ADAPT OR DIE IN AN EVER- CHANGING ENVIRONMENT. MFSA 16 August 2017

Transcription

1 ADAPT OR DIE IN AN EVER- CHANGING ENVIRONMENT MFSA 16 August 2017

2 Agenda 1. NCR / DTI 2. Sidewinder legislation 3. Curve balls 4. Litigation or the art of war 5. Conclusions

3 NCR / DTI NCR enforcement powers in the future? Is this still on the cards? Declaration of credit agreements as reckless and unlawful Reckless lending criminalised NCR issuing of administrative fines Redress for consumers Tribunal simply an appeal / review Forum?

4 NCR / DTI Key areas in NCA still interpretative nightmare Regulation and interpretation through circulars on website and compliance letters as if law Opportunity lost to provide clarity in last major amendments to the NCA The more legislation is written in plain language the less we and the courts seem to understand it Why should consumers and industry alike be content with poor drafting/legal uncertainty and how does it affect business

5 FICA JUST UP THE ROAD Yes NCA main legislation for credit industry but Financial Intelligence Centre Act (FICA) Presently banks need to comply but to Credit Providers, money or value transfer providers, short-term insurers, accountants, high value goods dealers etc. to be included soon process already on the way Inclusion of Credit providers does not require amendment of FICA Substantial amendments that will affect credit providers as well

6 FICA COMPLIANCE PILLARS Customer Due Diligence identification and verification of customers Duty to keep records Duty to report to the Centre: Suspicious Transaction reports Terrorist property reporting Cash threshold reporting Sanctions Internal administrative duties: Duty to formulate (and apply) Risk Management and Compliance programme Duty to appoint a compliance officer Duty to train staff Duty to register with the FIC

7 KEY NEW FICA AMENDMENTS From rules based to hybrid of rules/risk based approach Customer Due Diligence (Not just Client Identification and Verification) Source of wealth & source of income Domestic prominent influential person & Foreign prominent public officials and their family members and known associates Risk Management and Compliance Programme: enable the AI to identify, assess, monitor, mitigate and manage the risk that the provision of your products and services, may involve or facilitate, money laundering or financing of terrorist and related activities. Financial Sanctions screening and reporting Establishing beneficial owners Who is accountable for FICA compliance (Directors / senior management) Etc etc etc..

8 COURTS OF LAW AMENDMENT ACT NO 07 OF 2017 Signed by President and Gazetted 2 August 2017: ConCourt judgment in Stellenbosch matter Lesson non-compliance may lead to government intervention and legislation which may lead to unintended consequences Comply Comply Comply! MFSA document on amendments imminent Major impacts on sections 36, 45,55, 56, 57,58,65, 65J & 65M Transitional provisions interesting Teeth of clerks of the court been pulled courts more involved

9 More Sidewinder Legislation Financial Sector Regulation Bill (Twin Peaks): Does it affect us and the NCR? Directives by SARB Governor Both NCR and Financial Sector Conduct Authority will regulate credit providers but in different ways & focus More regulatory scrutiny on credit providers overlapping Protection of Personal Information Act (POPI) Chairperson and members of Information Regulator appointed 1/12/2016 Await commencement date of S 114 thereafter 12 months to conform with requirements of POPI Who really knows when this becomes effective

10 Curve balls: Credit life insurance FSB Board Notice 192 of 2016 Deals inter alia with Credit Life Insurance Consumer Credit Policy and the costs must comply with Regulations made by the Minister of Trade and Industry. Both NCR & FSB to watch out for. Final Credit Life Insurance Regulations on 9 February 2017 Effective in 6 months 10 August 2017 Cap on credit life insurance and annual charging Minimum requirements Exclusions and limitations of cover

11 Curve balls: Right to set-off Right to set-off: Sections 90(2)(n) and 124. NCR to obtain a declaratory order from North Gauteng High Court Affects numerous players in the industry and consumers alike Lengthy court battles creates legal uncertainty = prejudicial for consumers & debt review process & other credit providers. and Kaknis cases? Settled between parties and previous cases stand What is the sidewinder NCR may proceed on this & they may have a good case for declarator Marikana case next year lots of interested parties joining and high level of scrutiny

12 Curve balls NCR as legislature: NCR Circular 15: Inclusion of initiation fees in deferred amount iro unsecured and short-term loans Credit Bureaux Circular 23 of 2016: credit bureaux may only provide consumer credit information to on-sellers and resellers (including channel partners), who are registered credit bureaux. Compliance letters

13 More curve balls DTI Portfolio Committee considering various debt-forgiveness measures (Debt Relief Bill): Treasury supports the targeted debt relief for most vulnerable consumers Who will be affected? Do we know what is going on and how do you become part of the solution and not a victim of the powers that be? Industry must be part of this debate to avoid unintentional consequences Media reports state that microlenders and Retailers will be heavily affected

14 Litigation The art of war Plain language leaves us clueless Poorly drafted legislation lead to knee jerk reactions & litigation Litigation costly, lengthy and uncertain. Once you have caught the sidewinder what to do with it? Unintended consequences & industry and consumers play catch-up Alternative choices to litigation? Biggest lesson learnt by SAFPS (with consent from Manie Van Schalkwyk) Be involved in consultation process. Can Industry play a more prominent role in communicating with Regulators and Government? (Reminder various regulators) 2017 litigation prospects once again high what is the alternative!

15 CONCLUSIONS It is a jungle out there: So much coming at micro lenders and industry at all sides new legislation, legislative amendments, new regulators, court judgments, enforcement and huge financial penalties, new policies, new systems and products,. Know DTI and NCR but new Regulators and Players emerge such as National Treasury, FIC, SARB, FSB, Parliamentary Portfolio Committee. Interaction with these players critical. Be ahead of the pack or become extinct MFSA must think critically how to achieve this. There is a time to shut up, a time to talk, a time fight and litigate the dilemma is to know when to do what. As the elephants fight don t loose sight of the ants on the ground (consumers) and your business. Congratulations to the MFSA on 21 years. Well done! Given micro lenders and smaller entities a legitimate voice. Members need to deliver through compliance or else it weakens the legitimacy and power of the MFSA Give credit where credit is due!

16 ADAPT OR DIE KEEP EYE OPEN FOR SIDEWINDERS OR BECOME EXTINCT

17 CONTACT DETAILS Disclaimer: This presentation is not intended as formal legal advice. Readers and audiences at presentations are advised to consult with professional legal advisors for guidance on legislation, interpretation and legal advice regarding issues which may affect their businesses. This presentation may not be used without the author s consent.