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Dear stakeholder

In this, our first edition of Dispatches for 2019, we cover noteworthy events from December, January and February.

Most significant, in our view, is the positive impact achieved by the ASISA Foster the Future initiative. Amongst all the doom and gloom of a struggling economy, rising unemployment and corruption, the news emanating from the three Foster the Future entities – the ASISA Academy, the ASISA ESD initiative and the ASISA Foundation – is not only encouraging and positive, but also exciting.

ASISA Academy

The Academy’s fourth Independent Financial Adviser (IFA) internship programme, sponsored by Allan Gray, Coronation, Investec and Prudential, kicked off in February. The 35 interns completed a two week work readiness course before joining their host practices in Cape Town, Johannesburg, Durban, East London and Port Elizabeth where they will be initiated into a career in financial planning over the next 12 months.

At the same time the Academy’s 2018 IFA interns completed their 12-month internships and the majority received employment offers from their host practices. 

The IFA internship programme was launched in 2016 with the aim of helping young black professionals interested in pursuing a career in financial planning with the opportunity to intern with established IFA practices for 12 months. Including the 2019 IFA interns, 109 black graduates have benefitted from the IFA internship programme.

The success of the programme is evidenced by the fact that over the past three years 90% of IFA interns completed their 12-month internship and the majority have continued to work within the financial services industry.  Approximately 50% are still with their original host practices.

ASISA Enterprise and Supplier Development (ESD)

The ASISA ESD initiative started 2019 in a strong position to further expand its impact, due to the growing support from our valued funders.

During the fourth quarter of 2018, the ASISA SME Investment Trust received R35 million in new contributions from funders for the continued financial support of SMEs, while the ASISA ESD Manco received an additional R43 million for the development support of SMEs into 2019.

Since inception, the ESD initiative has developed 586 SMEs, thereby supporting 3 193 jobs and creating 750 new jobs.

We are also excited about the launch of the ASISA SME Database, which enables our stakeholders to access SME information for procurement purposes. Subscription to the database at a nominal annual fee provides subscribers with Supplier Development Points.

The SME Database also monitors the growth of SMEs supported by our funder’s contributions, tracks the engagement of mentors working with the SMEs and allows useful insights and impact metrics to be monitored and downloaded for reporting purposes. Once the ASISA ESD website launches later this month, subscribers can access the database online.

ASISA Foundation

The ASISA Foundation hosted a combined Annual General Meeting and Stakeholder Event on Thursday, 21 February in Johannesburg, to share with stakeholders highlights of what has been achieved to date.

Foundation CEO, Ruth Benjamin-Swales, shared with the audience that the Foundation had received contributions of R69 million from inception to the end of December 2018. More than 25% of the funds were allocated to rural areas and in total the Foundation programmes reached disadvantaged groups of which more than 85% were black beneficiaries and 66% were black woman. The Foundation has to date reached more than 32 000 beneficiaries.

These programmes include the Foundation’s Saver Waya Waya WageWise programme, currently supported by Sanlam, which has provided more than 18 000 economically vulnerable workers across all nine provinces with financial literacy skills. WageWise is responsible for 57% of the Foundation’s total reach.

The Saver Waya Waya Financial Literacy Programme for students at Technical and Vocational Education and Training Colleges (TVET), delivered by the Foundation in collaboration with the Absa Group, is specifically designed for final year students in disadvantaged communities with the aim of preparing them for the job market and managing their money once they start earning an income. In 2018 the programme reached 1 450 students across five campuses.

The Saver Waya Waya Financial Literacy and Micro Enterprise (FLAME) Programme, provided some 1 000 vulnerable community members with vital financial education and entrepreneurial support. The programme also incubated 29 township businesses from the country’s poorest areas, which support 101 jobs, 60 of which are new jobs created during the programme. These businesses started the incubation programme with cumulative recorded turnover of just over R100 000. After 15 months of incubation the businesses were generating cumulative turnover of more than R4 million, of which R1 million was profit.

ASISA Media Engagements

During the middle of February, ASISA hosted media conferences in Cape Town and Johannesburg. Both media conferences were attended by ASISA Board members.

The following topics were covered:

  • An overview of 2018 trends in the local CIS industry – Thabo Khojane, deputy ASISA chair, and Sunette Mulder, senior policy advisor at ASISA
  • A brief update on the South African hedge fund industry – Hayden Reinders, convenor of the ASISA Hedge Funds Standing Committee
  • Transformation of the savings and investment industry and a snapshot of ASISA’s transformation initiatives – Leon Campher

Draft Conduct of Financial Institutions (CoFI) Bill

On 11 December 2018, National Treasury published an initial draft of the CoFI Bill for comment by 1 April 2019. The Bill is the next phase of legislative reforms aimed at strengthening the regulation for how the financial services industry treats its customers, giving legislative effect to the Treating Customers Fairly (TCF) approach to market conduct regulation. A working group has been established under the ASISA Regulatory Affairs Board Committee with representatives from member companies that submitted comment. National Treasury has scheduled COFI Bill industry workshops in both Johannesburg and Cape Town.

Retail Distribution Review (RDR) Update

On 18 December 2018 the Financial Sector Conduct Authority (FSCA) published a status update on RDR Proposal TT - Special remuneration dispensation for the low-income market. Comment was due on 15 February 2019, but ASISA requested and was granted an extension to 28 February. The relevant ASISA Working Group collated input from members, which was then circulated for comment. Since members did not disagree on any points there was no need to hold a workshop and the final ASISA comment could therefore be sent to the FSCA by their original deadline of 15 February 2019.

Draft Smooth Bonus Standard

On 29 November 2018 the FSCA published a revised Draft Notice: Default Investment Portfolio - Prescribed Conditions for Eligibility of Smoothed Bonus Portfolios for comment by end January 2019. ASISA comment was submitted reflecting ASISA members’ main concern, being the difficulty of implementing the Standard by the effective date of 1 April 2019.

Annuities – regulatory proposals

National Treasury and the FSCA requested ASISA to propose suggestions that may alleviate Labour's concerns in respect of annuitisation of provident fund benefits on retirement, and also in relation to consolidation into umbrella funds and other retirement-related concerns.

The ASISA Red Book Standing Committee submitted a draft document to Treasury, which was discussed at a meeting set up by Treasury. The document was then finalised and submitted to Treasury and the FSCA on 7 December 2018.

Underwriting and non-disclosure

A meeting took place in January 2019 with the FSCA’s Regulatory Framework Department to start a process of industry engagement on issues concerning underwriting and non-disclosure. The ASISA delegation included the Chair of the Life and Risk Board Committee, Saks Ntombela, the Deputy Chair, Hennie de Villiers, ASISA CEO, Leon Campher, as well as ASISA senior policy advisors, Rosemary Lightbody and Anna Rosenberg.

ASISA Standards approved

The ASISA Board approved the ASISA Hedge Funds Investment Management Fee Standard and the ASISA Performance Fee Standard for Retirement Funds, effective from 1 March 2019. Both Standards are available on the ASISA website.

Kind regards

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