August 2014

welcome

Dear Stakeholder

Exactly a year ago in the August 2013 edition of Dispatches we provided a summary overview of South Africa’s first corporate bond default following the collapse of First Tech Group and the impact on our members and their clients.

Ironically, in this edition we have to focus on the fall-out from the woes currently facing African Bank Investment Limited (Abil).

While the exposure of our members’ local equity and fixed interest portfolios to African Bank stock and debt instruments was minimal, the crisis and the support measures announced by the South African Reserve Bank (SARB) nevertheless required a fair amount of communication and co-ordination between ASISA, its members, the regulator and the media.

There is nothing like a crisis to test the robustness of applicable legislation and existing regulation as well as established communication channels. The Abil crisis certainly achieved this.

While there has been much finger pointing and frustration over the past four weeks, the following must be said:

• Untested until now, the relevant legislation and regulation provided the necessary guidance to all parties impacted on by Abil. Any initial confusion was due to the fact that the provisions had not been tested before and therefore had to be interpreted quickly and correctly.
• We have to commend the Financial Services Board (FSB), in particular the Registrar of Collective Investment Schemes (CIS), Jurgen Boyd, and his team, for their pro-active and engaging approach throughout the two weeks of crisis.
• The Abil crisis highlighted the importance of ASISA’s role as facilitator between its members and the FSB. In addition ASISA also took on the role of engaging with the media on the issue and the impact on investors. Much time was spent helping journalists understand what had happened and how this impacted on CIS portfolios to prevent investors from panicking as a result of misperceptions. 
• The Abil crisis put the spotlight on money market portfolios and a number of journalists were under the impression that the capital invested in a money market portfolio is guaranteed. It must be pointed out that as far back as 2009, ASISA issued consumer education material explaining the difference between money market portfolios and money market accounts. We also highlighted the fact that it is possible for a money market fund to make a loss.

While the Abil saga is far from over, we believe that the dust has settled and that the necessary steps have been taken to minimise the damage. Next steps and timelines will be determined by the curator and ASISA has therefore facilitated a direct communication channel with the curator for its affected members.

CISCA Subordinate Legislation

On 8 August 2014 three Board Notices were gazetted under the Collective Investment Schemes Control Act (CISCA). Board Notice 90 replaces Board Notice 80, which sets investment parameters and limits. Board Notice 91 sets revised capital adequacy requirements for CIS in securities. Board Notice 92 sets advertising, marketing and information disclosure requirements for CIS.

Strong net inflows for local CIS industry

The local CIS industry attracted net inflows of R42 billion in the three months to the end of June 2014. In the first quarter of this year net inflows amounted to R27 billion. This brings to R151 billion the total net inflows for the 12 month period to the end of June 2014 – the second highest net inflows for any rolling 12 month period to the end of June.

At the end of the second quarter this year the industry managed assets of R1.64 trillion compared to R1.54 trillion at the end of the first quarter. The industry offered investors 1 088 portfolios.

Locally registered foreign funds held assets under management of R228 billion at the end of June 2014, compared to R214.9 billion at the end of March 2014. These foreign funds recorded net inflows of R2.6 billion in the second quarter of this year, after having experienced net outflows in the first quarter of this year.

Annual Board of Healthcare Funders (BHF) Conference

BHF is the representative organisation for the majority of medical schemes throughout South Africa, Namibia, Zimbabwe, Botswana as well as Lesotho.

ASISA was invited to lead a panel discussion on hospital cash plan fraud at the BHF Conference in Durban at the end of August 2014. This was the first time that ASISA had been invited to participate in the conference. The ASISA presentation took place at the HFMU (Healthcare Forensic Management Unit) Fraud, Waste and Abuse workshop, which was a parallel session of the BHF Conference.

ASISA’s objective was to raise awareness around the impact of hospital cash plan fraud and to start an inter-industry dialogue in order to eliminate this growing problem.

ASISA Board Meeting and Media Lunch

The ASISA Board of Directors held its second Board meeting for the year in Johannesburg on Thursday, 14 August. We are pleased to announce that the Board agreed with the proposed ASISA strategy and its alignment with the National Development Plan (NDP). The strategy has therefore been adopted.

Also, as has become customary, the media was once again invited to join the ASISA Board for lunch after the Board meeting. The aim to provide journalists with the opportunity to meet the Board and to ask questions about ASISA and/or the savings and investment industry in general.

The Board lunch was very well received by journalists, particularly because there was no agenda and they were free to pursue their own topics with different Board members.

ASISA Foundation

The first ASISA Foundation Annual General Meeting (AGM) took place on Tuesday 26 August 2014 in Johannesburg and was attended by funders and stakeholders.

In addition to the required formalities of an AGM, the meeting also included feedback from the team involved in the implementation of the Saver Waya-Waya  financial literacy campaign in Hammanskraal. Attendees were also treated to a live presentation of the industrial theatre component of the campaign.

By the end of August 2014 some 7 500 members of the Hammanskraal community had participated in the Saver Waya-Waya workshops and the roll out of further financial tips via SMS had begun.  The pilot project in Hammanskraal is scheduled to end around October 2014. The learnings and outcomes of the pilot project will be used to refine the programme for further implementation and roll out.

Academy Update

August was a busy month for the ASISA Academy with two UCT Short Courses running in Johannesburg and three Financial Services Industry Overview Blitzcamps in Cape Town. The IMACS@TSiBA course is gaining momentum and August also saw the start of our second series of Claritas Exam Readiness workshops for 2014.

Our Financial Journalists Bootcamp proposal to a group of senior editors was well received and we look forward to facilitating the learning journey for the journalists who report on our industry. We are also very pleased that MMI has offered to fund this programme, as all media houses are facing severe budget constraints.

In our continued drive to strengthen our partnerships with the financial services SETAs, Leon Campher and Terence Berry had a very constructive meeting with Cheryl James, the CEO of FASSET, in which we explored a number of ways in which we can more actively partner with FASSET, which is the Finance and Accounting Services Sector Education and Training Authority.

The Academy 2015 learning calendar is nearing finalisation and will be distributed to ASISA members and other industry stakeholders by the end of September to assist you in planning your learning agendas for next year.

In conclusion

The Abil saga once again highlighted the benefits for members of pro-actively participating in the ASISA structures. It is not surprising then that we have seen a surge in requests for company representatives to join our committees.

We welcome this and urge members to include themselves in the relevant structures before a crisis emphasises the importance of this.

Kind regards