Legislative Framework Flashcards
What is the mandate of the (PPR) Policyholder Protection Rules 2018
To regulate certain sections of the LTIA( Long-term Insurance Act) and the STIA( Short-term Insurance Act) that have been repealed, such as misrepresentation.
What is the purpose of the Insurance Act 2017
The purpose of the insurance act is to set out a legal framework within which the insurers and insurance groups can be regulated and supervised.
The supervision must be in line with the Twin Peaks System, established by the Financial Sector Regulation Act.
This act differentiates between life insurance and non-life insurance.
NB- The Financial Sector Regulation Act was enacted to path a way for the Insurance Act by establishing the Prudential Authority and the Financial Sector Conduct Authority.
What is the purpose of the long term insurance act and the short term insurance act
These acts were enacted to provide for the substantive (separate and independent) matters of insurance, which include prudential regulation and overseeing of the market conduct of (FSP) Financial service providers.
What is the mandate for the (FAIS) Financial Advisory Intermediary Services Act
This act was enacted by the South African national Treasury to directly deal with the conduct of FSPs and, more specifically intermediaries and advisors to ensure that advice rendered to FSPs is in line with the legislation and in a manner that is not prejudicial to the consumer.
● The FAIS Act contains detailed provisions on how prospective clients should be advised of the feature of a product before it is sold.
● Some of the provisions included in the Act :
(GCC) General Code of Conduct
(CCDM) Code of Conduct for Direct Marketers
● The purpose of GCC and the CCDM is to align the conduct of FSPs during the rendering of financial services with the fair treatment of clients and consumers’ protection.
● GCC highlights that FSPs are under the general duty to act at all times when rendering a financial service with due skill,care and diligence and such services should be rendering fairly and honestly to the interests of clients.
What is (COFI) and what is its purpose
(FAIS) Financial Advisory intermediary Services Act will be repealed and replaced with (COFI) Conduct of Financial Institutions Bill.
● COFI will be a risk-based and proportionate piece of market conduct law.
● The bill will be infused with the Treating Customers Fairly (TCF) initiatives as opposed to FAIS, which focuses more on the conduct of FSPs.
●Its purpose, like FIAS, is to address matters related to intermediaries and advisors.
TCF outcomes are as follows:
●Customers can be confident they are dealing with firms where TCF is central to the corporate culture.
● Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly.
●Customers are provided with clear information and are kept appropriately informed before,during, and after point of sale.
● Advice given must be suitable and takes account of customer circumstances.
● Products perform as firms have led customers to expect, and service is of an acceptable standard as they have been led to expect.
● Customers do not face unreasonable post-sale barriers imposed by firms to change products, switch providers, submit a claim, or make a complaint.
What is the Twin Peaks System?
The Twin Peaks System is a financial service authority that comprises the Prudential Authority and the Financial Sector Conduct Authority, of which these entities regulate and supervise financial services and products as well as the regulation and supervision of providers of those services and products.
What is Financial Sector Conduct Authority
Is comprised in the Twin Peaks System
It was established to improve the market conduct among FSPs in order to protect financial service consumers.
It is mandated to deal with the market conduct of financial institutions that provide financial services and products.
What is Prudential Authority ?
It was established for periodically ascertaining (regularly checking/evaluating) the financial soundness or liquidity of FSPs as a means to protect consumers and the financial services industry.
It basically deals with the financial soundness of insurers and insurance groups.
