The Insurance Act, 2017 (Act No. 18 of 2017) promulgated on 18 January 2018, repealed and replaced all the prudential and licensing requirements that were contained in the Long-term Insurance Act, 1998 (Act No. 52 of 1998) and Short-term Insurance Act, 1998 (Act No. 53 of 1998).
As a result, the introduction of the Insurance Act resulted in various references to terminology and classes of insurance business in the Long-term Insurance Act and Short-term Insurance Act, as referenced in the Fit and Proper Requirements for Financial Services Providers, 2017, being outdated and the main purpose of the latest amendments, published by the FSCA, is to ensure alignment with the Insurance Act terminology.
In the original statement (2017) supporting the amendments, the FSCA confirmed that the amendments are expected to have very little to no impact on FSPs or their representatives as no new requirements are essentially created.
Some of the changes include:
|●||The classes of insurance business as contained in Schedule 2 of the Insurance Act have been mapped against the current insurance product categories as contained in the Fit and Proper Requirements.|
|●||The Definition of “cash”|
|●||Definition of “CPD activity”: The amendment places a requirement on the Professional Bodies to only accredit activities that are verifiable.|
|●||Amendment of section 40 of the Determination clarifies that an FSP may not appoint a person as a representative who is an unrehabiliated insolvent. An additional amendment also provides that if a representative is already appointed and then becomes sequestrated, the FSP can retain that person as a representative provided that it implements sufficient risk mitigating controls to ensure that the sequestration doesn’t have an impact on clients or the FSP.|
|●||Update on definitions of “annual expenditure” and “remuneration”|
|●||Sections 27 and 52 updates|
The Amendment of the Determination of Fit and Proper Requirements, 2020 comes into operation on date of publication (26 June 2020).