IN THIS ISSUE

Dear stakeholder

Meaningful disclosure is core to treating customers fairly. Therefore, all ASISA members adopted the ASISA Standard on Retail Effective Annual Cost (EAC) in 2016, which was most likely a world first in its comparative scope and cost transparency. The Retail EAC Standard enables consumers and advisers to compare charges and their estimated impact on investment returns across most retail savings and investment products.

While the Retail EAC Standard was being developed, it became apparent that a standardised cost disclosure measure was also necessary in the sponsored commercial retirement fund arena. ASISA and its members therefore started developing the new ASISA Retirement Savings Cost (RSC) Disclosure Standard as soon as the Retail EAC Standard had been launched.

It was a proud moment for us when on 18 April 2018 the ASISA Board ratified the implementation of the new ASISA RSC Disclosure Standard effective 1 March 2019. 

The RSC Disclosure Standard commits ASISA members to present all costs (based on certain assumptions) relating to umbrella retirement fund solutions in a standardised manner, enabling employers to compare like with like when considering quotations from different ASISA members. This will also make it easier for the Boards of Trustees of umbrella funds to consider costs as part of their fiduciary duties.

The current RSC Disclosure Standard is only relevant to umbrella funds at an employer and trustee level and does not apply to stand-alone retirement funds, retirement annuity (RA) funds, preservation funds, beneficiary funds and other retail savings products covered under the Retail EAC Standard.

The development of a member-level disclosure standard is the next priority for the ASISA RSC Disclosure working group.

The RSC Disclosure Standard was developed in consultation with a number of stakeholders including the Financial Sector Conduct Authority (FSCA) (the former Financial Services Board), intermediaries, Batseta (the Council of Retirement Funds for South Africa) and other retirement fund trustee bodies.

An escalation in the number of entities offering payroll deduction services has prompted the South African Reserve Bank (SARB), in collaboration with National Treasury, to publish a consultation paper on payroll deductions.

The regulatory proposals seek to achieve a safe and efficient payroll deduction system that works in the interests of employees by addressing potential risks relating to voluntary payroll deductions.

ASISA submitted comments on behalf of members, supporting voluntary payroll deductions that enable wealth creation (home loans), saving and provision for disablement, retirement and death.

During April, National Treasury published for comment a revised version of the draft Financial Sector Levies Bill, together with a draft Memorandum of the Objects of the Bill, and a Supplement to the Impact Study of the Twin Peaks Reforms. ASISA is preparing a submission.

The 2017 statistics for the local hedge fund industry, released by ASISA in April, show that the industry ended the year with assets under management of R62.4 billion, a decline of R5 billion from the R67.4 billion managed at the end of 2016. This was the hedge fund industry’s first decline in assets under management since 2011 when assets stood at only R31.4 billion.

In April 2015 South Africa became the first country to put in place comprehensive regulation for hedge fund products. The new regulations provide for two categories of hedge funds, namely Qualified Investor Hedge Funds and Retail Investor Hedge Funds.

By the end of December last year, 99% of hedge fund assets had transitioned to regulated structures - 69% of hedge fund assets had been allocated to Qualified Investor Hedge Funds and 30% to Retail Investor Hedge Funds. The remaining 1% completed the transition during the early part of 2018.

The ESD Fund joined Sanari Capital, a black-owned private equity investment firm, in concluding a R13 million funding drive for Sensor Networks, a technology business specialising in sensoring devices and data points that can be managed through mobile applications.

The ESD Fund believes that this investment will reward the Fund with attractive economic returns while at the same time providing ASISA members with interests in the short-term insurance space with options that can significantly reduce risk while fostering innovation, creating access to rich sources of data and ultimately fuelling growth.

Ruth Benjamin-Swales, the CEO of the ASISA Foundation, and Janete Nel, ASISA point person for the Consumer Financial Education Standing Committee, represented ASISA at the 2018 Global Investor Education Conference in Tokyo. The conference was hosted by the International Forum for Investor Education together with the International Organization of Securities Commissions (IOSCO).

The theme of the 2018 Conference was “Building Lifelong Financial Resilience in a Changing Environment” and Ruth and Janete were invited to share with delegates the many learnings from the Foundation’s financial literacy programmes.

The presentations by Ruth and Janete were well received and the approach adopted by the Foundation of first piloting interventions to learn from the outcomes was praised.

The IFIE Advisory Board agreed to the establishment of an IFIE Africa Chapter. Kenya will chair the Africa Chapter for a two-year term.

The second Growth and Emerging Markets (GEM) workshop was also held and it was agreed that IFIE, with the assistance of the GEM representatives, would develop tools to assist the GEMs with their consumer financial education work.

On the topic of consumer financial education (CFE), the Academy has developed a brand-new bootcamp for individuals who lead CFE initiatives in organisations. The three-day CFE Practitioner Bootcamp will also be relevant to B-BBEE and transformation managers.

Bootcamp participants can expect to engage with a variety 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.

The CFE Practitioner Bootcamp will take place in Johannesburg from 18 to 20 June. Enrolments confirmed by 23 May qualify for a discount.

Kind regards