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Financial-advisor

FSCA provides guidance on essential services to the FIA

The Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) have received a number of queries regarding the treatment of financial services as essential services. The following information is extracted from a document released by the Financial Intermediaries Association (FIA) with their kind permission. It contains guidance from the FSCA on a number of very important matters to financial advisers:

“The attention of financial institutions is drawn to Annexure B of the Lockdown regulations which states that:

B. Categories of essential services shall be confined to the following services:

(3) Financial services necessary to maintain the functioning of the banking and payments environment, including the JSE and similar exchanges, as well as insurance services.”

Each entity should identify critical activities, processes and people that are necessary to operate and continue the supply of essential services. To the extent possible, persons should be off-site and working remotely. Executives of these institutions have an obligation to minimize persons called on to break isolation.

The following provides guidance on essential services that may require movement of staff as an exception to the lockdown:

It is most critical to keep the National Payment System and core banking processes open, so that South Africans may continue to buy, sell, earn, and make and receive payments. This should include system operators and TPPPs that support the financial sector as well as mobile wallet services. These TPPPs process billions of Rands in premiums and payments every month and may not be able to do so remotely.
Life and short-term Insurers (including middle office, back office, claims management, premium, policy and payroll administration) so that consumers and businesses make claims and have claims processed, receive funds from matured policies and received income payments owing. Insurers must identify categories of essential and emergency claims, which should be prioritised and processed over the 21-day lockdown period. Insurance business which is not determined to be essential or emergency should not be considered an essential service over the lockdown period. (See below how this impacts on advisers)
In Short Term Insurance claims management, it is essential to keep money in the system. This will include payments to suppliers, in particular small businesses. This may require additional support services for claims identified as emergencies such as:
Roadside assistance
A level of towing and storage services needs to be available to remove cars from the scene of the accident
Assessors and loss adjustors
Car rentals – if client is delivering an essential service only
Other emergency services like plumbers, electricians and building contractors.
Savings and investment industry, including life insurers, investment managers, Collective Investment Scheme (CIS) companies and Linked Investment Services Providers (Lisps): investments and savings need to remain appropriately invested over periods of extreme market volatility, and withdrawals of savings and investments facilitated where the saver/investor urgently and desperately needs access to funds (although withdrawal of savings and investments should not be encouraged and ideally be seen as a last resort). Monthly savings contributions into retirement funds and other savings products must not be interrupted.

How does this impact on advisers?

Advisers may not be regarded as essential services in terms of requiring exemption from lockdown, but their businesses should remain open to assist customers of financial services in this time of great uncertainty and should be done remotely.

Exceptions for advisers for essential services purposes and lockdown exemption are where they may perform full outsourced functions and transact on behalf of insurers. This should also be done with a focus on critical claims, payment and premium support. Advisers may also perform renewals and placement functions of large complex global insurance risks and require skeleton staff to do so.

Marketing, and the selling of new business, is not an essential service to maintain the system.

Remote working will mean that ICT infrastructure support, mobile support services, technical support desks, cyber security, especially to protect consumer data, will be essential services as defined.

Please click here to read “Where does the National Lockdown leave FSPs?” – a blogpost by Billy Seyffert COO of Moonstone Compliance.

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