Following a further consultative process, the FSB issued Information Letter 3 of 2013 on the 1st of July.
This document is of major importance to all binder holders, as well as holders of outsourced administration agreements. It provides a very clear set of rules as to how the FSB will interpret the current regulations and what it expects the industry to be doing.
Most importantly the FSB makes it clear that it considers a number of activities as being incidental to the actual binder activity. Accordingly, it should be remunerated as part of the binder fee and not seen as outsourced activities for which additional fees may be paid. This stipulation is going to require a complete re-alignment of current agreements for many binder and administration agreement holders.
The FSB goes into detail about who may be paid what, and by whom. It also recommends payment methods and prescribes reporting of payments.
If you are currently a binder holder, or performing outsourced administration on behalf of an insurer or binder holder, we strongly recommend that you become familiar with this information letter. The Regulator has already taken enforcement action against insurers for perceived contraventions.
We are arranging workshops, similar to those which were fully booked last year, to assist interested parties grasp the practical reality of Information Letter 3. Please diarise the following dates:
Johannesburg Benmore Gardens – 4 September 2013 – Afternoon session
Pretoria Brooklyn – 5 September 2013 – Morning session
Cape Town Pinewood Park – 17 September 2013 – Morning session
Durban Musgrave Centre – 18 September 2013 – Morning session
Please click here to register.