a pilot phase of the Saver Waya Waya WageWise Programme to 255 employees during March and April at the Sibaya Casino and Entertainment Kingdom, The Carousel Casino and The Maslow Hotel.

The programme was introduced to staff at these three sites as an additional offering under the OneSun Wellness Programme and included a Retirement Fund Member Education section, which proved very popular with employees.

Saver Waya Waya means to ‘save all the time’. The Saver Waya Waya WageWise programme was designed by the ASISA Foundation for economically vulnerable employees who earn less than R250 000 a year. It is a financial literacy programme that aims to raise awareness about financial literacy topics and addresses the profile, roles and responsibilities of Trustees of retirement funds.

Sun International has requested that the Foundation implement the programme at all its operations in South Africa over the next year.

ASISA Enterprise & Supplier Development (ESD) Fund

We received the Measurement and Evaluation (M&E) Report for the second ASISA Independent Financial Adviser (IFA) Development Programme, which concluded in February. It is very gratifying to see the positive impact that this programme is having on the development and growth of black owned IFA practices.

This year some 30 black-owned IFA practices graduated from the 12-month programme launched in collaboration with Allan Gray, Coronation, Investec and Prudential in 2016. Last year, 33 IFA practices graduated from this programme.

The following noteworthy achievements were highlighted in the M&E Report for the 2017/18 programme:

  • 36% of participating IFA practices reported an average increase in revenue of 15%;
  • 20 new jobs were created across the participating IFA practices;
  • In addition, 21 graduates participated in the ASISA Academy-powered internship programme; and
  • 81% of these interns were employed by their host practices at the end of the programme.

The M&E process is a key component of the programme as it enables continuous improvement based on feedback from participants. Each programme is evaluated at the half way mark and again at conclusion.

Academy Newsflash

A key component of the ASISA IFA Development Programme referred to above is the IFA internship programme run by the ASISA Academy. The internship programme provides black graduates interested in pursuing a career in financial planning with the opportunity to intern with established IFA practices for 12 months.

Interns participate in a structured programme that offers a powerful combination of work-readiness input, theoretical knowledge and practical work experience delivered by the Academy in partnership with the IFA practices.  Mentoring is a critical feature of the programme. Each intern is assigned a mentor who is in contact on a regular basis throughout the internship period, offering support and guidance.

The application window for IFA practices interested in hosting interns in 2019 opened on 1 June. Established independent practices are encouraged to submit their applications before 31 August 2018, bearing in mind that opportunities to host an intern are allocated on a first-come, first-served basis.

Based on the feedback from IFA practices over the past two years, it is envisaged that the internship period for the 2019 group of interns will be extended to 18 months.  The programme is currently offered in Johannesburg, Cape Town and Durban, and planning is underway to add Port Elizabeth.

Kind regards

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