I recently counted the number of Covid regulations and they number at approximately 147 different documents on the Government Website. That is a ridiculous amount of new rules that I suspect many people transgress every day without even knowing it - and I do not blame them.
The FSCA, Reserve Bank and Prudential Authority issued a new set of Covid Measures for FSP's to comply with under level 3 lockdown. These rules also allow FSP's to actively deal with clients in a prescribed manner, which I suppose is a silver lining. Please see the full document here. We've tried to take the essence out of it as much as possible to show you what you need to comply with in this post.
Apart from what we detail in this post please remember that financial institutions must comply with the Occupational Health and Safety Directives issued by the Minister of Employment and Labour in terms of the Regulations regarding the precautionary measures in workplaces. You can find these regulations here.
Where face to face meetings or physical interaction with customers are unavoidable, in order to protect both the employees of the financial institution as well as financial customers, these meetings should be held at premises where appropriate health measures and social distancing can be implemented, such as-
A financial institution should not hold meetings at the homes of clients, or visit financial customers at home for purposes of providing financial services to them.
Where exceptional circumstances require that a meeting takes place at the home of a customer, the following protocols must be followed:
A financial institution must upon request by the Authorities submit the name of the COVID-19 compliance officer designated under Regulation 47 and its workplace plan as contemplated in Regulation 47(1)(b) of the Regulations to the Authorities.
*This post is updated as and when information changes or regulations are added. Latest Update: 04/22/2020.
In this post we tell you all about how financial services companies can operate lawfully and safely during the lockdown. We are all aware of the lockdown currently implemented in South Africa due to the COVID-19, and even though we are in a lockdown, we should not confuse this period for a complete shutdown for financial services. Businesses that produce, distribute and deliver essential services are allowed to continue operations if necessary, whilst adhering to the correct health and hygiene procedures during this time.
There was a release of a third amendment which brings greater clarity to what is regarded as essential services in the financial sector. This amendment is the third amendment to the Regulations to the Disaster Management Act 2002, published by Government Notice No 318 of 18 March 2020, as amended by Government Notice No 398 of 25 March 2020 and Government Gazette Notice No 419 of 26 March 2020 (Regulations).
What is regarded as essential services in the financial market?
Essential Services in the financial market includes the following services necessary to maintain the functioning of a financial system as defined in section 1(1) of the Financial Sector Regulation Act, only when the operation of a place of business or entity is necessary to continue to perform those services:
What is our interpretation of FSP's rendering services during lockdown period?
We would argue the services that FSP's render fall under the essential services definition as mentioned above and can therefore continue operations if necessary to service current clients. This does not mean you should go out and canvass for new clients face to face. The essential services exemption is there to assist current clients in need that have no other option but to see you in person - i.e. vulnerable persons and those of little means. The FSP needs to have a CIPC certificate to continue operations and the staff need a permit issued by the FSP itself if they are traveling to and from clients.
Important information for FSP's during this lockdown period:
Where do I request a permit issued by the CIPC for my FSP?
The permit for an FSP to render essential services can be requested online, and is issued by the CIPC. Follow this link to request a permit or click on the "Request a CIPC permit" button below: bizportal.gov.za/essential_service.aspx
Where do I get a permit for the staff of my FSP if they are traveling to clients?
The permit to render essential services for staff of an FSP can be issued by the FSP. Use the form in this link, or click on the "Issue a Permit for my staff" button below: guideline_permit_essential_services.pdf
Are there any exemptions to provide relief to my FSP during the pandemic?
Annual Financial Statement submission dates are usually 4 months after the financial year end, it has now been extended by 4 months, therefore submissions are due 8 months after your FSP's financial year end.
An exemption for compliance with Financial Soundness Requirements was also issued and can be summarised as follows:
GENERAL SOLVENCY REQUIREMENT (Assets must exceed Liabilities)
Exemption: Liabilities may exceed Assets by no more than 20%
Applies to: All Cat 1’s / Cat 2 / Cat 4
WORKING CAPITAL REQUIREMENT (Current Assets must exceed Current Liabilities)
Exemption: Current Liabilities may exceed Current Assets by no more than 20%
Applies to: Cat 1 Holding Funds / Cat 2 / Cat 4
LIQUIDITY REQUIREMENT (Maintain Liquid Assets equal or greater than X/52 weeks of Annual Expenditure)
Exemption: The Liquid Assets may not be less than 50% of the specified Liquidity Requirement:
If you decide to rely on the exemption for Financial Soundness Requirements, there are certain conditions to be met. For more details, please refer to FAIS Notice 21/2020 on the FSCA website.
Note that there are also no Compliance Reports due for 2020.
Practical measures you must comply with
The FSCA and Prudential Authority also issued a joint Directive to state that those financial services businesses that are operating need to comply with the following:
"Financial institutions are hereby directed as follows:
A head of a financial institution must, where that head determines staff as essential as contemplated in Regulation 11B(2), endeavour to limit these members of staff to as small a number as possible and, as far as possible, enable remote working, including working from home to support essential services.
A financial institution must take appropriate precautionary measures to reduce the risk of exposure, transmission and spread of the COVID-19, including to limit the number of staff required to be at offices in order to provide the elevant required essential financial services to a minimum and must put appropriate measures in place to promote minimum physical contact between staff, by-
A financial institution must-
A financial institution must develop and implement an infectious disease preparedness and response plan that can help guide protective actions gainst COVID-19, which must include plans and policies aimed at compliance with this Directive.
A financial institution must identify a workplace coordinator who will be responsible for COVID-19 related issues and their impact at the workplace and for timeously responding to the Authorities upon request for information."
by: Horizon Compliance team