IN THIS ISSUE

Dear stakeholder

The highlight for June was the ASISA Foundation close-out event for 28 rural township entrepreneurs who participated in the Foundation’s Saver Waya Waya Financial Literacy and Micro Enterprise (FLAME) pilot programme in Hammanskraal, Soshanguve, Ga-Rankuwa and Rustenburg.

The entrepreneurs from some of the country’s poorest areas travelled to Sandton to celebrate with us the successful incubation of their businesses. Most of these businesses were little more than good ideas or fledgling micro enterprises less than a year ago. Now these businesses support 83 jobs, 42 of which are new. These jobs in turn positively affect the lives of at least 200 dependants.

The incubation period started in July last year and concluded in April this year. At the end of the incubation period, 28 out of the 30 businesses were still going strong. Incubated businesses managed to grow their profit margins to between 10% and 35% during the incubation period and total turnover for all businesses amounted to R2.2 million.

For ASISA the biggest win is that the FLAME programme has set the participants on a path of economic and financial inclusivity by empowering beneficiaries through financial education and by equipping entrepreneurs with business and financial management skills.

Launched in 2016, the first phase of the FLAME programme involved teaching financial literacy to low-income earners. The second phase included entrepreneurial and business development workshops. Some 30 participants who had either already started a micro enterprise or who had a viable business idea were then selected for the incubation phase, which included seed funding, business support and mentoring.

The ASISA Foundation is a non-profit initiative supported by the members of ASISA with the aim of delivering effective and objective financial literacy and micro enterprise development programmes to South Africa’s most vulnerable groups. The Foundation is part of ASISA’s Foster the Future initiative.

At its first meeting for the year, held on 13 June, the ASISA Board of Directors welcomed three new Directors who replaced longstanding Board members due to leadership changes within member companies represented on the Board:

• Rob Formby, the new Chief Operating Officer at Allan Gray, replaced Rob Dower;
• Hillie Meyer, the new Group CEO at MMI, replaced Nicolaas Kruger; and
• Willem Venter, the CEO of Prescient Holdings, replaced Herman Steyn.  

On behalf of the ASISA Executive we would like to thank the outgoing directors for their service and valuable contributions to ASISA over a period of several years.

ASISA’s 9th Annual General Meeting took place on the same day as the Board meeting. The new Board took office with immediate effect and Ian Kirk and Thabo Khojane were confirmed as Chair and Deputy Chair respectively.

The AGM also adopted the ASISA Annual Financial Statements and reappointed Price Waterhouse Coopers as auditors.  Willem Theron, Chairman of PSG Konsult, indicated his willingness to serve on the ASISA Nominations Committee (Nomsco) for another term and a nomination for Brendan Africa, Financial Director of Foord Asset Management, was tabled.  Both were unanimously elected to ASISA’s Nomsco.

The CEOs of financial institutions including banks and asset managers were invited via the Boards of ASISA and the Banking Association of SA (BASA) to attend a meeting with Public Enterprises Minister Pravin Gordhan and Finance Minister Nhlanhla Nene on 19 June 2018 to discuss the future financing of SOCs.

The meeting concluded that a joint task team should be formed to work on specific financing proposals set out by the Department of Public Enterprises and National Treasury in the meeting.

ASISA has established a work group under the Fixed Income Standing Committee to support and participate in the task team.

The ASISA Board approved the formation of the ASISA Systemic Risk Committee. The committee is chaired by Francois Gouws, CEO of PSG Konsult, who is also a member of the ASISA Board. The committee will engage on a regular basis with the Financial Sector Contingency Forum of the South African Reserve Bank (SARB) on matters related to systemic risk.

ASISA’s Economic and Savings Policy (ESP) Board Committee added the issue of Land Reform to its 2018 agenda following the motion passed in Parliament to establish a Constitutional Review Committee (CRC).

The ESP Board Committee formed a Land Reform Working Group, which prepared a report that was approved by the ASISA Board and submitted to the CRC on 15 June 2018.

ASISA representatives were invited to join Finance Minister  Nhlanhla Nene for the official launch of the FSCA in Pretoria on 4 June.  The final organisational structure of the FSCA has not yet been announced, although various executive appointments have been made. Until the Commissioner and Deputy Commissioner positions have been filled, the FSCA is being managed by a Transitional Management Committee.

During June, the FSCA issued the “Retail Distribution Review: Status Update – June 2018”, which summarises the current implementation status of the 55 RDR Regulatory proposals initially published in 2014, and briefly sets out planned RDR developments for the remainder of 2018. At the end of June, the FSCA also issued a “Discussion Document on Investment Related Matters” with the aim of eliciting input on possible regulatory measures to:

• Define the activity of “investment management” and consider the extent to which investment management needs to be demarcated from other forms of discretionary investment mandates;
• Clarify the nature of the legal and business relationships between different types of discretionary investment mandate holders, collective investment scheme management companies and investment advisers, and consider how best to structure these in the regulatory framework to achieve the RDR objectives; and
• Provide for fee and remuneration arrangements in light of the above, to align with the RDR approach of aligning remuneration with actual activities performed and avoiding unnecessary duplication of costs for the end investor.

The document is available on the FSCA website and ASISA will respond via our established RDR structures.

The FSCA published Guidance Note 2 of 2018 on its website during the last week of June to clarify certain aspects of Directive 8, particularly with regard to trustee training.

Directive 8 was issued in March this year to give guidance on how the combating of corruption and corrupt activities should be considered by the retirement fund industry.

At the beginning of June the FSCA published a Draft FAIS Conduct of Business Report for comments by 18 July 2018.  A working group will finalise an ASISA submission by the due date.

The FSCA sent an update to insurers in June about the draft amendments to the Policyholder Protection Rules and the Long Term Insurance Act Regulations and their interaction with the Insurance Act. The Act, together with the Prudential Standards, came into effect on 1 July.

The aim was for these amendments to be finalised and in force from 1 July 2018, but this has been delayed and indications are that they should become effective in the last quarter of the year.

The first joint communication by the Prudential Authority (PA) and the FSCA was also issued in June which sets out the status of the various regulatory instruments from 1 July 2018 such as board notices, circulars and directives.

The 2017 annual death claim benefit statistics for fully underwritten policies released by ASISA at the beginning of June show that life insurers paid 99.3% of all claims against fully underwritten life policies last year, resulting in benefit payments of R14.4 billion to beneficiaries following the death of a loved one.

Fully underwritten life policies are only issued if the policyholder has completed a full underwriting process, which involves a comprehensive assessment of the life insured’s health and medical history.

ASISA has been consolidating death benefit claims statistics for fully underwritten life policies since 2012 in order to provide consumers with the peace of mind that the majority of claims are paid.

When the Academy announced the launch of its inaugural Consumer Financial Education (CFE) Practitioner Bootcamp in Johannesburg for June, the demand was unprecedented and it did not take long for the bootcamp to be oversubscribed.

Academy programme champion, Fikile Khiva, reports that the bootcamp proved extremely popular. Due to the huge demand the Academy will be scheduling a CFE Practitioner Bootcamp for Cape Town later this year.

The CFE Practitioner Bootcamp was developed for individuals who lead CFE initiatives in organisations as well as B-BBEE and transformation managers. It covers a range of topics including:

• Championing CFE at an executive level;
• Identifying opportunities to impact the organisation’s B-BBEE transformation and inclusion objectives;
• Assessing programme content and delivery partners;
• The practical requirements of CFE reporting; and
• Developing and managing a CFE budget.

Kind regards