In a significant development, the Financial Sector Conduct Authority (FSCA) has issued Communication 27 of 2023, outlining their plans to initiate a thorough verification process regarding certain designated individuals and significant owners within financial institutions. This communication is designed to enhance the transparency and integrity of the financial sector.
Who does this apply to?
The FSCA's verification process will focus on specific categories of individuals within financial institutions. Those subject to this scrutiny will include significant owners, key individuals, directors, shareholders, members, and trustees of authorized Financial Services Providers (FSPs) as defined in the Financial Advisory and Intermediary Services Act, No. 37 of 2002, with a few exceptions. Significant owners and directors of collective investment scheme (CIS) managers as defined in the Collective Investment Schemes Control Act, No. 45 of 2002 are also part of this verification process.
Who is excluded?
It's essential to note that the following entities licensed by the Prudential Authority (PA) will have a separate verification process determined by the PA:
The Historical Context
The FSCA has already taken steps to verify information, including criminal records, for all new license applicants since June 1, 2022. New license applicants have been required to provide comprehensive verification information concerning various key individuals and stakeholders as part of the license application process. Now, the FSCA is expanding its scope and intends to continuously verify existing information, including criminal records of significant owners, directors, shareholders, members, and trustees of FSPs and CIS managers already holding licenses.
The Verification Partner: Managed Integrity Evaluation (Pty) Ltd (MIE)
To facilitate this extensive verification process, the FSCA has enlisted the services of an independent service provider, Managed Integrity Evaluation (Pty) Ltd (MIE). MIE will be responsible for verifying records, including qualifications and criminal histories, on behalf of the FSCA. This collaboration underscores the FSCA's commitment to ensuring thorough and impartial verification.
The Verification Process
As part of the verification process, MIE may directly contact the individuals whose information needs verification. Impacted individuals will receive a link from MIE, delivered via the latest contact details as recorded in the FSCA's system. This link will allow individuals to book appointments at the closest MIE fingerprint zone or satellite office, most convenient to their location. During the appointment, individuals must bring their official identification documents (ID book/card or passport) for verification purposes.
When Does it Start?
The commencement of the verification process and the outreach to impacted individuals is scheduled to begin on November 1, 2023.
Does your FSP participate in Open Finance? The FSCA requires certain information relating to Open Finance
In June the Financial Sector Conduct Authority (FSCA) published the Open Finance Draft Position Paper (Draft Position Paper) for comments. The position paper sets out the policy approach by the regulator when it comes to regulating Open Finance in South Africa.
The FSCA now requests certain information from all financial institutions and Third Party providers that participate in Open Finance. This was requested in the FSCA Information Request 2 of 2023 (General) in October. The information must be submitted to the FSCA by no later than 10 November 2023.
Where do I submit the Information?
Click HERE to access the online form through the Authorities’ website.
What is Open Finance?
Open Finance supports financial institutions in sharing their customers financial data with third party providers (TTPs) for the provision of Open Finance Services.
It relies on open APIs (Application Programming Interfaces) and data sharing to facilitate third-party developers and fintech firms in accessing and integrating financial information and services from multiple sources to assist a third party in the development of financial services for a financial customer.
This empowers individuals and businesses to authorise the sharing of their financial data with external service providers, moving away from the traditional control of banks and financial institutions over customer data and services.
This allows for the development and provision of innovative and personalised financial services and products to customers by third parties.
What Happens If I Don’t Submit the Information?
If an entity participates in Open Finance and fails to submit the requested information within the specified timeline it will be seen as an offence under section 267 of the Act and will, therefore be liable on conviction to a fine not exceeding R1 000 for each day during which the offence continues.
I Have Some Questions, Please Help!
For more information regarding this Information Request please contact the Financial
Technology Department of the FSCA at Nolwazi.Hlophe@fsca.co.za.
We are also here to answer any questions that you may have.
COMPLIANCE NOTICE IN TERMS OF SECTION 83(3)(d) OF THE PROMOTION OF ACCESS TO INFORMATION ACT 2 OF 2000
In accordance with the Protection of Personal Information Act 4 of 2013, the Information Regulator is a statutory body tasked with various responsibilities, including monitoring and enforcing compliance with the Promotion of Access to Information Act 2 of 2000 (PAIA) by both public and private entities.
Recently, the Minister of Justice and Correctional Services, on 27 August 2021, introduced the PAIA Regulations. These regulations, under regulation 17(1), have repealed several forms, including:
• Form A (Request for access to record of a public body),
• Form B (Notice of Internal Appeal), and
• Form C (Request for access to record of private body).
However, the Information Regulator has observed that certain public and private organizations still have these outdated forms on their websites. This practice is obstructing the right of access to information, which is a fundamental right. Therefore, in line with section 83(3)(d) of PAIA, a notice has been issued to ensure compliance.
Public and private bodies are hereby required to upload the following prescribed forms to their websites promptly:
• Form 02: Request for Access to Record in terms of Regulation 7 - Applicable to both Public and Private Bodies.
• Form 03: Outcome of Request and Fees Payable in terms of Regulation 8 - Applicable to both Public and Private Bodies.
• Form 04: Internal Appeal Form in terms of Regulation 9 - Applicable to Public Bodies only.
This action is taken to guarantee that access to records, both in the public and private sectors, is provided promptly, cost-effectively, and with ease. All public and private bodies are expected to comply with this directive by uploading the prescribed PAIA Forms to their websites within a fourteen (14) day period from the publication of this notice, i.e. on / before Friday 20 October 2023.
by: Horizon Compliance team