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INSIGHTAhead: A Challenging2011Ahead: A Challenging2011

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Editor’s Soapbox 2

Presidents Message 4

FIA Code of Conduct 5

From the Desk of the CEO 6

COO’s Report on IAIS Conference 9

Profile - 11

The Compliance Professional 13

Absa & UJ 14

Employee Benefits 18

Short - Term Exco 20

Insurance Advice 21

Premium Savings 22

Insurance Service Levels 23

Pension Funds vs RA’s 24

Leadership Seminar& Advisory Council 26

Financial Planning 28

Demarcation of Health 30

FAIS Conflict of Interest Policy 32

Succession Planning 34

Insurance Outlook 36

The Short-Term Ombud 38

FIA CANSA Golf Day 40

Santam Black Intermediary Development Initiative 42

Appointments 43

Humour 44

Sanlam on Trevor Manuel 45

Snippets 46

FIA Insight

The official mouthpiece of the Financial Intermediaries

Association of Southern Africa

P O Box 11901

Centurion 0046

Tel: 012 665 0085

Fax: 012 665 0534

Email: info@fia.org.za

Website: www.fia.org.za

Publisher

Financial Intermediaries Association of Southern Africa

Chief Executive Officer

Manie Booysen

manie@fia.org.za

Chief Operating Officer

Justus van Pletzen

justus@fia.org.za

President

Seamus Casserly

seamusc@firstequity.co.za

Editor & Media Manager

Clive Franks

Fax: 086 642 4540

Cell: 082 306 9158

clive@fia.org.za

Graphic Design

Streak Design cc

Cell: 083 447 2010

Editorial Contributors

Seamus Casserly, Manie Booysen, Justus van Pletzen,

Brian van Flymen,Joe Kotzé, Mike Stoker, Gareth Stokes,

Brian Martin, Gari Dombo, Chris Busschau, Barry Taylor,

Julie Methven, Debbie Barret, Michael Morris,

Caroline da Silva, Kieran Godden, Brett Wallenkamp,

Linda Shurlck, Johan van der Merwe

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Chris Busschau

E D I T O R ’ S S O A P B O X

by Clive Franks

The 4th and final quarter for 2010 has started off once again with very The day concluded with an address by Terry Booysen of CFG on the

significant events. First off was the Leadership Seminar / Advisory importance of Good Governance and what significance it has on all

Council which took place at Leriba Lodge in Centurion on 7 & 8 October. South African citizens both in their private capacity as well as in their

The Leadership Seminar was introduced by Seamus Casserly President businesses.

of the FIA who welcomed all the delegates as well as the distinguished

guest speakers. The following day the Advisory Council received a report back from Elian

Weiner CEO of Epic Communication the FIA’s new PR Company. The

First up was Neliza Goch who informed the delegates of the latest achievements made by them thus far have been very impressive during

developments occurring within FICA and their responsibilities in this the short period that they have been involved with us, gaining the FIA

regard. She was followed by Stefanie Mackenzie of the FSB and exposure in the National Press and on TV and Radio.

Moonstone regarding the Regulatory examinations. This topic was

cause for a very animated debate with delegates expressing their The remainder of the day was spent in discussion at reviewing what had

concern over two main subjects namely the level of language that been achieved by the FIA to date and what areas still had to be addressed

questions were asked and secondly the time allowed for the completion and the way forward for the FIA two years after the merges of the various

of answers. The main bone of contention was that the English used in organizations into the FIA. All in all the two days proved to be very fruitful

questions was of such a high standard that the average participant would and highly significant to all.

not understand what was being asked, and that the time given to answer

each question was way too short. Stefanie agreed to take the concerns in Justus van Pletzen our COO represented the FIA and WFII at the IAIS 17th

this regard back to the FSB in order to try and find an amicable solution to Annual Convention in Dubai with an observer status. Justus found the

the concerns expressed. convention very relevant and informative, and the various sessions were

addressed by a host of international speakers.

One of the most interesting guest speakers was Jonathan Dixon of the

FSB who addressed the Future Developments of the FSB. Jonathan The FIA and its members learned of the sad and untimely passing of

emphasised the high esteem regard that the FSB has for the FIA and its Chales Pillai form FAIS Ombud and the current Pensions adjudicator to

leadership. He praised the FIA for the manner in which issues were cancer. The President, Board and members of the FIA would like to

addressed and the positive outcomes of solutions were found to convey their heartfelt sympathy to Charles’ family friends and

concerns on the side of both parties. colleagues. He was a true friend and supporter of the FIA. Rest in Peace

Charles.

Dixon also expressed admiration for the very comprehensive and high

standard of the FIA’s Code of Conduct that members have sworn to We at the FIA wish all our members a safe and prosperous Festive

adhere to. He was convinced that with the understanding and Season and may 2011 be filled with health, peace and happiness. To all

cooperation the two bodies enjoyed the results would improve the those that will be on the roads over this period please stay alert, stay alive

standing of the industry not only with all role players and legislators but and remain safe on our roads.

with the consumer clarifying the transparency and professionalism that

intermediaries were striving to achieve.

Editor’s Soapbox

2

F I A P R E S I D E N T

4

Dear Colleagues Agency agreements with insurers, particularly for

those who are binder-holder brokers will change

2010 has been one of the most eventful years in my career which has as a and have to be reissued to deal with matters

consequence had a significant impact on my personal life. My personal goal such as c l i en t owne rsh ip , ac tua l

setting and planning for 2010 was poor and I always seemed to be playing responsibilities in terms of the binder

catch-up. I am probably not alone in feeling this way but I do prefer being regulations, Claims performance etc.

more organised. One can only think about our numerous interactions with

markets, regulators, reinsurers and other stakeholders to appreciate the The Stride project also illustrates that the

extent of change during the year. And we all have clients to service as well just Industry can co-operate for the benefit of all

to ice the cake! our stakeholders.

Your Association, the FIA, its strategy and intentions for members, remains Hopefully we will also build on the current

intact and we are certainly growing in stature influence and scale. Yes, sure, relationships with fellow industry organisations

there are wrinkles which need ironing from time to time, issues where we and other bodies such as Asisa, Inseta, Medical

don’t necessarily reach consensus or discussions about prioritisation and Schemes Council, IISA, FPI and others.

the like. All of these are normal in an association as dynamic as ours and in an

industry which is so changeable as well. This diversity breeds strength of 3. Premium pressurespurpose and we can be proud of our achievements to date. What is important

to me is that we as members and the FIA are directionally on track to fulfilling The market results for 2010 were good, so I suspect that a gradual softening our strategic goals. I submit that we are. of rates, and therefore reduced revenues to brokers, will materialise.

Manie will deal with the 2010 scorecard and achievements and I was asked to 4. The Regulator(s)give a perspective of 2011 and what it may hold for us brokers and the FIA. I’d

like to emphasise that these are my views without consultation and not The FSB recognises that the FIA has a significant part to play in their plans for

necessarily those of any other party. So if you disagree, fire the cannon my 2011. We will continue to build on the positive professional relationships that

way and not at our colleagues on the Board or on the Executive.exist and will add value to any negotiations that are initiated. The FIA is the

custodian of the Intermediary Industry’s interests and we will continue to 1. Data Exchange – Stride initiative promote these at all times.

The automatic exchange of Short Term insurance policy data between We were fortunate that the FSB was sufficiently comfortable to disclose their brokers who are binder-holders and insurers will be a reality for personal and 5 year regulatory agenda to us at the October 2010 Advisory Council so we commercial business. This is really a watershed moment for the industry as a can plan our position on a number of fronts properly.whole and the FIA involvement will inhibit necessity for any regulations to be

too onerous. There will be some adaption of our policy administration The Insurance Laws Amendment Act regulations are likely to be promulgated systems to comply with the ‘Acord’ South African standards, but I don’t finally and we will have to change our business models to accommodate believe that there will be material impact other than improved accuracy with these. However the drafts we have seen appear to assist brokers earn fees cost savings for both insurers and brokers. rather than restricting this practise which will be received positively.As part of the second phase in 2011, Claims processes will be included and I

suspect that we will easily adapt to working off the same data in an integrated The Consumer Protection Act will be effected during 2011 and will have a way. Customer service will improve as a result. major impact on our clients but fortunately we expect a limited impact on

Intermediaries in conducting our business. Watch the space for Insurers 2. Relationships with Insurers and other Associations coming under pressure too.

We have demonstrated to the entire market that we are a professional I believe that the “Treating Customers Fairly” initiative will have a serious

association representing our members in a manner that invokes respect. Our impact on the Direct insurers who have continued to make exotic claims of

relationships are at a level where a number of insurers will implement FIA savings, performance and efficiency without anyone challenging these

membership as criteria for granting agency agreements. We sincerely hope claims. This piece of legislation (or initiative) when initiated will change this

that this happens sooner rather than later. landscape. If this is the intention then it can’t happen too soon so let us hope

for 2011.

Message From The President of the FIA to Our Members

5

F I A P R E S I D E N T

remains to be seen and I therefore urge all colleagues to complete these as 5. Structureearly as possible and so prevent the rush at the end of the year. The

consequences of non completion are extremely serious for all of us.A number of the membership matters were dealt with via the membership

sub-committee and the real BHAG (Big Hairy Audacious Goal) of voting and By my estimation we are in for a very active year which will hopefully fee determination are a thing of the past. The new dispensation will be consolidate our position in the industries we serve even further and for the implemented for all 2011 membership renewals and is certain to result in a benefit of all our clients. Good luck to everyone in achieving their goals.much fairer fee structure.

My thanks again to all the FIA volunteers who actively participate at every We received a mandate from the Advisory Council to look at our structure and level in the FIA. Branch members, Committee members, Directors, will be spending some time developing proposals in this regard. Hopefully, by Chairpersons, social secretaries, colleagues at all levels. Your contribution early 2011 we can present these proposals to membership.makes the FIA what it is today and an association to be proud of. Please keep

up your efforts in 2011 and encourage your colleagues to do likewise.6. Organisation

To the Executive and staff of FIA a big thank you for your unstinting efforts and The FIA business strategy for the next 3 to 5 years is currently being

loyalty.formulated following serious input on priorities from the Advisory Council in

October. We will hopefully complete this by the end of the financial year in Finally may I wish you all a pleasant Christmas break with your family and

order to implement it in 2011. Watch this space.friends and a very prosperous 2011. I am certainly looking forward to the

challenge.We will develop an FIA “membership value proposition” i.e. what does the

Association do for members, for use both to encourage membership and to Regards.

market our organisation. Hopefully this will be completed in the next few

months and I am sure the executive will deliver. Seamus

7. Regulatory exams

These will be a reality next year and all FSP’s will be required to complete

successfully. Whether the FSB will relax the December 2011 deadline

C O D E O F C O N D U C T

This is the third article in a series dealing with the members’ responsibilities in Of all the provisions contained in the code, this

terms of our code. is arguably the most important. We surely

Specific reference is made to the necessity of complying with all legislation wish to be seen as acting in our clients best

that affects the financial services industry. Members undertake to operate interests and professional in the execution of

only in those areas of business for which they have been licensed. our duties thereby ensuring that we remain the

preferred distribution channel of product

The logic behind this undertaking is unassailably clear in that members suppliers and the first choice of advisor to the

should at all times conduct themselves in a competent professional manner public.

avoiding those disciplines where they do not have the necessary skills. It

must be remembered that the FAIS act provides for punitive sanction and / or In order to do so, we need to cultivate and maintain an appropriate image and

heavy fines should an intermediary be found operating outside the ambit of encourage our employees to act in similar fashion. Members should not

the licence. malign each other and must refrain from making public or private statements

which could be construed as bringing our industry into disrepute.

Why run the risk of placing our livelihood under threat ?

We are after all a party to our clients financial aspirations and the key agent of

Members’ undertake to not act in a manner which may harm the image of the their risk management – let us act accordingly.

FIA or its members.

Code of ConductBy Brian van Flymen FIA’s Vice-President

C E O

6

CEO’s Report - Highlights of 2010By Manie Booysen - FIA’s CEO

In many ways 2010 will be

remembered as a historic

year for South Africa with On 23 – 26 May, history was made when the inaugural Insurance Conference

plenty of highlights that was held at Sun City, hosted by the FIA, SAIA and the IISA. The event was very

were applauded both locally successful and was well attended by role-players across the entire spectrum

and internationally as the of the insurance industry.

world descended on our The participation of both international and local speakers from across the

country for the biggest industry and regulatory environment set the tone for strong future growth of

sporting event in the world. the event and we look forward to another successful conference in 2011.

The 2010 FIFA World Cup The 2010 Advisory Council meeting was combined with this event as a

soccer tournament turned breakaway session. The meeting, which was chaired by Steven Akakios, was

out to be an extremely handled with professionalism, embodying the seriousness of the feedback

successful event that that was given.

showcased South Africa to

the world and added Each of the Exco’s gave feedback to the delegates and addressed the various

enormous socio-economic concerns of the members. This opportunity to cooperate and network with

value to the country. We look forward to seeing the long-term benefits of this the broader insurance industry has helped to position the FIA as a genuine

event in the years ahead. partner in the industry for the benefit of all.

Globally, the economy seems to be on the road to recovery however the

sovereign debt crises in Europe are a stark reminder that we are not quite out

of the woods yet. The uneasiness of industry members regarding the new regulatory

examinations was identified and a decision was taken to conduct road shows

South Africa appears to have weathered the storm relatively well; however, on the examination process, jointly with the FSB, Inseta and other industry

we are mindful of the fact that ongoing retrenchments remain a real concern role-players in over 30 centres. The FIA has never presented in more centres

for the South African consumer. Clearly this also impacts on their ability to than this and we are confident that all those who participated are now better

insure themselves properly and it is important that we, as advisers, continue informed about the pending examinations and their requirements.

to assist clients to protect themselves as best they can.

Continuous feedback on all developments related to the examination process

At the FIA we also look back on 2010 with a sense of achievement and recall a was sent to members by Joe Kotze.

number of highlights:

During the first quarter of 2010 the FIA Code of Conduct was revised to be

The 2010 Financial Intermediaries Association of Southern Africa (FIA) aligned with those of SAIA and ASISA, with whom the FIA shares a common

Industry Recognition Awards were held at Emperors Palace on Thursday 3 future. Our code was in fact approved by the FSB before it was finally

June 2010. With more than 1 000 guests in attendance, this is one of the accepted and endorsed by the FIA leadership at the Sun City; Advisory

most significant events on the insurance calendar and enables us to pay Council Meeting. Epic, the newly appointed communications and public

tribute to those insurance product providers who received a favourable rating relations partner of the FIA, has worked with us to engage a greater public

in the FIA’s annual intermediary stakeholder benchmark survey, conducted awareness of the FIA, our self regulatory measures and our ethical behaviour.

by Bluestream research. The directors and management have committed themselves to promote the

image of the Intermediary wherever possible.

The top contenders per segment for 2010 were, in most results, no surprise

with Discovery, Sanlam, Santam and Momentum. CIA backed by Compass

won the new UMA category of underwriters.

The FIA held its first Leadership Seminar on 7 October 2010. The seminar

The awards add real value to the industry by: was well attended by the branch leadership and senior management of larger

members. The event proved to be a great success and representatives from

• Providing benchmark best practice statistics for intermediary both the Financial Intelligence Centre and the Financial Services Board were

satisfaction present to explain what some of the future regulatory changes mean and to

Tailor-made feedback to all product suppliers, which is proven to add answer questions on how this will affect intermediaries.

value to their continuous improvement strategies.

Providing a strong marketing message to the general public by

communicating the number 1 position of these prestigious awards.

2. THE INSURANCE CONFERENCE (TIC)

3. RE1 & RE2 ROAD-SHOWS

4. FIA CODE OF CONDUCT

1. FIA AWARDS

5. LEADERSHIP SEMINAR / ADVISORY COUNCIL

•

•

C E O

The strategic review session on day two gave some perspective on the FIA

and its achievements in the post-merger period. It was agreed that a follow-

up session will be held early in 2011 to unpack the identified areas of concern

and to establish new action plans for the way forward. At the FIA we look back on a year in which great inroads have been made in

establishing stronger relationships with regulatory bodies, industry role

players, organizational bodies and last but not least the media.

At the Advisory Council meeting in May 2010 at Sun City the Western Cape These burgeoning relationships have helped to open up new doors for the FIA

Division announced their vision to roll out a training programme to “up-skill” as a major role player in its industry as well as creating new opportunities in

or improve on the education of our staff in the insurance industry. negotiations on behalf of members.

The Insurance Boot Camp concept was received with great enthusiasm and

support from all members of the Advisory Council. These achievements have been made possible by a number of very

committed and knowledgeable individuals on the Board of Directors,

On 16 September 2010 the Insurance Boot Camp was launched and the first Executive Council, Short Term Exco, Employee Benefit Exco, Financial

milestone seminar took place in Cape Town. Planning Exco, Healthcare Exco as well as the Membership Exco of the FIA.

We envisage the Insurance Boot Camp project as having the potential to It is through the hard work and dedication of these people, all of whom

develop in the short to medium term into a national programme that can volunteer their services, that the FIA is able to achieve the success we are

benefit all the FIA members. already seeing and I take this opportunity to thank these individuals for their

efforts over the past 12 months.

I would like to take this opportunity to wish all our members and their families

The annual FIA/CANSA golf day was held on 12 October 2010. The event a blessed festive season and a prosperous new year. Once again thank you all

was once again a great success and well supported by the entire insurance for your continued and valuable support over the last year.

industry.

The CEO of the Council of Medical Schemes, Dr. Gantsho took part in the day

and also presented the cheque to CANSA.

8. FIA OFFERINGS

6. INSURANCE BOOT CAMP

7. FIA / CANSA GOLF DAY

9

C O O ’s R E P O RT

1. INTRODUCTION

2. DISCUSSION POINTS BY EXPERT PANEL

SPEAKERS

3. The following topics were discussed by

expert panellists:

3.1.Financial Stability and Systemic Risk

(including Macro Prudential Dimension)

financial supervision are inadequate and comprehensive risk analysis is

hampered by the lack of realistic data. This holds in a potential risk for

The 17th annual conference of the IAIS hosted by the Dubai Financial financial stability.

Services Authority (DFSA) took place from 27 – 29 October 2010 in Dubai.

Looking at the different discussion points it is clear that the worldwide

I as COO of the FIA represented the WFII (World Federation of Insurance economic crisis alerted regulators and specifically the IAIS.

Intermediaries). Although it was in an observer status the interaction with

the regulators across the globe was

invaluable.

The role of the IAIS is to establish and

set clear standards and to build a

positive reputation over the long term

performing and meeting of needs and

expectations of consumers. This

includes market conduct, consumer

protection and financial stability (policy Synopsisholder protection).

The panel discussed various issues related to The conference was opened by Peter systemic risk and financial stability and how these Braumüller chairman of the IAIS; issues intersect with the insurance sector as well

as definitional questions related to systemic risk “The world economy is still recovering and how they are related to the insurance sector, from turbulent times and supervisors and how insurance supervisors should supervise across the financial sector are digesting too-big-to-fail institutions. Macro prudential the lessons learnt from the financial surveillance and how insurance supervisors work crisis” he declared. with supervisors and policymakers from other

sectors will also be a focus of the discussion.The theme of the conference The

Gateway of Trust in the Insurance 3.2. Impact of International Accounting

Industry enables us to reflect on the role Standards on Insurers and Insurance

the insurance industry is expected to Regulation

play in a more stable financial system

and indeed in minimizing the risk of any future crisis. Synopsis

The consideration of system-wide financial risks has emerged as an area An overview of the IASB Exposure Draft on Insurance Accounting which

of focus following the crisis.” was released in July 2010 and other IASB standards which have a

significant impact on insurance companies was shared. In addition to

It is clear that the recent financial crisis moved the focus of the regulator providing an overview, the panel will discuss / concerns from a regulatory,

from the intermediary to that of systemic risk. The important thing is that industry and IASB Board perspective.

there should be a clear distinction between banking and Insurance.

One of the big challenges for regulators is to coordinate data as a uniform

intellectual as it is difficult to aggregate data at any level. The standards of

International Association of Insurance Supervisors (IAIS) 2010 17TH Annual Conference – Dubai Report back by Justus van Pletzen COO of the FIA

10

C O O ’s R E P O RT

3.6. IAIS Standards Implementation

3.3. Common Framework for the Supervision of Internationally

Active Insurance Groups

3.7. The Impact of the Global Financial Crisis on Policyholders and

Market Conduct Issues

3.4. Vision of Future Safety Net and Resolution Framework

3.8. Solvency 11

3.5. Similarities and Differences between Supervisors Responses

to 2009 Crisis

Jonathan Dixon from the Financial Services Board served on this panel.

Synopsis

The financial crisis has highlighted that implementation of supervisory

principles, standards and guidance in an internationally coordinated and

consistent manner is necessary to protect against adverse cross-border,

regional and global developments affecting international financial

stability. A critical success factor is to raise the level of adherence to

international standards by reinforcing implementation; carrying out

assessments and peer reviews to indentify gaps as well as vulnerabilities

and risks; and linking it sequentially to capacity building and improved

standard setting. By addressing the different priorities and allocating

appropriate resources, supervisors from both developed and emerging

market jurisdictions can commit themselves for supporting strong,

sustainable and balanced growth of the insurance market.

Synopsis

This session was aimed at addressing the supervision of IAIS ComFrame Synopsisproject – from various perspectives. One perspective is to compare

ComFrame with the rules and experiences with the consolidated The global financial crisis should not just be viewed from the perspective supervision as practiced under banking regulation. Another perspective of its financial impact on the insurance industry but also in relation to its results from setting ComFrame into relation to the evolution of the effect on policyholders. Market conduct issues are an important part of supervision of insurance groups in the European Union. Both regulatory this debate. The panel will discuss relevant issues relating to these topics approaches are complemented by the perception and assessment of the including potential tensions between prudential and market conduct insurance industry. policy objectives, how market conduct disclosure and other rules can

enhance financial stability and increase policyholder protection.

Takaful and Regional issues Synopsis

SynopsisThe recent financial crisis has demonstrated the need for the

improvement in the safety net and resolution framework. What has been The Takaful business in the insurance industry has grown remarkably, introduced in FSB (Financial Stability Board) discussion on systemically consolidating its position in the global insurance industry of today.important financial institutions is that the application of taxes and

‘systemic risk levies’ along with capital and liquidity surcharges over

financial institutions across jurisdictions.

Solvency 11 was treated and discussed as a high priority and the IAIS also

had a solvency 11 Information Seminar. The challenges of Solvency 11

were discussed from a supervisory and industry point of view.

Synopsis

The global financial crisis has generated a wide range of different and

difficult issues within the financial sector around the globe, giving cause

for analysis, reflection and reassessment of many aspects of risk, capital

management, business models, etc. This session is aimed at

understanding, arisen in banking, life insurance and general insurance

brokers before, during and since the global financial crisis. The

implications for regulation and supervision will be explored along with the

lessons learned from the actions taken or actions not taken by various

supervisors.

11

P R O F I L E

FIA: Preamble: With the desire of finding out more about what the FIA originally expected. However,

Board members do besides devoting their valuable time to the FIA; FIA if we do see a double dip, the

INSGHT will be conducting interviews with them in each quarter. Our role of the intermediary will

eighth interview is with Chris Busschau a Director and Chairperson of the once again be to constantly

Financial Planning Exco at FIA. remind consumers of the

importance of sticking to their

plans, to guide people in

p repar ing de ta i l ed and

comprehensive budgets that

I have been in the Financial Planning industry for 36 years, and I’ve been will help them to manage their

incredibly privileged to work with many very astute and very wise people. I cash flows in tough times, and

would like to think that some of their insight and ability to understand the in extreme circumstances to find temporary solutions that will reduce

industry has rubbed off onto me, and that this has enabled me to bring expenditure.

some of that accumulated experience to the FIA.

I was talking to a young man who joined the industry 18 months ago. He

It means being constantly alert to the various dynamics of the Financial has a B Com and he was telling me that he is the envy of his buddies from

Planning industry. It is a complex, ever changing world, with different university. He loves what he is doing, and says that it is far more satisfying

elements and diverse external forces coming to bear on the industry. We to help people to plan their financial lives than to be an audit clerk or

have risk management, through life, disability, and aspects of health working on an accounting software programme! He has been able to build

insurance; estate planning with the complex issues of trust formation, a client base quite quickly, and says that he is able to “write his own pay

wills, and liquidity provision; retirement planning covering pension and check” each month.

provident funds, retirement annuities, and many other investment

structures; and finally, pure investment planning including collective

investments such as unit trusts, endowments, structured investments,

and extending into property syndication, containers, and offshore

investment structures. Then, of course, we have the ongoing development Lets tackle those separately.

of new legislation and other forms of regulation, and the need to represent

our members when dealing with the Financial services Board, the National The FIA has to constantly examine itself to ensure that we are fulfilling the

Treasury, the FAIS Ombud and other Ombuds, and even on occasion requirements of our members. We have to be certain that we are offering

representing the industry and our members at hearings in Parliament. real value for the membership fees that our members pay.

Our members face the very real challenge of being in the industry at a time

when we are making the transition from being an army of sales people into

a profession with skill, technical know-how, and pride in what we do. This

will include ongoing education, meeting the ever more complex

I wish I had a neat, absolute answer to that question! However, the requirements of consumers, and becoming the Financial Doctors to the

consensus of opinion among economists seems to be that we won’t see a people of South Africa.

double dip, but that the recovery will be slower and tougher than we had

FIA: In what way do you feel that you are making the most contribution

to the FIA?

FIA: What incentives are there for young people to join our industry

FIA: What does being Chairperson of the Financial Planning Exco of and how do you think we will be able to attract them?

the FIA mean to you?

FIA: What in your opinion do you foresee as the main challenges

facing the FIA and its members?

FIA: Do you think the predicted double dip recession will occur and

what will intermediaries and consumers have to do in order to survive

the adverse effects of such a glitch occurring?

Profile: Chris Busschau Chairperson of the Financial Planning Exco and Director of the FIA By Clive Franks

P R O F I L E

FIA: What is the most important message that you have for the

members?

FIA: What is your feeling with regards to the RE1 & RE2 Level

Examinations? FIA: Are you willing to share a brief CV and a glimpse in to the private

life of Chris Busschau when you are not involved with the business of

the FIA

FIA: How do you feel about the FIA’s interaction with the regulators

such as the FSB?

My own experience of the Regulators, particularly the FSB, is that they are

staffed with excellent people. Our working relationships with them have

become increasingly open and constructive, and it has been exciting to

Welcome the increasing fit and proper standards. Other professions have see the development of a situation where the FSB now automatically

been through this process in the past, and the people who have embraced consults with the FIA on all aspects of regulation. It means that FIA

the increasing standards have built careers that they had never dreamed members can rest assured that the FIA will always receive an open hearing

were possible. from the regulators, and that the needs and complexities of the lives of

intermediaries will be noted.

I have two views.

Firstly, in principle, we have to see these as important building blocks in I’ve been married to Ruth for 38 years and we have 5 adult children.

creating the true profession we all aspire to.

I am active in Catholic Church affairs. Among other things, I am the

However, secondly, it seems that there are aspects of detail and Chairman of the Board of the Catholic Church’s radio station, Radio

implementation that need to be re-visited, and we in the FIA have a role to Veritas, and I also broadcast a weekly programme on the station. I serve

play here. on the committee of the alumni association of my old school, St David’s

Marist Inanda. I play enthusiastic but erratic golf, often with members of

my family who are all keen golfers. I am a heavy reader, and enjoy

everything from modern history to thrillers.

C O M P L I A N C E

New, more stringent requirements for

compliance officers dealing with FAIS The new amendments to Section 17 of FAIS, specifically Annexure 1, set

(Financial Advisory and Intermediary out the qualifications, experience and criteria for approval as a compliance

Services Act 2002) have been gazetted. officer by the FSB. The requirements endorse the Generally Accepted

Compliance Practice (GACP) framework released last year by the

FAIS impacts on all financial institutions Compliance Institute of South Africa.

that are financial services providers and

their representatives. In terms of FAIS "Effectively many of our standards have been incorporated into the

such financial services providers need to regulations and compliance officers will need to be able to demonstrate

appoint a compliance officer, who must knowledge of the applicable principles set out in GACP framework," says

be approved by the Financial Services Julie Methven CEO of the Compliance Institute.

Board (FSB).

She says the role of the compliance officer in South Africa has grown into

Since the Act came into force, there have one of significant importance, as financial service providers are

been increasing concerns about the level increasingly relying on their compliance officers to guide them through

of skills, knowledge and experience of some FAIS compliance officers, their regulatory responsibilities.

prompting the FSB to develop enhanced regulations to address the issue.

The GACP framework provides a set of standards and norms that act as a

These regulations, issued in terms of the FAIS Act, set out the qualification benchmark of compliance best practice, and is the first of its kind in the

and experience criteria for approval as a compliance officer by the FSB. world.

Promoting Confidence in the Compliance Profession By Julie Methven CEO of

the Compliance Institute

E D U C AT I O N

Final-year B.Com (Finance) students at the University of Johannesburg (UJ) Absa launches Absa Adviser Academy

are able to put theory into practice through an Absa-sponsored initiative that Absa launched the Absa Adviser Academy to train promotes excellence in financial planning. and develop high calibre Financial Advisers in an

“We are delighted to partner with UJ in this exciting project. We strongly effort to help address the shortage of skilled

believe that we need to do more to ensure that we produce well qualified financial advisors in the country.

financial planners in this country to meet customers’ needs for financial Situated in Blackheath, Johannesburg, advice,” says Peter Todd, Managing Executive at Absa Insurance and the academy will be run by Absa Financial Advisers (AIFA).Insurance and Financial Advisers

With 34 groups of students participating, the students are given a (AIFA).

comprehensive case study in which they are expected to prepare a financial Chief Executive Officer of Absa plan for a prospective client. The case study, which gets given at the Financial Services, Willie Lategan said: “There is a general shortage of skilled beginning of the year, includes all aspects of financial planning such as advisers in the country and the current adviser force is ageing. The Academy insurance, real estate and retirement planning, among others.is a strategic initiative that will enable us to close the skills gap and to serve

In the initial stages of the case study, 250 students work individually on the our clients in the best way possible.”

different aspects of the financial planning case study. They later form groups The launch of the academy is a significant milestone in the history of Absa. of between 3 and 6, which make a presentation to the Lecturers in Financial

Planning at the University of Johannesburg. Following intensive “As the leading financial advisory business, we have taken a leading position presentations and based on technical and visual aspects of the presentation, in the attraction and retention of the necessary skills and we hope that this the top ten groups are selected. These groups proceed to make presentation academy will help us launch the careers of future advisers,” says Peter Todd, to a panel of experts comprising of officials from the University of Managing Executive at AIFA. Johannesburg’s Department of Finance and Investment Management, the

Financial Planning Institute and Absa. A team of professional trainers and a stringent

quality control programme will ensure the “We would like to appreciate Absa’s efforts and commitment to filling the proper training and development of excellent skills gap within the financial planning environment. We believe that Absa’s financial advisers. decision to sponsor the best financial planning initiative makes a huge

difference in the lives of both the students and encourages excellence” says The trainee adviser will receive a competitive

Professor Els, Head of the Department of Finance and Investment remuneration package, which promotes

Management at the University of Johannesburg. financial freedom and provides financial

stability. The Academy will also provide each Absa has been sponsoring the event for the past two years and will do so in Trainee Adviser with a tailor-made personal the coming years. development and training path as well as a

range of other opportunities within Absa.

Absa and University of Johannesburg encourage excellence in Financial Planning

14

The new Absa Advisor Academy was launched 03 November 2010, and some of the delegates were Rabbia Sarang (Head of Absa Advisor Academy), Willie Lategan (CEO: Absa Financial Services), Bonane Phiri, Hlobisile Tshabalala, Charlene Dippenaar, Mokgatla Makaleng, Senate Mohale, Deeran Kuni, Jacqueline Hollamby, Mululamsi Ndou,

Godly Mothabi, Lebo Molemane and Faizal Shariff Noor (Business Development Manager Absa Advisor Academy). Picture by Lettie Ferreira.

E B

By Michael Morris of the FIA EB Exco

Looking forward to 2011, the EB Exco is planning to hold EB Educational 12(2) time period to

Workshops in Cape Town, Durban, Johannesburg, Port Elizabeth, 180 days, to allow

Nelspruit and possibly Bloemfontein late in April next year. These will t h e F S B t o

take a similar form to the successful Educational Workshops held early in withdraw section

2010 when EB experts from the major product providers and large 15B approvals of

broker organisations were invited to address groups of EB Brokers. s u r p l u s

Some of the topics that will be addressed include Tax and legal update, a p p o r t i o n m e n t

input on disability and PHI cover, a general introduction covering the FIA schemes and to

position paper on the independent EB broker, section 14’s and when they bring the handling of

apply, approved and unapproved group life, multiple organisations under death benefits arising

a single umbrella fund to name a few. Members in all these areas will after a member has resigned

receive timeous notification of this event. or retired (but before the benefit has

been paid) into the ambit of Section 37C

A number of events that have taken place during the last six months have

concerned members of the EB Exco. The FSA in the United Kingdom The FIA had sent a request through to the FSB concerning group scheme

announced the withdrawal of commissions paid to Employee Benefit commissions which have not been adjusted for a number of years.

brokers from 1st April 2013. This announcement was followed last Indications are that this will not be regarded as a high priority by them

month by Holland who has also withdrawn EB commissions. Our own although it is hoped that the will be dealt with early in the New Year.

FSB has also this year expressed their concern on the high reduction in

yield currently experienced by our own pension funds and are looking at Best regards.

pension fund costs. There is also a perception that the industry is greedy Michael Morris.

and looks primarily at its own profits. With this in mind, the EB Exco

realizes that there is a need to draw up a positioning document setting out

the duties and input of the independent intermediary which adds value to

the EB industry. This will after all inputs are considered be submitted to

the FIA Board. In this regard, two meetings of independent brokers

engaged in employee benefits were held in Cape Town to explore and

annotate what services independent brokers offer. A fair amount of

information emanating from these meetings was presented to the EB

Exco which will be very useful in compiling the positioning document.

The Government has not moved much further in outlining its retirement

reform plan for all citizens. There is talk that Group RA’s will not be

regarded as pension funds but merely as top up thus necessitating those

companies who have these products to join a government pension fund

or establish their own. There appears however to be an acceptance of

the protection of existing accrued members interests.

Changes to the Pension Funds Act were being considered to address the

issue of allowing unclaimed non-member spouse divorce benefits to

become an unclaimed benefit after 24 months, to change the section

Employee Benefits

18

There is also a perception that the

industry is greedy and looks

primarily at its own profits. With

this in mind, the EB Exco realizes

that there is a need to draw up a

positioning document setting out the

duties and input of the independent

intermediary which adds value to

the EB industry.

S H O RT- T E R M

By Barry Taylor Chairperson of the FIA Short-Term Exco

Insurers and will set a standard which in the long term will create efficiencies, It was indeed an eventful year not only for our economies of scale and sustainability of current business practices. This Industry but for the Country what with the very initiative has been a long time coming and it is a credit to the Insurer and successful hosting of the FIFA 2010 World Intermediary players involved for having the foresight and commitment to Cup soccer tournament with the spinoff of pursuing this project with the enthusiasm that has prevailed.the Gautrain, a host of magnificent stadia

and a mammoth exercise in upgrading the The next question is what to 2011?roads, airports and other infrastructure.

I foresee an equally active year from the FIA’s positioning where we will see We can look back and say we have much the promulgating of the ILAA Binder regulations and the activities that will go to be proud of. with ensuring compliance.

And what have we achieved in our STRIDE should become a reality in terms of going live, the full implementation Industry? of the FAIS General Code of Conduct, Conflict of Interest regulations and the

going live of the Consumer Protection Act. 2010 has been a very busy year for us in the FIA

Short Term space and on taking stock of all the I don’t believe that we must underestimate the time, effort and cost that the i s s u e s that we have dealt with in the Short Term committees it is a implementation that these issues will have and management and all credit to all those who have given so freely of their time and expertise.responsible staff will need to apply themselves to ensuring that sound and

good practice as well as a common sense approach is adopted.We were saddened at the passing of Nan MacLennan who was given a huge

send off by many friends and colleagues from the Industry. It was a tribute to Other initiatives that could progress into 2011 will be Treating Customers the contribution she had made and for the wonderful character she was. Who Fairly (TCF) where work is well under way by the FSB and Industry bodies. would have thought that she was seventy three – with all that energy and This will be an important piece of legislation which aims to ensure the fair enthusiasm? Dear Nan, we will miss you.treatment of customers in particular by Product providers and will focus on

the following outcomes; Our main focus for the year was the ongoing involvement in the regulatory

processes, in particular the Insurance Laws Amendment Act, the Data Consumer Confidence in the service providers they are dealing with.Sharing project and a focus on education and development.That products and services are designed to meet the needs of identified

consumer groups.It was a year in which the FIA Short Term division made great strides in the Those consumers are provided with clear and understandable improving and cementing of relationships within the industry, the regulators information pre and post the transaction.and industry bodies which will stand us in good stead in the coming years.That advice is appropriate to the circumstances.

Those products perform and meet the expectations of consumers and After two years of lively debate and constructive engagement with Jonathan that the service is of an acceptable standard.Dixon and his FSB team as well as SAIA and SAUMA representatives, the draft Those consumers do not face unreasonable post-sale barriers when it regulations pertaining to Binding Authorities were put to the Industry for comes to changing of products and in the fulfillment (claims) stage. comment at the end of September 2010. The main thrust of these regulations

will in essence deal with; the Accountability of the Insurer in terms of the The other initiative, if successful, that could have a major impact in years to outsourcing of Binder functions, the Responsible outsourcing of binders, come will be the proposed “Compulsory Third Party Motor Insurance” Policy Holder protection in terms of ensuring the fair treatment and deliberations, currently being driven (!) by the Department of Transport.protection of policy holder data and dealing with the areas of potential

Conflicts of Interest. The process and regulations have ensured continuity A further challenge that we as an Intermediary Industry body is the crying of the practice of intermediaries operating binding authorities with a call to need for skilled practitioners and the time has come for a concerted effort into employing sound judgement and governance and avoiding and or mitigating designing an Education and Development programme to elevating the all-areas of potential conflict of interest. We at the FIA are grateful to Jonathan round skills of our members and to once again becoming “respected and his team for their support and willingness to listen and debate.Insurance Intermediaries” with a focus on superior client service.

Another of the major achievements has been the industry initiative (SAIA and So we are in for interesting times and as the year draws rapidly to an end I the FIA) in putting together the data exchange project now branded as would take the opportunity of thanking all of those colleagues in the FIA fold, “STRIDE” (Short Term Insurance Data Exchange”).The purpose of STRIDE the many supportive friends in the FSB and greater Insurance Industry for will be to facilitate the exchange of policy holder data from Intermediary and their support of our endeavors during 2010, Season’s Greetings and a other third party systems to the principle Insurer involved in the transaction.fulfilling 2011.

Not only will this facilitate compliance with the Insurance Laws Amendment

Act but will support the Solvency Asset Management (SAM) requirements on

•

•

•

•

•

•

Where has 2010 gone?

20

21

D I S C L O S U R E

Consumers will get better advice, service and satisfaction from insurers if advice,” says Dombo.

they fully disclose information relevant to the risk that they wish to insure –

and ask the right questions. As such, Dombo advises those who do not have the time to read through

their insurance contracts in detail to rather “disclose as much information

“Insurers rely completely on the information they are given to underwrite as possible when talking to their insurance consultant.” The insurance

correctly and to be able to advise clients correctly. Without all the relevant consultant will know what is relevant and what advice to give.

information it becomes difficult to assess all the risks involved and provide

the right cover,” says Gari Dombo, Managing Director Alexander Forbes The purpose of insurance is to protect people against unforeseen risks and

Insurance. possible dangers. It is not about making profit by misleading clients.

Similarly, if clients try to trick their insurer into issuing a lower premium

The kind of information that people most often forget to disclose include “when something does go wrong the only loser is likely to be you” warns

the fact that they: Dombo.

• Rent out their house and are deriving an income from the property. For example, “if your policy is on a named driver basis and you don’t

Have a thatched roof or garden cottage. disclose that your children occasionally drive your car, your insurer will not

Occasionally park their car at their girlfriends place overnight. advise you to include them as named drivers. If they damage your car, or

Have changed their job (pertinent where the new job involves business injure themselves or others while driving, your insurer will reject your

travel by car with the insured vehicle). claim,” explains Dombo.

Allow their child to drive their car on weekends.

Are going on holiday leaving their home unoccupied for two months. Instead insurance is about asking questions and getting good advice.

Insure the car for private purposes though drive to the occasional

business meeting. There is no shame in not understanding the wording. Dombo encourages

Have stopped paying the armed response service. consumers to “ask as many questions as they want until such time as they

Have started alterations to the home. fully understand everything they are agreeing before signing.”

The information above is not relevant to all insurers and relevancy also And when it comes to advice Dombo believes “you should develop a close

depends on the basis of your cover. For example, relationship with your insurance consultant so that your cover can be

tailored to meet your individual needs.”

Many insurers are not concerned where you park when you are not at

home. For example, a good insurance consultant will advise that “you can pay a

Your vehicle cover may allow any licensed driver to use the vehicle. lower premium by insuring your motor and household contents in one

portfolio instead of insuring your assets separately. Or if you say you are

Failure to disclose this information, or any other information going on holiday they will suggest how you should insure the items that

that could affect the terms, condition or detail of your cover, you take with you” explains Dombo.

may lead to claims being rejected.

Once the insurance consultant and the client form a good relationship it

So the best way to ensure that you disclose all relevant becomes easier for the client to ask the right questions and disclose the

detail is to “either correct information – compared with the confusion and

thoroughly read miscommunication that typifies the faceless call-centre scenario.

you r i nsu rance

contract and ask the That said, warns Dombo, “insurers will not go through every single term

right questions - or and condition when you purchase cover. Ultimately, it remains the clients’

over disclose so responsibility to read the contract and ask the relevant questions as well as

you can get the best remain mindful of their duty for continual disclosure.”

•

•

•

•

•

•

•

•

•

•

Gari Dombo, Managing Director Alexander Forbes Insurance a member of the FIA

Insurance is only as Good as the Advice you Get

25

R E T I R E M E N T F U N D I N G

2.2 Taxation of retirement contributions and benefits (ii) Taxation of lump sum benefits on withdrawal

Value of lump sum Tax ratesTax deductibility of contributionsBetween R 0 and R 22 500 0%

Between R 22 501 and R 600 000 R 0 plus 18% of taxable amount (i) Pension fund contributions by members exceeding R 22 500

Between R 600 001 and R 900 000 R 103 950 plus 27% of taxable amount

For current pension fund contributions, it is the greater of: exceeding R 600 000

R 900 001 and above R 184 950 plus 36% of taxable amount

exceeding R 900 000• 7.5% of remuneration from retirement funding employment, or

• R1 750.(iii) Taxation of monthly income during retirement

Any excess may not be carried over to the next year.Any income earned during retirement is taxed using the scales published by

the National Treasury annually.For arrear pension fund contributions the maximum tax deduction is R1 800

per annum. Any excess over R1 800 may be carried forward to the 2.3 Comparison of retirement annuity, pension and provident funds

following year of assessment.

(i) Contributions(ii) Provident fund contributions by members

• A retirement annuity fund is a private arrangement fully owned by the

member. Employers and employees can now contribute in a tax Provident fund contributions are not tax deductible. They are paid from

efficient fashion to retirement annuity funds.post-tax income.

• Member and employer contributions under a pension fund

arrangement are paid from pre-tax income. However, under a Employer contributions to pension and provident funds are tax deductible,

provident fund arrangement, member contributions are paid from or paid from pre-tax income, for the member. This deductibility is subject to

post-tax income, whereas employer contributions are paid from pre-an maximum of 20% of salaries for the employer’s contribution to

tax income. Retirement annuity fund contributions are paid from pre-retirement funds and medical aid schemes.

tax income. The contributions paid from pre-tax income have upper

limits given above.(iii) Retirement annuity fund contributions by employees and employer

• The retirement annuity benefits can be made paid up should an

individual encounter financial difficulty that makes it difficult to keep For current retirement annuity fund contributions, it is the greater of:

up recurring premiums. There are restrictions in making such a

move in pension and provident funds.• 15% of taxable income other than from retirement funding

employment, or(ii) Benefits

• R3 500 less current deductions to a pension fund, or• Pension and retirement annuity fund members can take up to a third

• R1 750.of their retirement benefit as a lump sum. The remaining benefit must

be used to provide a regular income. Provident fund members have Any excess may be carried over to the next year.

the option to either take their entire retirement benefit as a lump sum,

or only take part of their benefit as a lump sum and use the remaining Taxation of benefits

benefit to provide a regular income. The cash lump sums and regular

incomes are taxed as shown in Section 2.2 above.In the taxation of any lump sum benefits, the taxable amount is the

• Retirement annuity funds do not allow members to receive their member’s lump sum benefit less any member’s own contributions not

benefit before age 55. Members may retire from pension or provident previously allowed as tax deductible.

funds subject to certain restrictions in the Income Tax Act. Members

may receive their benefits from pension and provident funds when The taxation of such benefits can be summarised as follows:

they leave their employer for any reason. These benefits may be

transferred to another fund or preservation fund free of tax or the (i) Taxation of lump sum benefits on retirement; death; termination of

member may take an after tax cash benefit.employment due to redundancy; and termination of employer’s trade

Value of lump sum Tax rates

Between R 0 and R 300 000 0%

Between R 300 001 and R 600 000 R 0 plus 18% of taxable amount

exceeding R 300 000

Between R 600 001 and R 900 000 R 54 000 plus 27% of taxable amount

exceeding R 600 000

R 900 001 and above R 135 000 plus 36% of taxable amount

exceeding R 900 000

Leadership Seminar Leriba Lodge

Advisory Council 7 & 8 October Leriba Lodge

F I N A N C I A L P L A N N I N G

By Chris Busschau Chairperson Financial Planning Exco of the FIA

The last three years have been a roller coaster of emotions in the Financial namely “Intermediary Relationships”. Planning industry! The National Treasury proposed that any

intermediary who receives any First came the Statement of Intent that introduced radical improvements in the commission payment at all should be values applicable to terminated investment policies. This was followed helter defined as an “Insurer Agent”, and that skelter by new commission regulations for some life assurance products, an only those intermediaries who charge ongoing increase in the educational / Fit and Proper requirements to be fees to their clients could be classified as licensed to give advice, the first visits on FSP’s by the Financial Services Independent Financial Advisers. As you Board, regulated requirements for improved and regular communication with will appreciate, this has both emotional clients, and, recently, the new FAIS Code on Conflict of Interests. elements as well as reputational and functional

aspects. At the saem time that this is being addressed, Will 2011 be different? we need to recognise that there is a possibility that commission regulations

for other products may come into the discussion. The FIA has already done Well, it depends on what you mean by different. The one thing that won’t some preparatory planning for the consultation process that this will set in change is the flow of change! motion, and has made a submission concerning some aspects. We remain of

the view that the correct dispensation is the de-regulation of all commissions, and will continue to promote that view.• Retirement Fund reform. This process has been on the go for some

The first few changes below are already in place, but will only really begin to years, and the discussion will continue. The FIA will continue to be actively change our lives next year. Other are waiting around the corner for us. involved in the debate.

• Medical cover. This too has been on the agenda for some time, and the • Conflict of Interests. The new code has been in place, and the FSB and FIA will keep you informed as the debate evolves. other bodies have run a number of informative workshops to help the industry • Fit and Proper examinations are facing us next year. Plenty of study and understand the implications and the changes we’ll have to make. I have preparation! We can view it as an absolute pain, or we can welcome the attended a number of these workshops and have realised that human nature opportunity to sharpen up our skills and our knowledge. does not change! The really big issues, the situations where major conflicts could arise, tend to be easily understood and generally accepted. People have generally agreed that payment of business expenses by product houses is unacceptable, that the rule that states that product houses can provide Well, the one thing that has not changed, and will not change, is the need that training for all intermediaries, but not pay for accommodation is the pulic has for professional, skilled and knowledgable analysis and advice understandable, and I don’t hear too many people complaining that golf days from Financial Intermediaries who are capable of persuading people to make and the like are critical to our business. The hottest debate seems to centre on the changes needed to satisfy their long term requirements. what I believe is a genuinely trivial issue, and that is “how do we apply the R1000 per annum per representative rule?” We are simply going to have to apply that most uncommon commodity, common sense, and accept that product houses will be able to provide facilities to enable us to do business The professional Financial Intermediary is a financial doctor. Let’s look at the with them (their branded stationery, software, etc) but not the things we use similarities: to run our businesses.• The new Companies Act will come into force in 2011. This is going to • Diagnosis: The medical practitioner does a careful examination of your introduce some critical changes in the way we interact with business clients. state of health – we conduct a financial needs analysisFor example, we will need to ensure that the full and precise name of a • Feedback: The doctor tells us what is right, and what is wrong with our business is reflected on every single piece of paper that forms part of a health. We tell the client where the gaps are in the financial plan.business transaction. We will also have to conduct Know your Customer • Solutions: The doctor tells us to lose weight, give up smoking, have an verification for all of the related parties (i.e spouses, children) of key people in operation, take a prescription of medication, start exercising. We recommend the business clients we transact with. The FIA is planning to run workshops the use of life assurance, health care cover, unit trusts, endowments, for members on the impact of this important new legislation. Watch this retirement annuities, disability cover, structured investments, offshore space for details. products, etc to solve the financial “illnesses”. • The Consumer Protection Act will also come into operation in 2011. • The doctor then uses persuasive skills to ensure that we do accept the Many aspects of this legislation will not apply to Financial Planners, as those advice, and that we take the medication, have the operation, or change our aspects of our business that are regulated by the FAIS Act will be exempted lifestyles. We use persuasive skills to enable people to make the decision to from the CPA. However, any activities not regulated by FAIS, such as set aside some cashflow to purchase the solutions, or to set aside some mortgage origination, any form of estate agency work, direct selling that does capital to make the investment.not involve advice, • Workflow Two will come back onto the radar screen in the next few months. Many people will have forgotten that this even exists! The National Treasury released its Discussion Paper on Contractual Savings Products in We are fortunate to be in an industry where we can be such a power for good the Life Insurance Industry way back in April 2006. Its contents covered a in people’s lives. Welcome the challenge of the changes we face in 2011, wide range of issues. The first of these, early termination values, was knuckle down to the studying needed for the exams, and emerge in December addressed through the Statement of Intent and the new commission next year fitter, stronger and of more value to our clients. The choice is yours – regulations. However, other issues were placed into two further I know what mine is!wrokstreams, and Workstream Two includes a very important element,

WHAT IS IN STORE FOR US?

SO WHERE DO WE COME INTO THE PICTURE?

FINANCIAL DOCTOR

WE ARE FORTUNATE

The Only Constant Thing is Change!

28

H E A LT H

By Michael E. Stoker Insurance Gateway® www.insurancegateway.co.za

In the midst of a sea of changes in the medical aid In providing a balanced view Mr. Schoeman acknowledged concerns environment and the regarding health insurance products and practices which may be seen to be uncer tainty surrounding harmful to the medical scheme environment. t h e n a t i o n a l h e a l t h insurance proposals, lies These include insurance products that cause the public to replace their another important related medical aid with insurance policies, or change their medical aid scheme plan issue, the demarcation of or benefit options, products which cause anti-selection by incentivizing good health insurance between risks to buy insurance until they need more comprehensive medical scheme the short-term, life and cover, or which may give rise to systematic exclusion from ongoing “lifetime medical aid industries. cover”.

Presently with each sector being governed by its own legislation, namely the Health insurance marketing practices which may be harmful to the medical Short-term Insurance Act, the Long Term Insurance Act and the Medical scheme environment include those where intermediaries are incentivized to Schemes Act, there are areas of overlap between products offered by Short- oversell or to mislead the public into thinking the product is a medical term and Life Companies and those offered by Medical Aid Schemes. scheme.

What is allowed by the legislation applicable to the various sectors and what should be allowed, is referred to as the health insurance demarcation debate Health insurance products and practices which may be seen to be harmful to and Mr. Herman Schoeman, Managing Director of Guardrisk provided a very consumers include misleading marketing and sales practices, exclusions informed and balanced presentation on this at The Insurance Conference, due to age or deteriorating health, cancellations of individual policies due to held at Sun City, in May this year. claims and the limited disclosure of benefits to and obligations of

policyholders.

Looking first at the historical perspective Mr Schoeman advised that for many years, under the 1943 insurance acts, the different covers offered by different Whilst the Council for Medical Schemes and the Financial Services Board institutions in the various sectors co-existed in harmony, until the borders issued a joint press statement in September 2000 announcing an agreement between what was a short-term or long term product, or a medical aid, began on the demarcation between the business of a medical scheme and health to get blurred, with the sectors encroaching on each other’s territories. insurance, the Insurance Laws Amendment Act 2008 proposes further

measures to clarify demarcation issues, which includes:The 1998 Short-term and Long Term Insurance Acts attempted to ring fence areas of overlap and whilst continuing to allow areas of commonality in • Retention of a Health event policyproducts, covers and benefits, endeavoured to limit further encroachment • Excludes the “business of a Medical Scheme”and clarify the borders, by introducing limits to features of insurance • Specifically includes policies conducting Medical Scheme business as products such as stated medical benefits, which may not defer actual allowed by Minister of Financemedical expenses and with benefits being payable only to the policyholder. • The detail will be in regulations still to be promulgated

• Consultation between Ministries and Regulators• Regulators may request any relevant information

Health insurance says Mr. Schoeman, can be categorised into four main • Rules relating to marketing and product designcategories:

At the beginning of his talk Mr. Schoeman posed the question “Can health Those where the product intent is totally removed from medical scheme insurance products and medical schemes co-exist?” Certainly when one business. considers the needs of consumers and their Constitutional right to protect

themselves against exposures, one would like to think so.Medical expenses cover linked to a health event but as sub-component of non-health related cover. Some factors highlighted by Mr. Schoeman…

Products offering a degree of augmentation to cover provided by medical • The cost of medical scheme membership is beyond the reach of the majority schemes. of South Africans

• Gaps in medical scheme benefit structures leave medical scheme members Products offering benefits targeted at consumers that are unable to afford a with potentially large uninsured financial exposuresmedical scheme. • The same can be said of medical scheme benefit limitations and caps

• Closed employer schemes offer little or no choiceSince different considerations apply to the categories, the best possible • The demand by consumers for value for moneyoutcomes can only be achieved if discussions surrounding the demarcation of health insurance and medical scheme business have regard to the unique Recently the FIA issued an update on the demarcation of health insurance products aspects of each health insurance product category. and members who would like to know more can find a link to the update, in the

FIA Weekly Indaba # 4 (21 September 2010), under item 1, General.

Products and practices harmful to the medical scheme environment

Products and practices harmful to consumers

Historical perspective of insurance lawTowards demarcation

Health insurance product categories

Consumer needsCategory 1

Category 2

Category 3

Category 4

Demarcation of Health Insurance

30

C I P

By Brett Wallenkamp of Wallenkamp Consulting cc

Mandated by the FAIS Act the FAIS Department of the FSB continue to • Contain a list of all associates of the FSP

drive the financial services industry to make full disclosure to clients on

financial services in order for them to make an informed decision. The The type of financial interest, or recompense, that a provider or its

latest amendment seen to the General Code of Conduct, published under representatives may receive or offer is limited to:

Board Notice 58 of 2010 on 19 April 2010, has introduced what can be

considered as the “FAIS Conflict of Interest Policy”. • Commission authorised under the Long-term Insurance, Short-

term Insurance and Medical Schemes Acts .

As is always pointed out by the FSB, the FAIS Act must be applied within • Fees authorised under these Acts, if those fees are reasonably

the spirit of the law, i.e. to protect the consumer. When interpreting who commensurate to a service being rendered.

and what is affected by the disclosure’s required under the new conflict • If the above fees are not paid, then fees that have specifically been

of interest, the definitions must be placed into context with the agreed to by a client in writing and which may be stopped at the

provisions. discretion of that client, are allowed.

• Fees or remuneration for the rendering of a service to a third party,

A provider and a Representative must avoid and or mitigate any conflict which can be considered reasonably appropriate to the service

of interest between themselves and a client . This requirement already being rendered or reasonably proportionate to the value of the

became effective on 19 July 2010. financial interest.

• An immaterial financial interest that is subject to any other law.

The definition of "conflict of interest" means you should always ask

yourself the following: However, a provider may not offer any financial interest to

Representatives:

When you sell a financial product or service to a client are you in a

situation where any commission or incentive etc, motivates you to • for giving preference to a specific product supplier or product (if that

present biased and unfair product recommendations or hide certain Rep is able to recommend other products or suppliers)

facts that would otherwise negatively influence that client’s decision? • for bringing in high volumes of sales without any consideration to

the quality of that service.

If such incident arises, then there is a conflict of interest, and in the spirit

of the law, must be appropriately managed and disclosed. So then, what is “a financial interest”?

Apart from additional definitions introduced to the FAIS General Code of This is defined as any cash, cash equivalent, voucher, gift, service,

Conduct, the newly inserted ‘Section 3A’ describes the requirements advantage, benefit, discount, domestic or foreign travel, hospitality,

FSP’s must comply with as from 19 October 2010. A synopsis thereof is accommodation, sponsorship, other incentive or valuable

abridged as follows: consideration.

Every FSP must adopt, implement and maintain a Conflict of Interest Exclusions are made, such as an ownership interest and on any training

Policy that complies with the provisions required. This policy must be (that is not exclusively available to a selected group of providers or

easily accessible for public inspection, eg published on your company Representatives) on products and legal matters relating to those

website and reducible to writing at all reasonable times. products, general financial and industry information or on specialised

technological systems.

It must manage conflicts of interest by adopting the following principles:

As daunting as it may initially appear, the “FAIS Conflict of Interest” can

• Ensure mechanisms are in place for identifying conflicts of interest. be used effectively to instil client confidence that they are dealing with

• Build procedures and business rules that ensure avoidance of FSP’s of integrity and that the financial product sold to a c l i e n t i s

conflicts by providing suitable documentation to clients that make most suitable to the client’s financial needs.

the disclosure.

• Adopt controls that will identify reasons for non-compliance and www.faisfirst.co.za

prescribe mitigating actions.1Sec 3(1)(b) of FAIS General Code of Conduct2• Implement suitable risk management processes to that will facilitate The definition of “associate” may at first glance appear

ludicrous when measured against such list, but parties listed compliance with the policy through adequate monitoring review and must be taken in context with the financial service rendered reporting.and related business relationships.3• Awareness and understanding by all Representatives of the Acts 52 and 53 of 2008 and 131 of 1998

consequences of non-compliance, eg suspension of licence, and to

provide relevant training as required.

The “FAIS Conflict of Interest Policy”

32

P L A N N I N G

By Joe Kotzé, FIA National Manager; Compliance

At a recent seminar on the above topic, hosted by Celestis, industry • What to do after the sale and

experts gave their views on this complex matter. financial survival

• Tax matters

In the same vein as retirement planning, succession planning is of critical

importance and should be part of an overall business planning strategy. Many sales are lost because of poor financial

Some factors to be noted is the fact that the average age of advisers is over records or because the buyer must work off old

50 and rising, barriers to entry into the industry are materializing and information. Accounting and financial statements must be kept up to date

sellers and buyers may be entering into a serious life changing transaction. and must be available readily and accurately. The secret is not to wait for

your accountant or auditor but to dictate processes.

Selling your business

There is also no set formula for valuating a book. Value models differ and it

As background to succession planning the following needs were identified may be better to look at opportunities that may arise from the sale. Keep in

from sellers and buyers: mind that trail commissions may not be a certainty in future due to

possible changes in legislation.

• Valuation of the business and client base

• Identifying potential buyers or successors Due diligence

• Preparation of a practice for sale

• Legal agreements A due diligence is a complex fact finding device and an intense

• Transition of clients examination of a target business. It can assist in the answering of three

• Due diligence or practice audit questions:

• Financing of the sale

• Negotiations • Whether to buy at all

• How much to pay

When sale of a business is considered it must be established whether the • How to structure the acquisition

business is an asset of liability. In most cases it may be a liability because

of failure to plan and prepare for the sale. An obvious question to ask is The function of a due diligence is to assess the potential risks of a planned

whether you would buy your own business and if it really is worth transaction by enquiring into all relevant aspects of the past, the present

something to someone else, keeping in mind that the biggest asset of the and the predictable future of the business to be purchased. It will also

business is the client base. Other considerations include: assist in determining what the possible benefits and liabilities of a

transaction will be.

• Are you ready to sell – mentally and otherwise?

• If you have partners, what arrangements have been put in place? You will need a due diligence to avoid nasty and costly surprises. The

• Are your clients ready for you to sell? buyer should be looking for reasons NOT to invest in the identified

• What about your staff? business. Studies show that up to 50% of acquisitions are subsequently

• Is your business “house” in order? disinvested or merely fail. Every due diligence is unique and considerable

• Are your business financials in order? professional judgment, skill and experience is required to verify

• Is your own financial plan in order? assertions.

Problems you may encounter: The following risks may need to be managed carefully:

• Unrealistic expectations about the sale • Understanding of the business

• Problems you must deal with at exit rather than having planned for • Understanding of the industry

earlier • Sustainability of the business

• The reality of a forced sale • Changing taking place in the industry

• Whether your clients’ affairs are in order and their willingness to • Contractual exposure

accept other advisers in your business • Warranties and representations – external and internal

• Agreements with your partners – the how, when and what for • Pending or possible claims or litigation

• Valuation of the business • FAIS and compliance

Succession Planning – An Overview

34

35

P L A N N I N G

The due diligence process can have the following scope: • Registers

• Commission tracking and financial records

• To determine assets and liabilities • Compliance policies and procedures

• Historical trading results • Complaints register and pending complaints

• Current trading • Contents of client files

• Financial projections • Compliance reports and financial statements submitted to the

• Taxation, VAT and possible penalties registrar

• Cash flows • Annual levies fully paid

• Registration with the Financial Intelligence Centre

The due diligence and valuation process should go hand in hand. • Interview with the compliance officer and handover report

Legal aspects Key FAIS considerations when selling:

Aspects to clarify will include: • Regulatory returns and levies up to date

• Client files in good order

• What is the legal nature of the buyer and seller? • Compliance records in good order

• What is it that is being sold? • Key risk documentation –

• How and when will ownership be transferred? - Risk management plan

• Are there any unusual circumstances like contractual capacity, - Business continuity/succession plan

insolvency or suspending conditions? - Conflicts of interest duly recorded

• What are the tax implications? • Pending matters disclosed

• What are the main terms of the sale agreement? • Contractual obligations

A serious consideration would be not to draw up your own agreement but When selling a business it is important to keep clients in the loop and plans

to rather use a legal expert. A checklist for such an agreement should are in place to transfer to another business. The FSB must be informed in

include the following: writing to lapse the license with reasons as to why and the effective date.

The compliance officer must provide the FSB with a letter of resignation

• Parties – check legal nature and founding documents and submit a handover compliance report. Clients must immediately be

• Subject for sale – check ownership and clear description of assets informed and steps must be in place to ensure that outstanding business is

• Purchase price and manner of payment – take into account the cost completed promptly or transferred to another provider.

of any risks

• VAT implications – check if applicable The FSB expects each provider to have a business continuation plan in

• Security – whether required for payment in installments place in the event of death, disability and retirement of key staff so that

• Date of transfer and possession – check for different dates and clients are not prejudiced in any manner.

suspending conditions

• Warranties business sold “voetstoots” or guarantees of income Buy and sell agreements should be an essential element for the sole

• Transfer of employees – is it a sale of a business as a going concern proprietor business. This will ensure that beneficiaries get fair value for

• Seller to assist buyer – agree time period and remuneration your business and effect prompt payment of the purchase price.

• Restraints of trade – check if applicable

• Cancellation – check if special circumstances for cancellation Some pointers for selling a business:

• Cater for unusual circumstances

• Include an objective valuation methodology

FAIS compliance • Choose an auditor who understands your business

• Review insurance policies to reflect the true value of the practice

The FAIS and FICA are the key legislation applicable in the sale of a • Identify a buyer that is aligned to your client profile

business or a book. Key principles to keep in mind are that clients cannot • Ensure the buyer has adequate resources in terms of capital and

be unduly prejudiced by your actions of buying or selling a practice or capacity

book. They should be kept informed as to what is going on and your

actions should be fair and equitable. When considering all the aspects above it should be clear that succession

planning should start at an early stage of any business. It is essential to

Key FAIS considerations when buying: engage the services of experts to assist and guide you through the

process of due diligence and valuation of your business.

• Advice records

• Know-Your-Clients records (FICA)

O U T L O O K 2 0 11

By Gareth Stokes Online Editor for FA News

As 2010 winds down the financial services industry is preparing for discussion). The addition of Conflict of Interest to the General Code of

another year chock full of regulatory change. Stakeholders in both the Conduct has been the focus of numerous industry discussions in recent

short-term and long-term insurance space will have to adjust business months amidst concerns large industry players will interpret these

practices to comply with reams of new legislation. At the outset insurance provisions differently. Compliance officers will keep a close watch on

companies will take steps to adhere to the stringent solvency and Financial Services Board (FSB) enforcement activities in this regard.

reporting requirements introduced in the latest International Financial

Reporting Standards (IFRS). The long-term insurance industry is looking forward to improving trading

conditions through next year. New business is

There are plenty of developments around an on the up – and lapses and surrenders are on

industry-wide Financial Services Charter (FSC) the decline. Peter Dempsey, deputy CEO of the

too. Ministers at the departments of finance Association for Savings and Investment

and trade & industry have expressed their South Africa (ASISA), says the value of

desire for the financial services industry to surrendered individual policies decreased

carve out its own Financial Sector Charter. The from R18.7-billion in the second half of 2009

first phase of the Charter has already been to R17.2-billion in the first half of 2010. Lapse

finalised and should be gazetted by the end of rates have been in decline for the past three

November 2010. And the industry hopes the periods and the trend is expected to continue

second part of the Charter will be gazetted by through 2011.

the end of the first quarter, 2011. Once the

Charter is finalised and gazetted insurance Meanwhile, short-term insurers are putting in

industry stakeholders – including brokers – will the hard miles to improve their operating

have to make radical changes to their reporting environment. The South African Insurance

practices. Compliance with industry codes will Association (SAIA) is spearheading a range of

no longer suffice. Insurers and brokers face initiatives to improve profitability in members’

numerous operational challenges too. motor books – some of which could be

implemented early in 2011. The SAIA has also

Some of the biggest changes to how insurers partnered with the Financial Intermediaries

conduct their businesses stem from the new Association (FIA) to develop a secure method

binder arrangement rules contained in the of transferring customer information and

Insurance Laws Amendments Act (ILAA). Insurers will still be able to underwriting data between insurers and intermediaries. The joint venture –

outsource to brokers (brokers with binders, or persons with binding to be marketed as the Short-term Insurance Data Exchange (STRIDE) –

authority), but will have to address the inefficiencies and conflicts of will revolutionise data sharing among insurance industry stakeholders.

interest inherent in the current binder structures. In particular brokers will This system will also facilitate compliance obligations introduced by ILAA.

have to address the challenge of working with data on two separate

platforms The good news is South Africa’s economic recovery is still on track, albeit

at a slower pace than expected. Conditions for intermediaries in the

Insurers and brokers will also have to adjust their internal procedures and financial services industry are finally improving.

systems to accommodate FAIS-related initiatives such as Conflict of

Interest (already in force) and Treating Customers Fairly (under

After a whirlwind 2010 Insurers and

Brokers are Already Scanning the

Environment for Next Year’s Challenges

36

S H O RT- T E R M

By Brian Martin

The Ombudsman for Short-Term Insurance says that policy holders who the security requirements at the new risk address

have violation cover for their motor vehicle should always remember, in the were unacceptable to the insurer.

event of their claim being repudiated by their insurer, due to unintentional

violation or non-compliance, to check with their financial institution, to see Ms Smith did not check with her financial

if they have lodged a claim with the insurer. institution if a violation claim was lodged and

continued making her monthly payments to the

Violation cover, in general, permits the finance institution whose interests finance house on a vehicle she no longer had. She had

in the vehicle have been noted on the policy, to file a claim in terms of the unintentionally violated the terms of her policy, but had a violation claim

policy where the financed motor vehicle is damaged, written off or stolen been submitted the outstanding balance in terms of the agreement would

during the period of insurance and where a term or condition of the policy, have been settled.”

has been unintentionally violated or not complied with, resulting in the

claim being rejected by the insurer. “We cannot stress how important it is for consumers to read the specific

terms and conditions applicable to the type of insurance cover that they

In such cases, the violation policy usually pays for the cost of repair to the wish to purchase and in the case of violation cover, to make the necessary

vehicle less the applicable excess (if the vehicle is repairable) or in the enquiries with both the insurer and financial institution to avoid

case of a total loss, the maximum indemnity less the applicable excess. unnecessary financial burden”, says Brian.

“What may happen is that the financial institution does not lodge a claim in

respect of the violation cover provision, or that if a claim has been lodged,

they may fail to advise the consumer of this fact.

This leaving the policyholder to believe that they have to carry the full

burden of making good the outstanding amount on the finance agreement

or repairs to the vehicle”, says Brian Martin, The Ombudsman for Short-

Term Insurance. An example of the workings of this type of cover is

illustrated by this scenario:

“Ms. Smith purchased a motor vehicle valued at R200 000, 00 and took

out violation cover as part of the insurance cover for the vehicle. The

vehicle was stolen and the claim was repudiated due to a change in the risk

address which occurred after the inception of the policy and of which Ms

Smith had failed to notify her insurer. Had her insurer been notified of the

change in the risk address they would not have continued with the cover as

The Ombudsman for Short –Term Insurance:

Unintentional Violation or Non Compliance

should Not always leave you Empty-Handed

38

In such cases, the violation

policy usually pays for the cost of

repair to the vehicle less the

applicable excess (if the vehicle

is repairable) or in the case of a

total loss, the maximum

indemnity less the applicable

excess.

A most enjoyable and successful day was held at the Centurion work or in the course of business we frequently have to deal with Golf Estate on Tuesday, 11 October 2010, a day that was well cancer particularly in the field of Healthcare Insurance. supported by both members of the FIA and sponsors. This is an opportunity to support and assist CANSA with their A truly fun and enjoyable day was had by all, with CANSA awareness campaign, but more importantly to contribute to the benefiting by the generosity of all. research which will have an impact on the industry in theOver the years the FIA both nationally and at local branch level long term, and quite possibly touch our lives as individuals.have contributed in excess of a half a million Rand to CANSA and We look on this as a hugely important from the FIA's corporate and have formed a close relationship with their branches throughout social investment contribution to those that are inflicted with this the republic. A full field of players once again turned out to support debilitating disease The Cheque for R40 000 was handed tothis worthy cause at the Centurion Golf Estate, many Insurers and Antionette Joubert and Dalene van Rooyen of CANSA by Dr our business partners participated and supported this event. Monwabisi Gantsho Registrar and CEO of the Council for Medical The proceeds collected will enable research in to trying to Schemes (CMS) and Manie Booysen CEO of the FIA.find cures for this devastating disease. In our daily lives whether at

FIA/CANSA GOLF DAY

October 2010

S B I D I

Developing and creating access for black intermediaries into the short-term being employed either in Santam or at large brokerages. This year Santam

insurance industry gives Santam the opportunity to influence the relooked the programme and made enhancements to ensure that 90% to

transformation of this sector, not only in terms of skills transfer, enterprise 100% of the candidates would be successfully placed in employment in 2010

development, and job creation, but also in recognising an emerging market either within Santam or established black brokers.

that is under-serviced in insurance terms.

Santam has to date invested over R1million in this initiative and envisages the

Santam, has therefore implemented enterprise development in a way that programme becoming a long-term, sustainable contribution to the short-

specifically focuses on its supply chain and broker distribution channel term insurance Industry.

through the Santam Black Intermediary Development Initiative (SBIDI),

launched in 2008. Govender concludes: “Santam is committed to transformation and

development within the short-term industry. We have taken SBIDI to new

Selven Govender, head of Business Development at Santam says: “Santam is heights in 2010 and aim to achieve even bigger milestones in 2011 and

looking beyond only training and qualifying black intermediaries – the SBIDI’s beyond. There is huge excitement within Santam about SBIDI; we want to

ultimate aim is to create operational and viable black brokerages. We are spread the word and make SBIDI ‘business as usual’.”

constantly engaging with existing brokers and sharing the goals and

objectives around the SBIDI programme.” To find out more about our SBIDI programme email sbidi@santam.co.za or

contact 011 912 8183

The brokers who become part of the programme have very specific

involvement in it. All brokers participating in this programme mentor the

interns on all aspects of the business, for example, day-to-day operations,

sales and relationship building etc.

Santam would like existing black brokers:

- to contribute to transformation in the short-term industry and South

Africa;

- to be mentors to the graduates attending the programme;

- to eventually employ these graduates once they have completed the

programme;

- to introduce other existing black short-term and life brokers to Santam.

In return, the black brokers will receive the following value from Santam:

- Increased capacity within their brokerages by employing the graduates

- The black brokers could attend short courses on business

development, marketing, sales etc. skills as well as Santam product

training (Personal and Commercial Lines)

- Santam would look at removing the ‘barriers to entry” to doing business

with Santam to make it easier for the black brokers to do business with

Santam

SBIDI 2009 concluded with success, 42 Interns completed the programme

with 35% of the interns in Gauteng and 56% of interns in the Western Cape

SBIDI is the future of short-term insurance in South Africa

42

All brokers participating in this

programme mentor the interns

on all aspects of the business,

for example, day-to-day operations,

sales and relationship building etc.

43

A P P O I N T M E N T S

Old Mutual

Old Mutual Life Assurance Company (South Africa) Limited

(“OMLACSA”) announces the appointment of Mr Paul Baloyi, CE of

the Development Bank of Southern Africa, to its Board of Directors

as an Independent non-executive Director with effect from 22

October 2010.

Liberty Corporate

Liberty Corporate today announced the appointment of Seelan

Gobalsamy as the new Chief Executive of Liberty Corporate with

effect from 1 December 2010. Gobalsamy joins the business from

Old Mutual, where he most recently held the position of Managing

Director for Old Mutual Corporate.

Sanlam

The Sanlam group today announced the appointments of three new

business unit heads: Ms Lulu Letlape as Group Head of Corporate

Affairs, Mr Basil Forbes as Group Head of Market Intelligence and

Ms Siobhan McCarthy as Head of Group Communications

Mutual & Federal

announces new Group Manager: Business Systems Support

Salvatore Nicolaci has been appointed as the new Group Manager

for Business Systems Support at Mutual & Federal, one of South

Africa’s leading short-term insurers. His appointment is effective

from 1 October 2010.

Lion of Africa

1 November 2010: Lion of Africa Insurance - the first short-term

insurer in South Africa to achieve a Level 1 Broad Based Black

Economic Empowerment rating - has appointed Colly Mata as

Executive: Commercial and Local Authorities Sales at Lion of Africa

Insurance.

Lion of Africa Life Assurance Company has appointed Derek Pead

as its Chief Executive Officer. Pead brings with him a wealth of

industry experience and an exemplarily performance record.

1 2

3 4

5 6

7 8

H U M O U R

Results of cutting out the middleman!!!

Laugh and the World Laughs with You...

45

N E PA D

From the perspective of boosting investment and trade in Africa, Johan van

der Merwe, head of Sanlam Investments, believes the proposed new role

for Minister in the Presidency Trevor Manuel, as announced on Sunday 24

October, is an extremely positive move. Manuel’s new assignment is to

assist President Zuma on the New Partnership for African Development

(Nepad) sub-committee on infrastructure and forms part of the cabinet’s

new growth plan. “Manuel’s deep understanding of the economic

fundamentals in South Africa and Africa will prove invaluable in this

position.”

Van der Merwe said that, in terms of foreign and local investments, the

move was likely to be viewed favourably both locally and internationally.

“Manuel’s successful term as SA’s finance minister has earned him strong

support globally and his presence on the sub-committee is likely to be very

well received by investors.

“It is also great news from our perspective because Sanlam Investments is

a deep believer in the opportunities which abound on the African continent.

We have a presence in seven countries, have launched among others, an

African opportunities fund, a Pan-African property fund, and we are

exploring private equity opportunities across the continent. We also

acquired a stake in Sustainable Capital an investment firm focusing on

social responsible investment in Africa. We’ve been operating in Africa

since 1994 and have real experience of the challenges faced here in terms

of doing business. We are thus hopeful that the sub-committee and

Manuel’s role on it will have a very positive impact on the African success

story.”

Sanlam Investments is the cluster of investment businesses within the

JSE-listed Sanlam Group. Businesses include Sanlam Investment

Management, Sanlam Employee Benefits, Sanlam Private Investments

and SIM Emerging Markets. Van der Merwe has headed up Sanlam

Investments since 2003.

Sanlam Investments' head welcomes Trevor Manuel's NEPAD involvement

Van der Merwe said that, in terms of foreign and local investments, the move was

likely to be viewed favourably both locally and internationally. “Manuel’s

successful term as SA’s finance minister has earned him strong support globally

and his presence on the sub-committee is likely to be very well received by investors.

S N I P P E T S

INAUGURAL BOTSWANAN INSURANCE CONFERENCE HAILED A SUCCESS

8 September 2010: The insurance industry came out in force for the launch of the inaugural conference for the Insurance Council of Botswana (ICB), which was held in Gaborone last week (9 September 2010).

The historic event, which attracted some of the biggest players in the South African insurance industry, took place in the Gabarone International Convention Centre in Botswana and was well supported by various speakers from South Africa.

Manie Booysen, CEO of the Financial Intermediaries Association of Southern Africa (FIA), who attended the event, said it was clear from the presentations that Botswana and South Africa have the same views regarding the regulatory environment for the insurance industry.

“The conference was a huge success and it was gratifying to see so many important players in attendance such as the IISA, SAIA and UNISA. It also presented a valuable opportunity for the South African insurance industry to liaise and network with the government, regulatory authorities and industry leaders in Botswana.

Booysen added that a number of prominent FIA members are members of the ICB, including AON, Glenrand MIB and Alexander Forbes, which were also sponsors of the event.

The ICB is a voluntary and nonprofit organization with the purpose of promoting the interests and self regulation of the insurance industry of Botswana.

46

FSB Conference

The Annual FSB Conference was held on Tuesday 19 October 2010 in Pretoria. The key addresses were by Gerry Anderson of the FSB followed by Jacky Huma & Marinus Mans of the FSB on the subject of Treating Customers Fairly. Gerhardus van Deventer of the FSB and David Davidson of the FAIS Ombud’s office addressed the issue of Fraud Cases & Complaints. This session was concluded by Francisca Khoza of Bowen Gilfilian on the New Trends in employment Benefits and Pensions. The day continued with various break-away session which proved to be of interest to all those attending.

The Minister presents Certificates to Members

Ladies of FIA National Office at CANSA Tea 27-10- 2010

S N I P P E T S

Durban Sports Day

Kremetart Division Meeting

The Kremetart Division Meeting was held on Friday 5 November 2010 at Stonecutters Lodge near Lydenburg and was very well attended.

48