A budget deficit exacerbated by a growing salary bill;

Labour productivity and strikes;

Energy constraints;

Pedestrian economic growth;

Slow implementation of the National Development Plan (NDP); and

An ineffective education system.

The Annual Conference of the International Investment Funds Association (IIFA) took place in Rio de Janeiro, Brazil, from October 19 to 21.

The IIFA consist of 40 national and regional IIFA member associations, of which ASISA is one, representing global assets under management of around US$38.2 trillion.

Members of the IIFA are committed to working with regulators and the International Organisation of Securities Commissions (IOSCO) to facilitate the development and implementation of standards that will protect investor interests and sustain and enhance the confidence of investors in investment funds.

More than 60 delegates representing fund associations from five continents attended the three-day conference. Leon attended on behalf of ASISA and provided the following summary of the key points discussed at the IIFA Conference:

ASISA members had previously expressed concern about the implementation of the Taxation Laws Amendment Bill changes due on 1 March 2016 to bring about harmonisation of tax treatment of retirement funds, given the opposition from Labour to these changes. Members were concerned that implementation may be postponed to 1 March 2017, or that the provisions may be amended, impacting on systems and other changes that are already underway.
 
Responding to industry concerns and Labour opposition, two different options have been provided for in the final draft of the Taxation Laws Amendment Bill tabled in Parliament on 27 October 2015. The Bill can be downloaded from http://www.treasury.gov.za/together with a National Treasury media statement that explains the position.

The reason for including both options in the Bill is that the drafters of the Bill want to be in a position to simply pull out the option that is not ultimately selected before the Bill is finally promulgated. An urgent meeting has been scheduled by Treasury with ASISA and other business representatives to discuss the two options. While there is still no certainty as to which option will prevail, it may well be that ASISA members, employers and payroll administrators will need to make and communicate changes to the provisions that had been expected to come into effect from 1 March 2016.

The final draft of the Financial Sector Regulation Bill was tabled in Parliament on 27 October 2015. The Financial Sector Regulation Bill Working Group will consider the Bill.

The Financial Intelligence Centre (FIC) Amendment Bill was tabled in Parliament on 27 October 2015. ASISA had submitted comments on the draft Bill in May 2015 and the FICA Standing Committee will review the Bill and comment if necessary.

The following tax work received attention in October:

The local Collective Investment Schemes (CIS) statistics for the quarter and year ending September 2015 were released to our members and the media. 

The statistics show that half of all assets are now invested in Multi Asset portfolios, while Equity portfolios hold 21%, Interest Bearing portfolios 25% and Real Estate 4%.

At the end of the third quarter this year, the local CIS industry managed assets of R1.8 trillion and offered investors 1 274 portfolios.

Net inflows of R44.5 billion in the third quarter of this year – the highest for any quarter over the past two years - brought the total net inflows for the 12 months ended September 2015 to R120 billion.

The 2014 claims fraud statistics were released early in October. Our long-term insurance members reported a steep increase in the number of fraudulent and dishonest long-term insurance claims detected in 2014. Last year 8 306 cases were uncovered compared to 4 690 in 2013.

While the number of fraudulent and dishonest claims for 2014 is significantly higher than in previous years, the total amount involved is marginally lower than in 2013 when the value of the claims uncovered was R794.5 million. This means that dishonest policyholders and criminals submitted more claims in 2014, but of lower values. Had these claims gone undetected, the industry would have lost R755.2 million to dishonest policyholders and criminals in 2014.

The Department of Justice and Correctional Services published a draft Cybercrimes and Cybersecurity Bill together with a Discussion Document at the end of August 2015.  The aim of the Bill is to, among others, create offences and impose penalties that have a bearing on cybercrime and to provide for the establishment of various structures to deal with cybersecurity.

A working group under the Regulatory Affairs Board Committee will consider members’ comments during November to finalise an ASISA submission by the due date of 30 November 2015.

We would like to remind members that the new ASISA Standard on Calculation and Disclosure of Total Expense Ratios (TER) and Transaction Costs (TC) takes effect on 1 January 2016 for measurement periods ending on or after 31 December 2015. From that date onwards the TER and TC measure must be calculated and disclosed as per the standard.

This precedes the introduction of the Standard on Effective Annual Cost (EAC), which comes into effect on 1 October 2016.

The ASISA Foundation has made slow but steady progress with its roll out of the pilot phase of Project Qaphela, the Sanlam funded financial education programme run for the National Union of Mineworkers (NUM). A number of workshops have been held at the NUM's national training college in Midrand for workers from across South Africa.  The Foundation also took the workshops to workers at various sites in Mpumalanga and Limpopo. The workshops were well received.

Retirement Fund Trustee Education workshops have also gained momentum over the past few months.  Through collaboration with BATSETA and the ASISA Academy, the Foundation has funded the training of 209 retirement fund trustees from various retirement funds across South Africa.

The leadership in the Technical and Vocational Education and Training (TVET) Colleges in Rustenberg and Hammanskraal expressed huge enthusiasm and support for the proposed Saver Waya Waya Phase 2 project to be run with their final year students during the first and second terms of 2016.

Following a successful stakeholder engagement event in Johannesburg in August 2015, the Foundation will be hosting a Cape Town Stakeholder event at ASISA's offices in Newlands on Wednesday 11 November. For more information please contact nwilliams@asisa.org.za.

Since inception the ASISA Foundation has received just more than R20 million in grant contributions from various stakeholders. The stakeholder event affords the Foundation the opportunity to express appreciation to funders and to showcase some of the activities of the Foundation to date.

The ASISA Academy learning calendar for 2016 is now available. Please Click here for more information. The Academy will be pioneering two new programmes in 2016, namely the Financial Markets Learnership and an IFA Internship for graduates wishing to become independent financial advisers. To be kept informed of developments on both of these programmes please click here.

The Academy’s two flagship life insurance courses took place in October. The UCT Life Insurance Underwriters and the UCT Life Insurance Claims Assessors Short Courses took place in Johannesburg and Cape Town respectively and achieved highly successful learning outcomes for all the delegates involved.

During October the Academy achieved recognition on two fronts. The Academy’s BBBEE rating improved from Level 4 to Level 2 and the Chartered Financial Analyst Institute recognised the Academy as one of their internationally approved Exam Preparation Providers for both the CFA and Claritas Exam Readiness Programmes.

November is traditionally one of the busiest months at ASISA with Board Committee meetings scheduled for most of the month ahead of the last ASISA Board Meeting for 2015, which takes place on 8 December.

We look forward to reporting back on this activity in our last edition of Dispatches early in December.